FINN Partners and Galen Growth Global State of Digital Health Q3 2022

Experts from the Galen Growth data and research team have been working side-by-side with the FINN Global Digital Health Group to chart the complex and often fragmented digital health landscape, emerging market trends, areas of growth, and innovation. This novel report goes beyond market ups and downs. It defines what therapeutic sectors are high priority, what digital health geographic hubs benefit most from the capital infusion, and at what stages of development equity funds prefer to engage and invest.
While 2022 digital health venture capital has not matched the skyrocketing value of 2021, the closer look provided in the report reveals that capital infusion in 2022 exceeds 2021 values for the Early Stage and Series A funding rounds. It increasingly lagged in 2021 values across later funding stages.

HIGHLIGHTS:

  • Early-stage venture funding remains strong and promises a healthy innovation pipeline, while the IPO market has stagnated, with 6 IPOs and 4 SPACs globally. M&A activity has maintained strength, with a dip of only 7% YOY.
  • With only 27% of ventures having raised venture capital in the last 18 months, the remainder of the ecosystem could be facing a bumpy ride, pushing their C-Suite and investors to cut costs, focus on profitability before growth or rethink business models.
  • A global analysis of 12,000+ digital health ventures reveals that just 17% have significant clinical strength. Though some therapeutic areas saw funding shrink by more than 30%, oncology maintained the position of the most invested therapeutic areas in Q1 – Q3 2022, and mental health held the second position.
  • Among the top 5 most invested therapeutic areas, gastroenterology was the only one that saw an increase in funding (2%) from 2021 to 2022.
  • More than 60% of the total venture funding value comes from North America. But on a regional level, the Middle East (Israel and the United Arab Emirates) set record highs of venture funding in Q2 2022. Europe maintains momentum throughout 2022 and has not experienced the quarter-on-quarter decrease in venture funding seen in North America. Regions with increased investment correspond to established regulatory, public health and payer systems that prioritize digital health use.