Digital Health Funding: A Quarter-by-Quarter Analysis

All funding deals in the digital health market over the last years

Below is the table listing all the deals. You can find our methodology at the end of this page.

If you want a deeper understanding of the market and its current dynamics, get our report covering the Digital Health Market.

Is digital health funding actually getting stronger right now?

Digital health funding looks broader today than it did in Q1 2026, but total dollars alone give a pretty poor read of what has changed.

Across the five quarters we studied, total capital stayed surprisingly stable: $1.78 billion in Q2 2025, $2.03 billion in Q3, $2.07 billion in Q4, $2.11 billion in Q1 2026 and $1.92 billion in Q2. Someone looking only at that series could reasonably conclude that digital health simply hovered around $2 billion per quarter.

The deal market tells a very different story. Deal count slipped from 75 in Q2 2025 to 73 and then 71, dropped sharply to 58 in Q1 2026, and rebounded to 82 in Q2. Capital excluding rounds above $50 million followed an even bigger swing, bottoming at $662 million in Q1 before reaching $1.124 billion in Q2.

The latest quarter therefore looks stronger underneath the headline. More companies raised, more money reached deals below $50 million, and the median round still held around $14 million even though total funding declined.

Quarter	Deals	Total capital	Capital excluding >$50M	Median round
Q2 2025	75	$1.775B	$909M	$10.0M
Q3 2025	73	$2.034B	$845M	$12.0M
Q4 2025	71	$2.068B	$869M	$14.0M
Q1 2026	58	$2.111B	$662M	$13.8M
Q2 2026	82	$1.924B	$1.124B	$14.0M
Five-quarter total	359	$9.912B	$4.409B	-

Was Q1 2026 really the strongest digital health funding quarter?

Q1 2026 raised the most digital health capital in our five-quarter window, but the quarter depended heavily on a small group of very large financings.

Deal count fell 18.3% from Q4 while total capital edged up 2.1%. At the same time, funding below $50 million dropped 23.8%. Six rounds exceeded $100 million, and those deals absorbed 51.1% of all Q1 capital. Rounds above $50 million accounted for 68.6%.

OpenEvidence's $250 million financing was the biggest Q1 round in our dataset. Rock Health found the same concentration problem in its separate U.S. digital-health universe: 12 rounds above $100 million captured 59% of Q1 funding.

Company maturity moved in the same direction. Follow-ons reached 79.3% of deals, their highest share in our period, while the median age of funded companies increased to five years. Investors were putting a lot of money behind companies that had already survived several funding cycles.

Q1 was exceptional for the companies able to raise very large checks. For the wider market, conditions were much tighter than the $2.11 billion headline suggested.

Why did Q2 2026 look healthier even though digital health funding fell?

Q2 2026 looked healthier because digital health funding reached far more companies and the middle of the market came back.

Deal count jumped 41.4%, from 58 to 82. Capital below $50 million increased almost 70%, from $662 million to $1.124 billion. First financings more than doubled from 12 to 26. Meanwhile, the share of money tied to rounds above $50 million fell from 68.6% to 41.6%.

The improvement also spread across categories. Clinical Workflow Software rose from 22 to 36 deals, Remote Monitoring from four to ten, and Patient Engagement from five to nine. At the same time, Virtual Care funding fell from $994 million to $355 million, so the quarter still broadened despite losing one of Q1's biggest sources of capital.

We would pay more attention to that mix than to the 8.9% decline in total funding. Q2 had more companies raising, a much larger pool of mid-sized financings and less dependence on a few giant checks.

Are digital health investors writing bigger checks now?

Digital health investors are writing bigger typical checks than they were in early 2025, although most of the step-up happened during 2025 and has since flattened.

The median round rose from $10 million in Q2 2025 to $12 million in Q3 and $14 million in Q4. It then stayed almost unchanged at $13.8 million in Q1 2026 and $14 million in Q2.

The average behaved much more erratically because a few huge deals could move it by tens of millions of dollars. Q1 is the clearest example: the quarter was packed with megadeals, yet its median financing was actually slightly lower than Q4's.

