The post What Sets 2025’s Digital Health Funding Environment Apart From Previous Years? appeared first on Above the Law.
The digital health funding landscape has gone through a series of twists and turns ever since the Covid-19 pandemic — once characterized by a frantic investment pace and overblown valuations, then later hesitance and a dead exit market.
But for the past six months or so, the digital health sector’s funding environment has been quite stable and busy, noted Billy Deitch, partner at Oak HC/FT, during an interview this week at the ViVE conference in Nashville.
This year “feels busier” in terms of quality investment opportunities, Deitch stated.
“Coming out of the boom times of ‘21 and ‘22, there were a couple years of companies tightening their cash burn, not raising — and now we’re seeing so much more activity. I would say since around Labor Day of last year, and then continuing into this year, the pace of opportunities that we’re seeing is much higher than it’s been in years,” he declared.
He noted that this isn’t entirely surprising, given many companies have been preserving the capital over the past two years with the plan to raise funds in 2025.
In the past, it was common for startups to raise capital every six months or so, Deitch pointed out. With all that cash, a lot of them have focused inward over the past couple years, figuring out ways to scale their business and increase their revenue, he explained.
Deitch also highlighted that “growth at all costs” has proven to be an unfit motto for digital health startups.
“The fact of the matter is healthcare can move really slowly — a lot more slowly than other sectors. You need to really deliver, and you need to move at the pace that health systems or payers are willing to move at,” he remarked. “You can’t just sell solutions. You have to sell solutions, deliver on solutions and make sure that your customers are saying great things about you — that gives you the right to continue to grow.”
Deitch added that point solutions probably won’t continue to receive high amounts of investment like they did in 2021 and 2022.
“Point solutions got funded [in the past] — they had a narrow focus, so let’s say a health system has to buy 10 of those to have a solution. These companies can struggle on their own,” he stated.
He said he is seeing more and more point solution providers merge with each other to create platforms with broader sets of tools — and added that he believes this trend will only become more common.
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