Health tech investment trends: How are investors positioning for the future of health?

by | Mar 18, 2020 | Portfolio News

The Deloitte Center for Health Solutions recently provided a report full of insights into the quickly emerging health tech sector. For the report, the company interviewed 15 health technology investors and analyzed data from 2011 through 2019 from the Rock Health Digital Funding Database.

The years 2018 and 2019 saw rapid increases in investments into well-being and care delivery innovators, as well as innovators who were leveraging AI, machine learning, and the Internet of Things to enable their products and solutions.

According to Rock Health data, funding for health tech innovators was greater than $7.4 billion in 2019, and funding data shows that investors are still seeing the field as a profitable one for investment.

There’s a difference between the approaches taken by investor arms of health care corporations (CVCs) and traditional venture capital firms. CVCs often serve as advisors or counselors to early innovators, giving them a sounding board and laboratory. CVCs also tend not to be as ROI-focused as traditional VCs.

Deloitte advises health care incumbents to pay attention to these trends as they plan their strategies for the future. And as health tech investors and innovators continue to develop differentiated products and solutions for the health care market, they should consider where the industry is headed in the future.

Rock Health’s analysis confirms the challenges to success as a health care startup. Only 9 percent of innovators founded between 2010 and 2019 have been acquired or conducted IPOs.

Health tech innovators need several capabilities to succeed in the future of health: the right value proposition, the correct metrics to show it, and the right people (there are plenty of engineers and data scientists, but a shortage of people with soft skills such as sales experience and leadership).

Health tech innovators may also consider the benefits of working with CVCs early in the process. CVCs can act as advisors and counselors for innovators; they can provide the right access to the right resources to help understand problems from different perspectives; and they have patience as they’re looking for the change they want to bring in rather than the ROI.

Read the full article here.