Right now, a roughly $14 million median looks more like the new level than the start of another rapid climb in check sizes.

Is the $20M–$50M digital health funding market finally coming back?

The $20 million to under-$50 million digital health funding segment had its strongest quarter of the period in Q2 2026, which is one of the better signs of broader funding conditions.

We counted 22 deals in that range during Q2, up from 12 in Q1. They represented 26.8% of all transactions and 34.6% of all capital. One quarter earlier, the same segment accounted for only 18.3% of funding.

This part of the market is useful to watch because it sits between small startup rounds and nine-figure winner rounds. A healthy flow of $20 million, $30 million and $40 million financings means more companies are finding capital to scale after the early stages.

Q2 gave us the first strong evidence of that happening in this five-quarter window. We still need to see whether the improvement carries into later quarters before treating it as a settled trend.

Quarter	$20M–<$50M deals	Deal share	Capital share	$100M+ capital share
Q2 2025	14	18.7%	25.0%	28.2%
Q3 2025	18	24.7%	23.8%	38.7%
Q4 2025	13	18.3%	18.8%	41.3%
Q1 2026	12	20.7%	18.3%	55.8%
Q2 2026	22	26.8%	34.6%	37.9%

Are new digital health startups still getting funded?

New digital health startups are still getting funded, and Q2 2026 was actually the strongest quarter for first financings in our period.

The path was messy. First financings represented 30.7% of deals in Q2 2025, fell to 17.8% in Q3, recovered to 28.2% in Q4 and slipped back to 20.7% in Q1 2026. Then Q2 produced 26 first financings, or 31.7% of all deals, both period highs.

The median first financing improved as well, from $3.58 million in Q1 to $5.40 million in Q2.

Follow-on companies still capture far more dollars. In Q1, for example, first financings generated only about $73 million while previously funded companies raised more than $2 billion. The gap is huge, but the startup pipeline itself has clearly remained active.

Are digital health investors moving toward older and later-stage companies?

Digital health investors briefly leaned much harder toward older, previously funded companies in Q1 2026, but that shift already softened in Q2.

The Q1 numbers line up neatly. Follow-ons reached almost 80% of deals, the median funded company was five years old, and the median follow-on company was six years old. Q1 was also the quarter with the heaviest megadeal concentration.

By Q2, the median company age had dropped back to four years, first financings had climbed to a period high, and the follow-on share had fallen to 68.3%.

Stage data leads to the same conclusion. Seed and Series A represented between 61% and 71% of transactions in every quarter we studied. Later stages generally stayed in the low-to-mid-20% range. Dollars can swing heavily toward Series B, C and later rounds, but early-stage companies still make up most of the actual deal count.

There is one caveat worth keeping visible: known-stage coverage fell to 82.9% in Q2 2026, compared with 89% or more in most earlier quarters. We therefore wouldn't read a few percentage points of stage movement too literally.

Is Clinical Workflow Software the hottest digital health funding category right now?

Clinical Workflow Software has the clearest sustained momentum in digital health funding today, with three straight quarters of rising deal share and fresh evidence that health systems are deploying these products at real scale.

Clinical Workflow's share of deals fell to 27.4% in Q3 2025, then climbed to 35.2% in Q4, 37.9% in Q1 2026 and 43.9% in Q2. The latest quarter in our dataset produced 36 financings worth $964 million, roughly half of all digital health capital we tracked.

The funding has followed commercial expansion. Abridge said it had passed 100 health-system deployments in early 2025, more than 150 enterprise systems by mid-2025, and more than 300 enterprise health systems representing over 250 million patients by August 2026. An expansion announced shortly afterward gave roughly 4,000 clinicians across WashU Medicine and BJC Health access to the platform.

Ambience Healthcare has been moving in the same direction. Its $243 million Series C in 2025 was the largest Q3 financing in our dataset. In 2026, Ambience reported an enterprise deployment at Houston Methodist with 80% utilization across specialties and a 40% reduction in documentation time. More recently, the company introduced contracts tying part of its economics to measurable outcomes rather than simple AI usage.

