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Digital health accelerator ANDHealth has awarded up to $9 million in non-dilutive funding to five startups through its ANDHealth+ commercialisation program, selected from a record 90 applications that represent a 65 per cent increase over the previous four cohorts.
The funding is drawn from ANDHealth's $33 million allocation under the Medical Research Future Fund BioMedTech Incubator Program and will support Australis Scientific, Corcillum, Earflo, Kraken Coding and More Good Days as they advance digital and connected health products toward regulatory clearance and commercial scale.
However, the announcement coincides with the release of ANDHealth's FY2026 Industry Sentiment Survey, which paints a stark picture of the funding environment facing Australia's digital health sector.
The survey found 86 per cent of digital health SMEs now cite access to capital as a top-five challenge, up from 60 per cent in FY2023.
Some 92 per cent of respondents plan to raise growth capital in the next 12 months, with 46 per cent raising capital as a survival measure rather than to fund expansion.
One in five companies surveyed had laid off staff, and fewer than 10 per cent believe Australian investors have the knowledge required to support digital health ventures.
“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," says NDHealth CEO Bronwyn Le Grice.
“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 findings of the ANDHealth survey reflect those in 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.
It also called for stronger capital availability and government procurement settings to prioritise Australian research and development.
“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," says Le Grice.
“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.”
ANDHealth reports that its alumni companies have collectively raised $236 million, generated $97 million in new revenue and impacted 4.1 million patients as at 31 March 2026.
Since its incorporation in 2017, ANDHealth has "coalesced" more than $100 million in non-dilutive investment and support for Australian digital and connected health companies.
The non-dilutive nature of the funding is a critical differentiator for early-stage health technology companies navigating capital-constrained conditions.
Dr Kath Giles, founder of ANDHealth alumnus OncoRes Medical, says non-dilutive funding is essential for companies developing regulated health products, where the path to revenue is longer and more capital-intensive than in conventional software sectors.
“Capital constraints have become the defining challenge for digital and connected health companies, particularly in a more risk-averse global funding environment," says Giles.
“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.”
The domestic funding squeeze contrasts with renewed global investor appetite for digital health.
Globally, digital health startups raised US$4 billion ($6.2 billion) in the first quarter of 2026 across 110 deals, producing an average deal size of US$36.7 million - the highest since the fourth quarter of 2021.
“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," says Dr Elaine Stead, principal at Main Sequence Ventures.
"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, also points out that with most digital health founders being women it is no surprise that the top 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" says Yang.
“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.”
The five newly funded companies by ANDHealth span applications from scientific diagnostics and cardiac monitoring to hearing health, clinical coding and chronic disease self-management, reflecting the breadth of innovation emerging from Australian digital health ventures.
ANDHealth's program provides each company with up to 18 months of structured commercialisation support alongside the funding, covering regulatory strategy, reimbursement pathway design and market access planning - areas Le Grice identifies as persistent gaps in Australia's health innovation ecosystem.
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