Survey: Digital health investments will rely on ROI and clinical validation in 2023

Return on investment and clinical validation will be the most significant indicators for success for digital health companies in 2023, according to a survey by investment firm GSR Ventures.

The survey, which included responses from more than 50 investors, found that more than 94% deemed ROI to be “important” or “very important” to a digital health company’s success, and 79% said clinical evidence and trials were top indicators. 

Investors anticipate digital health funding in 2023 will be between $15 billion and $25 billion. They also expect valuations will decrease by around 20% for seed stage funding. Series A and Series B+ valuations could dip between 20% and 40%. 

The prevalence of provider shortages and burnout will provide the most opportunity for startups, according to 48.1% of those surveyed. Nearly 27% said changing reimbursement models was the biggest challenge, followed by 11.5% who cited interoperability.

More than half of investors said oncology was the brightest clinical area for startups, followed by mental health at 37.3%, neurology at 27.5% and primary care at 23.5%.

“While digital health investors still believe valuations will drop in 2023, most still believe the overall ecosystem is quite healthy and investment levels will be comparable to the past few years at $15 to 25 billion,” Dr. Justin Norden, a partner with GSR Ventures, said in a statement.

“Further, it’s great to see investors place increasing importance on clinical validation which is going to be essential as startups go after these areas of huge opportunity such as oncology and provider burnout.”


Digital health funding was rocky in 2022. According to Rock Health‘s report, startups raised $2.2 billion across 125 deals in the third quarter this year, making Q3 the lowest-funded quarter by dollars raised since Q4 2019. 

During a panel discussion at HLTH 2022, investors relayed the importance of companies refocusing their business models in anticipation of decreased funding in 2023. 

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