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AI-Driven Digital Health Funding Sees Modest Boost in H1
ByAinvest
Thursday, Jul 10, 2025 3:57 pm ET1min read
Digital health startups raised $6.4 bln in H1 2025, a modest increase from the same period last year. AI-enabled firms accounted for 62% of the funding total, with an average raise of $34.4 mln per round. The sector saw fewer deals, but larger average deal sizes and 11 mega-rounds, with nine going to AI startups. Public exits also ticked up with two digital health IPOs in May and June.
Digital health startups raised $6.4 billion in the first half of 2025, marking a modest increase from the same period last year. The sector saw fewer deals, but larger average deal sizes, with 11 mega-rounds, nine of which went to AI startups. This growth is driven by investor excitement about healthcare AI, which accounted for 62% of the funding total, with an average raise of $34.4 million per round [1].The digital health market continues to mature, as evidenced by the thawing of the IPO freeze with Hinge Health and Omada Health going public in May and June, respectively. These successful debuts have sparked renewed interest in digital health IPOs, with several startups planning to go public in the near future [2].
Despite the uncertain economic and policy backdrop, the digital health sector remains robust. The sector saw robust M&A activity in the first half of 2025, with 107 deals, on track to nearly double the 121 deals recorded in 2024. Private equity firms are also banking on a new roll-up strategy, combining AI-native startups with legacy healthcare players [1].
However, digital health startups must navigate an uncertain policy environment. The digital health sector faces broader economic and tariff-related uncertainty and the impact of President Donald Trump's megabill, which introduces Medicaid work requirements and Obamacare marketplace changes that could leave millions uninsured. Federal agencies and legislative committees have signaled an interest in a more tech-enabled healthcare experience, with requests for information on the use of AI in clinical decision support or new care models [1].
References:
[1] https://www.fiercehealthcare.com/health-tech/healthcare-ai-rakes-nearly-4b-vc-funding-buoying-digital-health-market-2025
[2] https://www.businessinsider.com/healthcare-startups-in-line-go-public-according-to-bankers-2025-7
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