The workflow story is unusually convincing. Funding has increased across many companies while the products themselves have spread from note-taking into coding, revenue integrity, prior authorization, decision support and broader clinical operations.

Was the Virtual Care funding boom just a one-quarter spike?

The Virtual Care funding boom looks temporary so far: Q1 2026 brought much larger checks without a similar jump in deal count, and Q2 reversed most of the dollar surge.

Virtual Care generated $994 million in Q1, up from $373 million in Q4 2025. Yet deal count moved only from 18 to 19. The median round almost doubled from $12.5 million to $23.6 million.

One quarter later, Virtual Care funding fell to $355 million and its share of deals dropped from 32.8% to 20.7%.

The category still attracts plenty of financing, but Q1's spectacular dollar number came mainly from round size. We haven't seen the sustained increase in the number of funded companies that would make the boom look durable.

Which smaller digital health categories are actually gaining momentum?

Remote Monitoring has the cleanest early rebound among smaller digital health categories, while Patient Engagement is recovering and Care Navigation is losing breadth.

Remote Monitoring dropped from nine deals in both Q2 and Q3 2025 to five in Q4 and four in Q1 2026, then jumped to ten in Q2. The extra activity came from more financings rather than one giant round, which makes the rebound more interesting.

Patient Engagement also improved sharply from a weak Q1. Five deals generated only $24.5 million that quarter, with a $1.3 million median. Q2 produced nine deals and $113 million.

Care Navigation has been moving the other way. Deal count fell from 11 in Q2 2025 to four in each of the two latest quarters. Q1 still generated $262 million from those four financings, so a few large companies can keep the dollar total high even as the underlying pipeline narrows.

Health Data Infrastructure remains erratic. Four deals captured 19.1% of all market capital in Q4 2025; one quarter later, its capital share was only 2.2%.

Category	What we observed	Where it stands now
Clinical Workflow Software	Deal share rose for three straight quarters	Strongest sustained momentum
Virtual Care Platforms	Q1 funding jumped to $994M, then fell to $355M	Volatile
Health Data Infrastructure	Four Q4 deals captured 19.1% of market capital	Highly concentrated
Remote Monitoring	Deal count rose from 4 to 10 in Q2	Early recovery
Patient Engagement	Recovered from 5 deals and $24.5M to 9 deals and $113M	Improving
Care Navigation	Fell from 11 deals to 4 despite some large rounds	Losing breadth

Is Europe becoming a real digital health funding hub?

Europe is winning a larger share of digital health deals, but North America still dominates where the money goes.

Europe represented only 14.1% of transactions in Q4 2025. Its share then jumped to 27.6% in Q1 2026 and stayed high at 25.6% in Q2. There are clearly more European companies showing up in the funding market.

Check sizes remain much smaller. Europe's share of capital reached 21.5% in Q1 before falling to 10.0% in Q2. The median European financing that quarter was about $4.3 million, versus roughly $17 million in North America.

North America took 85.8% of Q2 capital from 67.1% of deals. Europe currently looks more competitive in startup formation and deal activity than in large-scale capital allocation.

Quarter	North America deal share	North America capital share	Europe deal share	Europe capital share
Q2 2025	68.0%	83.3%	22.7%	15.2%
Q3 2025	75.3%	88.3%	16.4%	10.2%
Q4 2025	73.2%	87.1%	14.1%	5.0%
Q1 2026	62.1%	75.4%	27.6%	21.5%
Q2 2026	67.1%	85.8%	25.6%	10.0%

Are the same investors taking over digital health funding?

Lead investors remain fairly spread out in digital health, while strategic investors have been coming in and out opportunistically rather than steadily taking more share.

Repeated lead activity is visible, but it is still thin. Lightspeed Venture Partners appeared as lead or co-lead on three deals in Q3 2025. In Q2 2026, General Catalyst and Andreessen Horowitz each appeared three times, while Menlo Ventures, Spark Capital and Index Ventures appeared twice.

No quarter in our analysis shows one or two firms leading a large enough share of transactions to suggest control of the market. Lead-investor disclosure is reasonably strong as well, ranging from roughly 83% to 92%, so the absence of obvious concentration is meaningful.

