Midway Through 2021, Digital Health Startups Sprint Past 2020 Records

At the end of Q1 2021, our friends at Rock Health noted the record-breaking $6.7 billion raised by digital health startups and declared the sector “all grown up.” The additional $8 billion raised in the second quarter of this year—with H1 2021 breaking fundraising records for any previous full year—is another strong signal that digital health is now a mature market sector that will continue its robust growth.

The first half of this year saw $14.7 billion invested in digital health companies, which surpasses the total for the entirety of 2020. At this pace, 2021 will be the most-funded year ever for digital health startups.

VC Megadeals Continue

We continued to see megadeals—funding rounds of more than $100 million—throughout Q2 2021, and the quarter featured one of the largest funding rounds raised by a digital health startup: Noom, the developer of a weight loss app, brought in a $540 million Series F round, backed by Silver Lake, Oak HC/FT, Temasek, Novo Holdings, Sequoia Capital, RRE and Samsung Ventures.

Exits Steady; Capital Markets Speed Bumps

Digital health companies continued their trajectory to the public markets with SPAC deals and traditional IPOs, and as many as 11 more SPAC deals are expected to close this year. M&A also kept up the consistent pace established in Q1, as tech giants like Amazon, Google and Apple joined mature digital health players in snapping up promising startups.

But while the private markets are booming, public market investors are starting to gently tap the brakes. The 18 digital health companies that have gone public since the beginning of last year have seen their Q2 average stock returns fall below NASDAQ levels. However, the companies that went public prior to the beginning of 2020 are seeing their average returns track or even beat the NASDAQ for all of 2021 to date.

Add to this recent rumblings from the SEC about SPAC regulation and insurers who may be raising premiums to write policies for SPACs, the exit picture could grow even more complicated.

Notable Q2 Deals

But these slight headwinds aren’t stopping digital health startups from breaking fundraising records, joining the public markets and getting acquired. Here is a look at some of the notable deals from Q2 2021.

Funding Rounds

The most funded value propositions in digital health are on-demand healthcare programs, fitness and wellness technology and research-and-development initiatives for the pharmaceutical industry, researchers at Rock Health wrote. Mental health, diabetes and cardiovascular disease are the leading clinical indications for digital health developers.

The top funding rounds in Q2 included:

  • A $540 million Series F round for weight-loss platform Noom.
  • A $350 million Series E round for Mumbai-based online drug delivery platform PharmEasy provided by Caisse de dépôt et placement du Québec, Eight Roads, Everstone Capital, F-Prime Capital, LGT Group, Prosus Ventures, Temasek Holdings and other investors.
  • A $300 million Series D round for digital pharmacy platform Capsule Pharmacy, led by Durable Capital Partners and joined by new investors Baillie Gifford, T Rowe Price, and Whale Rock.
  • A $300 million Series D round for telemedicine app Kry provided by Canada Pension Plan Investment Board and Fidelity Management & Research.
  • A $300 million Series B round for home China-based fitness application company Fiture provided by All Stars Investment.

SPACs and IPOs

There have been 11 exits in the first half of 2021, with at least 11 more expected to close this year. Notable Q2 IPOs and SPACs include:

  • The April IPO of healthcare services company Agilon Health.
  • The May IPO of Privia Health, which provides technology to physicians’ practices.
  • The June IPO of digital physician network Doximity.

There were also notable SPAC transactions involving well-known digital health companies, including:

There will likely be more SPAC transactions for digital health leaders in 2021, including for digital therapeutics companies Pear Therapeutics and Better Therapeutics.


M&A activity is also surging: In the first half of 2021, each month saw an average of 22 acquisitions of digital health companies, compared to last year’s monthly average of 12. Tech giants are stepping up to acquire developers of digital health technologies. Notable deals include:

  • Microsoft’s acquisition of conversational AI company Nuance in a deal worth $19.7 billion.
  • IBM’s acquisition of network manager (for healthcare and other industries) TurboNomic in a deal worth as much as $2 billion.

There were a number of other notable acquisitions in Q2, including Accolade’s acquisition of PlushCare, Cedar’s acquisition of OODA Health, OneMedical’s acquisition of Iora Health and GoodRx’s acquisition of HealthiNation.

“Mega Momentum” Through 2021 and Beyond?

Funding totals are at an all-time high for digital health startups, as is the number of deals, the size of deals, the number of acquisitions and the number of public-market exits. It is an exciting time to be a part of the digital health ecosystem during this period of remarkable growth and maturity.

Digital health’s fundamentals as a sector are strong enough to withstand the ups and downs of the market. In the long run, we believe it will continue as an important component of health care and the economy, with ample exit opportunities.

Questions or thoughts? Drop me a line or reach out on Twitter.


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