ºÚÁÏÕýÄÜÁ¿

Digital health funding, particularly in artificial intelligence (AI) companies, surged 47% in Q1 over the previous quarter, even as deal volume slipped 9%, according to a recent .

This underscores a broader venture capital trend: Investors are making fewer bets but writing larger checks.

Investments reached the highest level since mid-2022 despite contraction in contract deal volume. The divergence can be attributed to a more selective funding environment, with capital concentrating around established companies, particularly those leveraging AI for specialized health care applications, the report explains.

3 Takeaways from the Report

1 | Megarounds are back, and AI is claiming most of them.

Funding from megarounds ($100 million-plus deals) rose to $2.5 billion across 11 deals in Q1, capturing 46% of all digital health funding. AI-focused startups secured eight of the 11 megarounds, signaling where investors expect outsized returns.

2 | AI companies are capturing more than half of digital health funding.

AI startups raised $3.2 billion in Q1, or 60% of all digital funding, the report states — up from 41% in 2024. Top-funded segments included AI-derived small molecule drug discovery and clinical documentation tools, underscoring the shift toward targeted, high-impact applications.

3 | Unicorn creation rebounds, driven by AI-native platforms.

Digital health saw six new unicorns in Q1 (companies with more than $1 billion in value) — more than in all of 2024. With half of these investments focused on AI related to provider workflows, the data suggest that investor conviction is highest where AI directly supports care delivery.