Investors once drawn to quick-growth stories are now cautious, and the companies that need patient capital most say they are being left behind.
Unlike consumer health platforms such as Eucalyptus and Heidi Health, many digital and connected health ventures must fund years of clinical validation before earning a dollar. That long runway requires specialist investors willing to back evidence-heavy business models rather than pure software plays.
ANDHealth, which operates Australia’s largest dedicated digital health accelerator, has now quantified the funding strain through its FY2026 Industry Sentiment Survey. The data shows a sector struggling to bridge the gap between lab bench and commercial launch.
According to the survey, 86% of digital and connected health small and medium enterprises now list access to capital as a top five challenge, up sharply from 60% in 2023. More than half of respondents say funding is not just a concern but their single biggest headache, outranking regulatory issues and talent.
The pressure is forcing difficult decisions. About 46% of companies currently raising money say they are doing so simply to keep the lights on rather than to expand.
A further 21% have already cut staff, which indicates that the capital drought is translating into job losses and shelved product roadmaps.
If the trend continues, Australia’s digital health ecosystem could lose many of its most ambitious, clinically focused startups to markets with deeper specialised capital pools. ANDHealth’s findings indicate that without investors comfortable with regulated pathways and delayed revenue, only lighter-touch unregulated offerings may thrive locally.
That tilt may reshape which kinds of health innovations are built in Australia and which are pushed offshore in search of funding and friendlier growth conditions.
