Digital Health Funding Trends and Market Dynamics in H1 2025

The digital health sector has seen significant activity in the first half of 2025, with companies like Hinge Health and Omada Health making their initial public offerings (IPOs) and a notable increase in mergers and acquisitions (M&A) activity. With 107 M&A deals completed in the first half of the year, the industry is on track to double the number of exits seen in 2024.

Funding and Deal Activity

In the first six months of 2025, digital health funding reached a substantial $2.8 billion across 226 deals. A significant portion of these deals, 25%, were seed funding rounds, indicating a strong interest in early-stage digital health companies. StartUp Health has tracked 19 M&A deals during this period, further highlighting the consolidation trend within the sector.

The rise in funding and deals suggests a robust interest in the digital health market, with investors keen to capitalize on the growth potential of health technology solutions. This trend is expected to continue as more companies seek investment to expand their offerings and scale operations.

Shift Towards Secondary Deals

A survey conducted by Inc42 for the third quarter of 2025 revealed that 41% of Indian investors currently prefer secondary deals over traditional exit strategies like IPOs, buyouts, and acquisitions. This shift is partly due to venture capital firms launching secondary-focused funds, which provide investors with more immediate liquidity options.

Secondary exits are becoming an indicator of a maturing market, with 92% of investors reporting increased liquidity through secondary share transactions. These transactions are enhancing liquidity within the market, offering early investors more flexible and timely exit opportunities.

Market Maturity and Liquidity Dynamics

The digital health market is experiencing a significant transformation as it matures and becomes more organized. The increase in secondary funds, particularly in India, allows early investors to exit their positions more efficiently. As the market for secondary funds becomes more structured, investors benefit from organized channels that facilitate these transactions.

The expected liquidity from the 2025 IPO cycle is anticipated to be substantial, providing further evidence of the sector's maturation. The trend towards secondary funds is becoming a critical component of the market's dynamics, offering a viable alternative to traditional exit strategies and contributing to the overall liquidity of the digital health ecosystem.

Outlook for 2025 and Beyond

As the digital health market continues to evolve, the trends observed in the first half of 2025 point towards sustained growth and diversification of funding and exit strategies. With significant liquidity expected from the ongoing IPO cycle and the increasing popularity of secondary funds, the market is poised for continued expansion and development.

Investors and companies alike are navigating this changing landscape by adapting their strategies to align with the current market dynamics. The ongoing organization of secondary fund channels and the consistent interest in digital health solutions signal a promising future for the sector, as it continues to attract investment and facilitate growth.

Overall, the digital health market's funding trends and market dynamics in the first half of 2025 highlight a period of significant activity and transformation, setting the stage for further developments in the years to come.