Digital Health Funding Landscape Shifts as Clinical Workflow Startups Lead the Pack

Q3 Funding Surge Masks Underlying Market Complexities

Digital health funding has surged in the third quarter of 2025, with companies raising $3.5 billion across 107 deals, according to Rock Health's latest analysis. Year-to-date funding now stands at $9.9 billion, surpassing 2024's total through the third quarter. However, this apparent growth belies a more complex market landscape, characterized by the rise of unlabeled funding rounds and a shifting focus towards clinical workflow solutions.

Unlabeled Rounds Bridge Funding Gaps Amid Series B Struggles

The prevalence of unlabeled funding rounds has become a notable trend in the digital health sector. While decreasing from a high of 55% in Q4 2024 to 35% in 2025, these rounds are increasingly viewed as a permanent fixture in the industry's funding ecosystem. Rock Health analysts note, "What once looked like a stopgap has now become routine."

These unlabeled raises are filling the void left by a sharp decline in series B funding. Only 30 companies reported series B rounds through Q3 2025, compared to an average of 60 deals per year over the past four years. This shift has extended the median time between series A and B rounds to 27 months, up from 17 months in 2023-2024.

Becca Shmukler, partner at the Laerdal Million Lives Fund, highlights the growing disparity in the market: "There's a set of companies raising quickly at high valuations—and then there's everyone else. For those navigating the tougher path, the playbook is to find the moat and double down on clear differentiators."

Clinical Workflow and AI Solutions Dominate Funding Landscape

The most active segment of the market has been digital health solutions for workflow and infrastructure, particularly AI-driven technologies. Major deals in Q3 included Strive Health's $550 million series D, Abridge's $300 million series E, and Innovaccer's $275 million series F.

Clinical workflow companies have captured 42% of digital health funding since Q1 2025. These startups are expanding horizontally, acquiring companies or partnering with health systems to encompass more of the workflow process. For instance, some are adding prior authorization capabilities to ambient scribe platforms.

As startups innovate, incumbents like Epic, Oracle, and athenahealth are also enhancing their offerings. Rock Health's report suggests this competition is driving rapid standardization of novel technologies, while potentially creating opportunities for startups that can deliver clearer ROI or focus on overlooked workflows.