During this session, digital health investors and finance experts discussed the trends they are watching in today’s market. The group also shared ideas on how companies can stand out from their competitors in the bid for limited investor dollars, and the role of venture capital and venture capital-backed companies in solving today’s healthcare challenges.
- Bill Evans, Founder and General Partner, Rock Health
- Anna Fagin, Principal, Town Hall Ventures
- Adam Heller, Managing Director, Healthcare Investment Banking, Ziegler Healthcare Investment Banking
- Fazeela Abdul Rashid, Partner, Revolution Growth
- Moderator: Dale Van Demark, Partner, McDermott Will & Emery
Top takeaways included:
- The COVID-19 pandemic accelerated the adoption of digital health, and while digital healthcare delivery is here to stay, some correction in the market is expected. While the healthcare system was moving towards digital health due to technological advances, the COVID-19 pandemic accelerated patients’ and providers’ wiliness to utilize technology. This increased utilization has provided tangible evidence that digital health solutions have real efficacy, clinical quality, and can help lower costs and bring better, more efficient outcomes. At the same time, the COVID-19 pandemic distorted the market, as providers had no choice but to supply care virtually, and there was abundant capital for startups. As the pandemic unwinds and the market tightens, the panelists expect to see correction in the market.
- In this constrained capital market, successful digital health companies are those that can demonstrate they are self-sustaining, able to be a long-term solution and can add value. Investment funds have been funneled towards operating and managing portfolio companies, with fewer new investments as a result. With this in mind, new entrepreneurs in the digital health ecosystem need to demonstrate that they can make a core, clear difference, adding true efficiency to the healthcare system and demonstrating where their value resides.
- Digital health tools can address inequities in the health care system—but not every solution addressing inequity is venture-backable. There is a tremendous opportunity for digital health tools to address inequity if founders and investors are willing to ask hard questions and commit to addressing inequity as part of their goals. Returns can be equipped by mission, rather than acting in conflict with the mission. However, not every business that can affect outcomes is designed for scale and is venture-backable. The panelists agreed that it is okay that not everything is venture-backable—there are many ways to fund a business and many issues in the healthcare system that require different stakeholders.
- For ventures that are looking for capital right now, focus on finding the right partners and demonstrating value. The panelists recognized that it is a difficult time for ventures that are looking for funding, but urged companies not to give up if they have something unique and visionary. Even in this market, the panelists agreed that finding the right partner is key—the relationship must work in both directions and align with the venture’s vision. The panelists also advised that successful ventures that will be those that can achieve early, quick wins to demonstrate that their business model has value.