Impact of COVID-19 on Characteristics and Funding of U.S. Healthcare Startups: Retrospective Review

Abstract

Background: The rise of telehealth and telemedicine during the pandemic allowed patients and providers to develop a sense of comfort with telehealth, which may have increased the demand for virtual-first care solutions with spillover effects into venture capital funding. Objective: We aimed to understand the size and type of digital health investments occurring in the prepandemic and pandemic periods. Methods: We examined health care companies founded from March 14, 2019, to March 14, 2020 (prepandemic) versus those founded from March 15, 2020, to March 14, 2022, after pandemic onset. Data were obtained from Crunchbase, a publicly available database that catalogs information about venture capital investments for companies. We also compared companies founded prepandemic to those founded after the first year of the pandemic (pandemic steady-state). We performed a Wilcoxon rank sum test to compare median funding amounts. We compared the 2 groups of companies according to the type of funding round raised, geography, health care subcategory, total amount of funding per year since founding, and number of founders. Results: There were 2714 and 2218 companies founded prepandemic and during the pandemic, respectively. The companies were similarly distributed across geographies in the prepandemic and pandemic periods (P=.46) with no significant differences in the number of founders (P=.32). There was a significant difference in total funding per year since founding between prepandemic and pandemic companies (US $10.8 million vs US $20.9 million; P