Strategic investors have been even less consistent. Strategic-backed deals represented 24.0% of transactions in Q2 2025, 24.7% in Q3, 19.7% in Q4 and 25.9% in Q1 2026 before falling to 15.9% in Q2.

Corporate participation today looks selective. Companies and strategic investors are showing up around specific products, stages and partnerships, especially in workflow software, rather than steadily taking a bigger slice of every quarter.

What actually changed from quarter to quarter in digital health funding?

Digital health funding moved through four distinct transitions: bigger checks without more deals, a fairly stable late-2025 market, a Q1 concentration shock and then a Q2 breadth rebound.

From Q2 to Q3 2025, deal count fell 2.7% while capital rose 14.6%. Funding below $50 million actually declined by about 7%, the median round rose from $10 million to $12 million, and Virtual Care deals jumped from 11 to 23 while Clinical Workflow dropped from 33 to 20. Investors were putting more dollars into roughly the same-sized market.

Q3 to Q4 was much quieter. Deal count slipped another 2.7%, total capital rose only 1.7%, and the median round reached $14 million. Clinical Workflow started recovering, first financings picked up again, and a handful of Health Data Infrastructure deals created an unusually large category total.

Then came the big break. From Q4 to Q1 2026, deals fell 18.3%, total capital still increased, and funding below $50 million dropped almost 24%. Six $100 million-plus rounds, more follow-ons and an older company mix pushed the quarter heavily toward established winners.

The next move went the other way. Q2 produced 41% more deals, almost 70% more sub-$50 million capital, a much stronger $20 million to $50 million segment and the highest first-financing share in the period.

That sequence is why the market feels so different now despite quarterly capital staying near $2 billion most of the time.

Why does our Q2 2026 digital health funding picture look different from other reports?

Our Q2 2026 digital health picture looks different because market definitions matter enormously: broader databases include company types and geographies that can be dominated by completely different kinds of megadeals.

We count 82 financings in Q2 2026, up 41% sequentially. CB Insights, looking at a broader global digital-health universe, reported deal activity falling 36% quarter over quarter and funding dropping 24% to $5.7 billion. It also found that 60% of funding went to only ten megadeals, with AI drug discovery playing a major role.

Rock Health uses a narrower U.S. startup definition and produces another set of totals again. Its research nevertheless agrees with several broader themes we see here: funding has become highly selective, AI companies command large rounds, workflow products have attracted a disproportionate amount of capital, and megadeals can badly distort headline growth.

Our analysis deliberately keeps one market definition consistent from quarter to quarter. That makes the internal changes more useful than trying to reconcile every external industry's headline number into a single total.

What is the funding trend actually telling us?

Digital health funding currently looks healthier beneath the surface than it did during Q1 2026. The quarter with the most capital was also the quarter with the fewest deals, the weakest funding below $50 million and the strongest dependence on nine-figure rounds.

Q2 moved money through the market much more broadly. We saw 82 financings, $1.124 billion of capital outside rounds above $50 million, 26 first financings and a sharp comeback in $20 million to $50 million deals. We would rather see that combination continue than another record quarter built mostly on megadeals.

The most durable category story is Clinical Workflow Software. The deal-share recovery has lasted three quarters, and the commercial picture has kept strengthening after our Q2 cutoff. Abridge and Ambience are now talking about hundreds of health-system deployments, wider workflow coverage and enterprise contracts linked more closely to outcomes.

The market still has a difficult middle. Early-stage companies account for most transactions, while huge sums periodically flow to a small set of established companies. Q2's expansion in mid-sized rounds is encouraging precisely because it creates a bridge between those two ends.

Several eye-catching trends have already faded. Virtual Care's Q1 surge, the temporary shift toward older companies, Q1's strategic-investor spike and the Health Data Infrastructure boom all weakened quickly. We give those changes much less weight than patterns that survived several quarters.

For now, total quarterly funding is probably the easiest metric to misread. Deal breadth, first financings, mid-sized rounds and capital outside megadeals tell us much more about whether digital health funding is genuinely opening up or simply rewarding a few winners.