The digital health sector has become a juggernaut during the COVID-19 pandemic, with nearly $15 billion invested in private digital health companies in 2020 and nearly $30 billion invested last year, according to our good friends at Rock Health.

Previous annual records — including total dollars invested in digital health, number of deals, and number of funding rounds over $100 million — weren’t just shattered in 2021, but left completely behind. account.

Rock Health points out that mental health remains the most funded digital health clinical indication, with startups in the sector raising more than $5 billion last year. Companies with technology to optimize and streamline R&D for biopharmaceutical and medical technology were the most funded value proposition, with startups in this area raising $5.8 billion.

Over the past few years, the public health emergency of COVID-19 has served as fuel for an industry dedicated to delivering innovative new ways to deliver care.

2021 ended on a particularly high note, with the fourth quarter alone seeing $10.8 billion invested in US-based digital health companies. For comparison, that’s more than the collective increase of comparable startups in Asia (the world’s second-largest market) in 2021. Well over half of Q4 deals in the US funded seed rounds of more of $100 million.

But 2022 started on a different note. Digital health startups may be innovating at the same impressive pace, but macroeconomic conditions, including inflation and impending interest rate hikes, have put significant pressure on the investment landscape surrounding the industry.

Regardless of this year’s final numbers, there is ample evidence that innovations in the digital health sector will benefit patients and the national economy for many years to come.

solid ground

As digital health experiences rapid growth, there are fears of an economic bubble forming around it. Analysts also questioned whether the rapid adoption of digital health products and services will continue after mass vaccination helped the United States bring the pandemic under control.

But patients and healthcare providers are sticking with telemedicine and other innovations, the Rock Health 2021 Digital Health Consumer Adoption Survey noted, with 73% of patients saying they want to continue using telemedicine platforms. telemedecine. Ernst & Young analysts found that 80% of physicians want to accelerate the use of digital platforms.

And while publicly traded digital health companies aren’t seeing much success in the stock market yet, there are signs that investment may continue to flow into private companies this year.

Insurance coverage for digital prescription therapies has increased in the past year, and startups are increasingly collecting clinical evidence to further validate their claims that their technologies help patients. Payers and providers are building payment models around digital therapies, and tech giants like Google, Apple, and Amazon continue to invest and make acquisitions in the broader digital health space.

At the same time, exit markets remain healthy. According to research from Rock Health, nearly one in four dollars invested in a digital health startup goes to a company that eventually exits through an IPO, acquisition, or merger. Researchers last assessed this statistic in 2019, when just 15% of money going to startups went to a company that found an exit.

Public markets could experience considerable volatility this year, and private markets are unlikely to be immune. There may be changes in how venture capitalists deploy their funds and how startups use that capital.

It will be interesting to see what 2022 brings. But one thing is certain: digital health solutions will survive the pandemic and continue to be a driver for our economy and a boon for patients.