Why the Best-Funded Digital Health Companies Don’t Sound Like Everyone Else

Here we go y'all! CB Insights released its State of Digital Health 2025 report, a dense, data-heavy snapshot of where capital, acquisitions, and conviction are actually flowing across the industry. Most reactions focused on the obvious headlines: funding is back up, mega-rounds are back, AI is everywherrrrre. But buried beneath the charts is a far more interesting story for anyone working in marketing, design, or product: fewer companies are getting funded, fewer are getting acquired, and the ones that are winning all share something deceptively simple. They explain themselves clearly. What looks like a funding slowdown is really a clarity filter, and in digital health, that filter is getting ruthless.

‍

1. First up: Capital is concentrating around clarity, not novelty

Funding rose 19% year over year, but deal count fell. Fewer companies are getting more money. That is not a taste for risk. It's a preference for companies that can clearly explain what they do, why it works, and why it matters now.

For marketing and design teams, this means:

• Vibes✨ are no longer enough.
• "AI-powered" without a sharply articulated use case is table stakes at best.
• Investors are rewarding products whose value can be seen quickly, often inside a real workflow.

The companies attracting large rounds tend to have tight product narratives that connect directly to outcomes: clinical documentation that saves hours, evidence platforms that reduce uncertainty, drug discovery tools that compress timelines.

2. AI has moved from headline to infrastructure

Nearly a quarter of M&A activity targeted AI companies, and 100% of new unicorns 🦄 leverage AI in their core product. This is the most important reframing for marketing teams.

AI is no longer the story.
--> AI is the plumbing.

Winning companies are not selling "AI healthcare platforms." They are selling:

• Faster diagnoses
• Cleaner clinical decisions
• Fewer manual steps
• More confident humans

The design implication? Interfaces are getting calmer, not flashier. The best products hide the intelligence and foreground the decision, the action, or the saved time.

3. Mid-stage dominance changes how brands must behave

Mid-stage deals reached an all-time high share of volume. Investors are betting on companies that already have traction, customers, and operational complexity.

This creates a tension many teams feel but rarely name:

• You can no longer sound like an early-stage visionary.
• You are not yet allowed to sound like an enterprise incumbent.

Marketing and design now have to do the HARDEST job in SaaS: translate maturity without killing momentum.

This is where brand systems, not just messaging, matter. Visual identity, information hierarchy, tone, and product UX all need to say: "We're proven, but still hungry." 🦛

4. M&A favors companies with narrative coherence

M&A rebounded strongly, especially in AI and telehealth. Acquirers are not just buying technology. They are buying understandable assets.

A product that:

• Has a clear category definition
• Fits cleanly into an existing workflow
• Comes with a crisp story about its role

… is simply easier to integrate, sell internally, and defend strategically.

Design debt and narrative sprawl are now acquisition risks.

5. Small teams, enormous valuations

Some of the highest valuations per employee belong to companies with fewer than 100 people. That is not accidental. These teams tend to:

• Be opinionated about scope
• Invest early in product clarity
• Use design as a force multiplier rather than decoration

This reinforces a quiet truth: good design is not about polish, it's about leverage.

‍

Dear reader: If you’re ready to sharpen how your product is understood, we’d love to help! You can start with our Friction Finder, or just set up time to talk.