Digital health is booming, but here’s what it needs to avoid a bust

The global healthcare market is undergoing a long-overdue digital transformation, and investment is pouring in from all over the world.

In 2024, the market attracted $25.1 billion globally, reflecting a 5.5% year-on-year increase across thousands of deals. From startups to industry giants, tech investment is changing the face of healthcare. 

But with change comes challenge. And in the inertia-heavy, regulation-rich healthcare landscape, the only way to maintain momentum is through global collaboration.

The digital health boom is global, with a regional home 

A recent report from CB Insights revealed that digital health startups across the globe raised $5 billion during the first quarter of this year. This huge investment reflects a trend for fewer, higher-quality deals.

“In the first quarter of 2025, the average digital health funding deal was $6.4 million.”

Europe, APAC, MENA , and the Americas have all attracted substantial investments in key areas, including oncology, medical diagnostics, and of course, Artificial Intelligence ( AI).

AI-driven innovations accounted for nearly half of all digital health advancements globally, with US AI startups securing 60% of all digital health funding in Q1.

This global momentum finds fertile ground in the UAE, a nation proactively positioning itself as the leader in healthcare innovation through ambitious national agendas. The commitment is clear, with the combined digital health market of Saudi Arabia and the UAE expected to reach $4 billion by 2026.

“This reflects the UAE’s dedication to fostering a vibrant ecosystem for digital health, attracting talent and capital.”

AI leads investment in digital health

Companies with regulatory milestones and provably scalable AI platforms are seeing the most success.

“Top-funded segments include AI-derived small molecule drug discovery and clinical documentation tools.”

Among these companies, startups have arguably the biggest opportunity in digital health. The sector saw 6 new unicorns in Q1’25 — more than in all of 2024. With half focused on AI for provider workflows, investor confidence is highest where AI directly supports care delivery.

How to avoid a bust

Despite this optimistic outlook, the path to impactful digital health adoption has some hurdles. 

Fewer, but higher-quality deals suggest that investors are grappling with identifying truly scalable and clinically validated solutions. This may lead to investors hesitating over new opportunities – which is a problem for an industry that’s already slow to adopt new tech.

“As health challenges continue to surge from ageing populations the need for scalable and effective patient care has never been greater.”

Only startups with provable ROI and strong clinical validations can secure these high-quality deals. They also frequently struggle to navigate complex regulatory pathways, secure meaningful pilot opportunities, and connect with strategic capital and buyers.

Investors and startups need more frequent interaction with clinicians and policymakers to fully understand the opportunities and real-world impact of digital health.

WHX Tech, the upcoming healthcare technology event in Dubai, is designed to address these very challenges by bringing together sellers, buyers, investors, and startups from around the world.

The event provides a vital nexus for discovering validated innovations, fostering direct engagement between solution providers and healthcare decision-makers, and connecting promising ventures with discerning investors.

In doing so, WHX Tech creates the environment for informed collaboration, helping drive the digital transformation of healthcare in the UAE and around the world.