Digital Health Funding Surges in 2025, Exceeding Previous Year's Totals
Additionally, 35% of the funding rounds remained unlabeled in 2025, a decrease from 44% in 2023, indicating an improvement in the transparency of funding sources. Furthermore, mergers and acquisitions (M&A) activity in the sector saw a substantial increase, with a 37% rise from the previous year. Health AI companies received 54% of the funding, reflecting a growing focus on advanced technologies.
Digital health funding experienced a significant increase in 2025, reaching $9.9 billion. This marks a notable rise from the previous year's total of $8.4 billion, demonstrating growing investor interest and confidence in the digital health sector.
Investment Trends and Deal Sizes
In the third quarter of 2025, digital health funding amounted to $3.5 billion across 107 deals, contributing to the annual total. The average deal size also saw an uptick, with 2025 averaging $28.1 million per deal, compared to $20.4 million in 2024. This growth indicates a trend towards larger investments in this sector.
Notably, there were 19 mega-rounds in 2025, which accounted for 40% of the total funding, amassing $3.8 billion. These large funding rounds suggest a focus on substantial investments in promising companies. Additionally, 35% of the funding rounds remained unlabeled in 2025, a decrease from 44% in 2023, indicating an improvement in the transparency of funding sources.
Sector Focus and Mergers and Acquisitions
Healthcare workflow tools emerged as a significant area of investment, receiving 42% of the total funding. This highlights the priority placed on improving healthcare efficiency through digital solutions. Furthermore, mergers and acquisitions (M&A) activity in the sector saw a substantial increase, with a 37% rise from the previous year. There were 166 acquisitions in 2025 compared to 121 in full-year 2024, underscoring a vibrant M&A landscape.
Among the notable M&A deals was Google's acquisition of Wiz, marking the largest deal of the year. This acquisition is reflective of the tech giant's strategic interest in expanding its footprint in the digital health space.
Global Venture Funding and AI Influence
On a global scale, venture funding surged in 2025, with private funding reaching $425 billion. This elevated 2025 to the third-highest year on record for venture financing. The M&A activity also ranked as the second-highest on record, illustrating a robust environment for corporate consolidations.
Artificial intelligence (AI) played a pivotal role in this funding landscape, with health AI companies receiving 54% of the funding, up from 37% in 2024. The prominence of AI in digital health funding highlights the sector's shift towards integrating advanced technologies to enhance healthcare solutions.
Deal Dynamics and Future Prospects
The total number of deals completed in 2025 was 482, a slight decrease from 509 deals in 2024. Despite the dip in deal volume, the proportion of investments over $100 million reached 42%, the highest since 2021. This shift suggests a preference for fewer but larger investments, particularly in AI startups, which raised larger funding rounds.
The average Series A deal in 2025 was valued at $24.1 million, while the average Series C deal for AI companies reached $83.7 million. This increase in deal size points to heightened investor confidence in early-stage and growth-stage companies.
While there were only 30 Series B raises in 2025, compared to an average of 63 annually, the digital health IPO window opened amid uncertainty. Biotech startups continue to rely heavily on venture capital as they navigate a dynamic funding landscape.
The funding surge in 2025 is part of a months-long rise in startup funding, as healthcare executives increasingly prioritize AI and digital technologies.