ANDHealth issues $9M in digital health funding, reveals 'alarming' funding gap strangling $45B industry

Bronwyn Le Grice, founder and chief executive of ANDHealth

MELBOURNE, AUSTRALIA, May 25, 2026 /EINPresswire.com/ -- Australia’s digital and connected health commercialisation engine ANDHealth has released new data revealing a significant gap between burgeoning funding demand and dwindling funding availability in a sector predicted to surpass A$45 billion by 2033 and poised to transform the nation's health and care system.

According to ANDHealth’s FY2026 Industry Sentiment Survey, 92 percent of digital and connected health SMEs plan to raise growth capital in the next 12 months, and 90 percent want to expand geographically in the same timeframe (up from 49 percent in FY2023).

The ANDHealth+ funding and acceleration program also attracted a record 65 percent increase in applications compared to the previous four cohorts, in the program’s most competitive round in its 9-year history.

Ninety startups fought for a share in up to $9 million of funding that was this week awarded to startups Australis Scientific (NSW), Corcillum (SA), Earflo (WA), Kraken Coding (NSW but founded in NT) and More Good Days (VIC).

In Australia, digital health is also one of the fastest-growing health technology segments, growing at a 55 percent compound annual growth rate since 2018 and doubling in size in the past three years.

Globally, the industry is projected to reach US$946 billion by 2030.

Yet despite this high growth potential and clear demand for capital, 86 percent of SMEs in the Australian sector cited “access to capital” as one of their top five key challenges, up 26 percentage points from 60 percent in ANDHealth’s FY2023 survey.

The majority (51 percent) also now ranked access to capital as their single biggest challenge, highlighting the level of funding urgency now facing the industry.

Specialist capital and policy settings fuelling bottleneck

In searching for a solution, 80 percent called for digital and connected health-specific investment funds to attract more capital into the sector, with 39 percent expressing uncertainty about whether domestic investors could support scaling companies.

Participants also called for reforms to public sector procurement to prioritise local innovation and accelerate growth (74 percent), and pointed to a need for a dedicated health technology assessment and reimbursement framework (66 percent).

The findings mirror the federal government’s Ambitious Australia: Strategic Examination of R&D (SERD) report, which identified “health and medical” innovation and “technology” as two of the six key national innovation priorities, calling for stronger capital availability and government procurement settings to prioritise Australian research and development.

Leadership diversity improving as sector matures

Positively, the survey also found signs of improving leadership diversity across the sector.

Sixty percent of companies reported one or more female founders (up from 47 percent in FY2022), and 39 percent reported a female CEO or managing director (up from 33 percent in FY2022).

However, the survey also found that women-led companies are typically smaller, have raised less median capital, and report lower confidence in local investor support than their male-led peers.

Companies preserving runway over growth

Capital scarcity was also forcing many companies into defensive decisions, rather than growth strategies, despite the sector’s maturity.

Forty-six percent were raising capital as a survival measure, 21 percent had laid off staff, and 17 percent had paused market expansion plans. Less than 10 percent of companies surveyed believe Australian investors have the knowledge and skills to support them.

The proportion of companies affected by economic conditions when raising capital has more than doubled since FY2022, rising from 32 percent to 66 percent, while 49 percent said the same conditions were affecting their ability to secure government funding.

Why this matters for patients

ANDHealth warned the capital bottleneck is a broader health system issue, because digital and connected health technologies can expand access to care, support remote patient monitoring, reduce pressure on hospitals, and improve health and care delivery for rural and regional patients.

ANDHealth is now calling for a coordinated national response, including dedicated digital health investment funds, greater mobilisation of institutional capital, local procurement reforms, and a fit-for-purpose reimbursement framework for digital and connected health technologies.

Bronwyn Le Grice, CEO and Managing Director of ANDHealth, said: “This is an alarming signal for a sector that has the ability to transform Australia’s health and care sector to drive patient outcomes and economic benefits.
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“Australia has the foundations of an internationally competitive digital and connected health sector, but too many companies are being held back by the settings that determine whether local innovation can reach patients and scale.

“The ‘if not, why not’ procurement principle recommended in the SERD report is one example of the reform needed to give Australian-developed technologies a fair opportunity to be adopted locally.

“But procurement is only one part of the bottleneck. Companies also need access to capital that understands the complex pathway from clinical evidence to commercial scale, and reimbursement frameworks that reflect how health and care delivery is changing.”

Dr Elaine Stead, Principal at Main Sequence Ventures, said: “When 86 percent of founders identify capital access as a top-five barrier, that’s a structural failure in how we’ve built our investment ecosystem. It’s not a new observation that Australia lags the world, with VC accounting for only 0.16 percent of Australia’s GDP - but it represents real companies that stall, real breakthroughs that don’t reach patients, and real talent that eventually finds a better-funded home somewhere else.

“What concerns me more is the second finding - the lack of dedicated digital health investors. The opportunity in Australian digital health is genuine and significant. The question is whether we’re willing to invest in it with conviction before that opportunity moves offshore.”

Rachel Yang, Partner at impact investment fund, Giant Leap, said: “It is no coincidence that the majority of digital health founders are women, nor that the number one challenge they face is access to capital. Women are the majority of healthcare users, the majority of the healthcare workforce, they drive most household healthcare decisions, and represent over half the population.

“The capital gap they face is not unique to digital health. It reflects a broader pattern across the startup ecosystem, where investment decision-making remains predominantly male. In a sector where the founder base skews heavily female, that structural dynamic has a compounding effect.”

Dr Kath Giles, CEO and Managing Director of cancer imaging company OncoRes Medical, said: “Capital constraints have become the defining challenge for digital and connected health companies, particularly in a more risk-averse global funding environment.

“In this context, non-dilutive funding, such as programs like ANDHealth+ and the R&D Tax Incentive, has become increasingly critical, both as a source of capital and a lever for attracting private investment.

“Importantly, it enhances the business case for companies to remain Australian-based, enabling them to progress key milestones locally without being forced to seek offshore capital prematurely.”

Ann Murphy
Third Hemisphere
andhealth@thirdhemisphere.agency

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