In 2023, venture funding plummeted in the digital health world, but it provided lessons for what should follow in 2024, according to a Rock Health post published Jan. 8.
Here are three key takeaways from the report:
- More startups sought extension raises, hoping to gather more capital in order to compete. This can be helpful for younger startups, which haven't yet had time to establish themselves.
- In 2023, 44% of fundraising deals were unlabeled, which means that the start-ups furnishing the deals were likely not meeting benchmarks for their next scheduled, labeled raise.
- Last year, it is speculated that a large number of deals were "silent", meaning that they took place among pre-existing venture capital investors.
Here are three predictions:
- In 2024, labeled raises will make a comeback. With more start-ups finding their footing, this year will see more initiatives meeting the benchmarks they need to advertise labeled raises. More of these raises equates to more funding and a more solid future.
- This year, the number of mergers and acquisitions will greatly increase compared to last year. The poor financial performance of some start-ups in 2023 will provide those companies looking to acquire start-ups with a good opportunity to do so.
- The public market for digital health companies will rearrange itself, as many companies in 2023 were noncompliant with listing standards for the NASDAQ or NYSE.