Digital Health Funding Trends in 2025
Digital health funding in 2025 is surpassing last year’s numbers, with outsized fundraising rounds boosting the sector’s investment total. A report by Rock Health reveals that in the third quarter alone, U.S. digital health startups raised $3.5 billion in venture capital funding across 107 deals. The total funding for 2025 so far has reached $9.9 billion, exceeding last year’s $8.4 billion raised through the third quarter.
However, there are some notable shifts in the funding landscape. Startups are securing fewer middle-stage deals and are avoiding rounds with traditional series labels. Instead, the sector is witnessing a rise in the number of mega-rounds worth $100 million or more, often backed by well-known investors.
One of the key trends highlighted in the report is the increase in average deal size, which has reached $28.1 million in 2025, up from $20.4 million in 2024. This trend is fueled by the prevalence of mega-deals, with 19 mega-rounds recorded so far this year, including investments in companies like Ambience Healthcare, Judi Health, and OpenEvidence.
Mega-deals have accounted for nearly 40% of the total funding in 2025, bringing in $3.8 billion of digital health investment. Despite the overall increase in funding, some investment trends that emerged during the COVID-19 pandemic continue to shape the fundraising landscape.
For instance, unlabeled raises, where companies raise funds without a traditional Series A or B label, have become more common. While the percentage of unlabeled raises has decreased from 44% in 2023 to 35% in 2025, it remains significantly higher than pre-pandemic levels. These raises can complicate the assessment of a company’s growth potential and readiness for partnerships.
Moreover, companies are taking longer to raise Series B rounds, with fewer middle-stage deals being inked. This trend, coupled with the focus on specific value propositions like AI documentation tools and revenue cycle management products, is reshaping the digital health funding landscape.
In response to the evolving market dynamics, some startups are opting to partner with or acquire other companies to enhance their capabilities. Mergers and acquisitions in the digital health sector have increased by 37% compared to last year, with 166 acquisitions recorded in 2025 so far.
Overall, the digital health funding landscape in 2025 is characterized by larger deal sizes, a shift towards mega-rounds, and a focus on enhancing healthcare workflows. As the sector continues to evolve, investors and companies alike will need to adapt to these changing trends to navigate the complex funding environment effectively.
