With the Covid19 pandemic highlighting the failings of traditional healthcare systems, Digital Health startups are capitalizing on the increasing venture funding the industry has seen in recent months.
The digital health industry has been pumped with $14.7 billion from venture investors during the first half of 2021,, already surpassing the entirety of the funding seen back in 2020. The contrast is even higher when compared to the $7.7 billion seen in 2019, according to a report by Rock Health.
Sheila Talton, chief executive of Gray Matter Analytics Inc., referred to the current digital health market by stating, “Covid exposed the lack of investment that health systems have made in technology.”
Digital health startups like San Francisco-based Doximity Inc. have seen their market capitalization increase to $8.87 billion after going public in June, reflecting the increasing interest the industry has sparked.
Rockville, another startup that provides software for electronic prescriptions, has secured over $135 million in total funding in the past year alone.
While the increasing investment will allow the industry to flourish and progress, experts believe it also creates pressure for entrepreneurs to raise more capital than they really need, which could be counterproductive in the long term.
This will be especially concerning once the current health crisis subsides, as it is not certain if those startups will be able to keep afloat.
Larry Cheng, a managing partner with venture firm Volition Capital, expressed his belief that “smart entrepreneurs” should take advantage of the situation to raise just the right amount of funding without overdoing it.
With vaccination efforts around the world progressing steadily, uncertainty is on the air when it comes to the future of digital health startups.
However, many executives expect the trend to continue as consumers, health providers, and governments have realized the benefits of having an effective digital health system in place.