Access to healthcare has long been an issue in the U.S., but the sheer magnitude of the problem became apparent during the early days of the COVID-19 pandemic. Numerous digital health startups stepped in to address the plethora of issues, and for a few quarters, VCs flocked to back them.

Many of those startups are still focusing on the same things, like telehealth primary care or chat-based therapy, but there’s little visibility into the adoption and customer acquisition they’ve seen. It’s clear investors aren’t so sure either: VC investment in digital health dropped to just $3.4 billion in Q1 2023 from a peak of $15.1 billion in Q2 2021, according to CB Insights.

I’m not saying the sector is dead in the water by any means, but the founders still finding success are doing far more than merely building off their peers. A recent fundraise illustrates clearly what VCs are finding attractive in the sector, and the types of startups that may find traction in today’s climate.

On Wednesday, digital health startup Caraway said it had raised an oversubscribed $16.8 million Series A round led by Maveron. The startup looks to offer 24/7 access to physical and mental health resources targeted at Gen Z customers, and its integrated healthcare service has doctors and nurses who are always available for text chats and calls. It also offers tools that help its customers maintain and respond to mental and physical health issues in between appointments or when professionals are offline. The app is licensed to operate in 10 states.

When founder Lori Evans Bernstein started the company in January 2022, she had just left her previous startup, HealthReveal, which used AI to help people manage chronic illnesses. Around the time, Evans Bernstein realized how hard it could be for people to get treatments when talking with her niece: After 15 weeks of fruitlessly waiting for appointments to treat a reaction to an unknown allergy, her niece simply gave up and hoped it wouldn’t come back.

“The more I peeled the onion, the more I couldn’t believe the lack of access to care and the experience they had to go through to get the care they needed,” Evans Bernstein said. That story inspired her to start Caraway, aiming to do away with those barriers to accessing healthcare.

Deal Dive: Caraway shows what else digital health can do by Rebecca Szkutak originally published on TechCrunch