Digital therapeutic deal-making and venture investment continued up and to the right in the first half of 2021 – far up and to the right. 

On the venture side, Rock Health reported that all digital health companies (including those that don’t have patient-facing applications like R&D and practice management and workflow tools which I omit from this analysis) raised $14.7B in the first half of 2021. For digital therapeutics, that number was $4.45B. Quarter-over-quarter, venture investment in the digital therapeutic space grew by 40 percent.

On the deal making side, we saw the number of deals increase by 56 percent q-o-q in the second quarter for a total of 53 deals in Q2. For the first half of 2021 there was a total of 87 deals. And just to demonstrate how rapidly this subsector is growing, I compared Q2 of 2021 to Q2 2020 and came up with an impressive 230 percent increase year-over-year. 

Here’s how the M&A deals break down:

R&D partnerships jumped significantly in the second quarter with a total of 12 transactions. That is significantly more than we’ve seen in previous quarter. Development and commercialization licensing deals also saw a big jump – perhaps reflective of the fact that more companies are maturing to a point they are ready to go to market. 

Acquisitions remained strong in the second quarter while reverse mergers remained on pace with Q1 at three. The reverse mergers had an average value of $363M, down a bit from the average deal take for companies in Q1 which was $441M. The reverse mergers for Q2 included:

  • Prescription digital therapeutics company, Pear Therapeutics netted $401M as a result of its reverse merger
  • Cognitive behavioral therapy company, Babylon Health’s deal brought in $575M as a result of the offering, and 
  • Better Therapeutics, also developing cognitive behavioral therapies, netted $113M from the deal.

While neuro, oncology, cancer and diabetes deals dominated deal-making in 2020, the therapeutic areas targeted by digital therapeutic companies are becoming more diverse as the technology matures. In the second quarter there were six deals for pulmonary indications, and one each to treat dental, genitourinary and musculoskeletal conditions. 

On the venture capital side, VC investment in digital therapeutics for Q2 2021 totaled $2.6 billion. That brings the total for the first half of the year to $4.45B – 78 percent more than the value of all of the investments made in the space in 2020. 

The number of deals jumped to 59 in the second quarter, an 84 percent increase over the prior quarter. The brings the total number of digital therapeutic investments in the first half of 2021 to 91, already doubling the number of investments made in the prior year. 

There were ten deals for $100 million or more in the second quarter (up from five in Q1) including:

  • Medically Home Group, $100m in an unspecified series
  • Oura Health, $100m in a Series C
  • Akili International, $110m in a Series D
  • Vida Health, $100m in a Series D
  • Cerebral Inc., $126m in a Series B
  • Medopad, $130m in a Series C
  • PathAI, $165 in a Series C
  • Lyra Health $200m in an unspecified series
  • Cue Health, $235m in an unspecified series
  • Kry International, $300m in a Series D

By number of deals, Q2 saw a significant increase in the number of Series B rounds. Early-stage deals also saw an increase, albeit more modest, while the number of late-stage rounds was either stagnant or down. 

The average value of early-stage rounds was just over $10M in Q2, down from $17M in the first quarter. However, the average value of Series B rounds jumped 126 percent to $43.5M in the second quarter. A bumper crop of mega-deals helped drive up the average value of late-stage rounds in the second quarter. 


With so much capital coming into a relatively nascent area like digital therapeutics, one’s antennae might start to twitch for fear of a bubble. Silicon Valley Bank reported in May that US healthcare venture fundraising year-to-date had hit $20.8B. That’s well in excess of the $16.8B raised in all of 2020, which itself was a big jump from the mere $10.7B raised in all of 2019. 

Looks like we might be in for a frothy ride.