SAN FRANCISCO - Digital health refers to the use of digital technologies to improve health outcomes, and encompasses a wide range of products and services. These include mobile apps and wearables that help patients manage their own care, remote monitoring systems that allow clinicians to track patient data from afar, virtual reality tools for pain management and rehabilitation, artificial intelligence (AI) algorithms that analyze medical records for the early detection of disease and readmission, and telemedicine programs that provide remote consultation with doctors via video chat or phone call (and now even text messages!).

Before looking at this year’s industry investment and startup trends, a review of events in 2022 is useful. The year got off to a reasonable start in for investments in digital health, but then a sharp decline ensued that persisted throughout the rest of the year. The flow and sizes of deals equated to just over USD15 billion dollars, with over 575 deals throughout the entire year. Large investments for companies in the late and early stages of funding declined by 60 percent and 33 percent, respectively, compared to 2021.

Meanwhile, before going under in March 2023 and subsequently becoming a subsidiary of First Citizens Bank, Silicon Valley Bank's report on digital health investments in 2022 revealed a marked decrease in software and AI ventures that are transforming healthcare across the board. According to the report, venture capital investments decreased in almost all sectors in healthcare, with a sharp decline in new investments and more structured term sheets in 2022’s fourth quarter.

Market healthcare exits also plummeted in 2022, with many plans being halted after a massive listing craze in 2021 that featured many healthtech and device companies. For listed health tech companies, last year was not a great one for their stock performance, and investors pushed for more merger and acquisiti