5 digital health categories led VC investment in 2021

Here are the five digital health sectors that scooped up the most venture-capital funding in 2021.

1. Telehealth: $9.5 billion (up 111% year-over-year). Telehealth continues to lead digital health funding, attracting 28% of all investment across 230 deals. While telehealth utilization has dropped since the early phases of the COVID-19 pandemic, healthcare executives still expect telehealth to stabilize at a higher rate than before the pandemic. The top telehealth deal in the quarter was a $500 million Series D funding round raised by Ro, a direct primary care provider and platform that got its start selling hair loss supplements and erectile dysfunction medication to men. 

2. Data analytics: $3.2 billion (up 76% year-over-year). This subsector is the best-funded within a broader category of software companies that help healthcare providers manage health data. The implementation of federal data-sharing regulations designed to facilitate information exchanges between healthcare organizations has prompted greater investment in this area. Komodo Health, an artificial intelligence-based data analytics platform for providers, led funding in this space with a $220 million Series E.

3. Mobile health apps: $2.6 billion (up 86% year-over-year). Apps make up nearly half of the larger mobile health category, which also includes wearable sensors and mobile devices. This category has taken off as the pandemic intensified demand for virtual care. Employers increasingly looking to boost employer benefits have embraced mobile health tools, also contributing to growth. Digital pharmacy startup Capsule raised the largest funding round in 2021 with $300 million. 

4. Wellness: $2.4 billion (up 209% year-over-year). Spurred on by nine funding rounds of more than $100 million, wellness startups grew faster than all other digital health companies. Investors have poured money into wellness companies, hoping to cash in on growing consumer spending on health. Unlike digital health startups that sell mainly to providers, payers and manufacturers, wellness companies can go to market quickly, burning through less cash and delivering a faster return on investment. Noom, a psychology-based weight loss startup, raised the most in the category with a $540 million Series F funding round.

5. Wearable sensors: $2.2 billion (up 170% year-over-year). Companies in the category were involved in 33 deals in 2021—just one more than 2020. But the average deal size was more than two and half times the size, pointing to investors’ excitement over the potential of wearables to transform healthcare. Hinge Health, a physical therapy startup that uses wearables to deliver remote care, raised the most among wearables startups last year, raking in $600 million in a Series E funding round. Its $6.2 billion valuation makes it one of the most valuable digital health companies.