Digital well being executives predict funding in 2024 will improve for corporations with platforms confirmed useful for healthcare suppliers and sufferers, whereas these not exhibiting worth can be pressured to dissolve.
Leaders additionally relayed to Our blogNews that mergers and acquisitions can be distinguished within the digital well being trade, and genAI corporations might take heart stage when garnering funding.
Russell Glass, CEO of Headspace
“Within the coming years, we’ll see considerably elevated charges of mergers and acquisitions in digital well being. With a lot competitors, extra restricted capital availability and numerous single-solution distributors, corporations can be required to mix efforts or be pressured to dissolve.”
Amit Khanna, senior vp and basic supervisor of well being at Salesforce
“Digital well being funding can be cut up into two elements. The standard digital well being funding we noticed throughout and post-pandemic can be diminished drastically. That is in step with the macro circumstances we’re seeing out there–inflation, margin pressures and the upper rate of interest setting. However now, genAI has the ability to remodel the trade, particularly inside medical and drug discovery, the place genAI might help work in the direction of decreasing the documentation burden, lowering the time for a trial and/or bettering the effectivity of the trial. We consider GenAI is the place we’ll see measured funding improve.
From a startup perspective, digital well being funding can be dramatically impacted and almost definitely diminished. This can be a constant theme for digital well being funding if the Federal Reserve retains elevating rates of interest. And even when massive enterprises proceed to make investments in genAI, enterprise capital funding for most of these investments can be tight.
Lastly, I predict that new AI-based startups funded by massive tech corporations will rise as much as the problem of fixing non-clinical use circumstances with non-clinical/automation workflows (e.g,. co-pilot emails) and help with life sciences analysis and improvement.”
Kourosh Davarpanah, CEO and cofounder of Inato
“Enterprise capital and personal fairness will keep a excessive bar for brand spanking new investments in 2024, prioritizing corporations with a confirmed product-market match, sturdy margins and a transparent path to profitability. We’ll seemingly see a pivot in well being tech funding in the direction of the biopharma sub-sector. Immature enterprise fashions, slower gross sales cycles and tight end-market budgets have just lately impacted digital well being corporations. In the meantime, life science corporations are doubling down on investments to modernize drug improvement, making biopharma tech a relatively extra enticing funding alternative.”
Ann Bilyew, SVP, well being and group basic supervisor, WebMD Ignite
“We nonetheless have a methods to go in washing out what was arguably overinvestment in questionable fashions in 2020 to 2022–whether or not via enterprise, PE and even SPACs. Funding was down significantly this yr which meant that many corporations couldn’t proceed to fund operations with investor capital. There have been some main flameouts like Babylon, Pear Therapeutics, Well being IQ and lots of different much less seen failures.
The first query in healthcare tech is all the time, ‘who’s going to pay you for it and why?’ You actually have to know what is usually a byzantine set of incentives and need to have a enterprise mannequin that is smart and scales. We’ve got seen these cycles earlier than–a number of years of overinvestment with too many corporations getting funding, adopted by a major pullback as many wrestle to achieve scale and profitability in markets with entrenched performs and lengthy gross sales cycles. That is adopted by an extended interval of diminished capital outlay. A couple of corporations will rise to the highest and create sustainable companies, however most will promote early or shut down for lack of funding.”
Neil Patel, head of recent ventures at Redesign Well being
“Continued flight to high quality with digital well being corporations which have stayed afloat and even grown throughout this time can be acquisitive, both elevating capital to accumulate struggling corporations or ideally buying with inventory. Secondly, I might anticipate a continuation of insider rounds for Collection A+ corporations, both flat or down, via the primary half of the yr, with the second half of the yr selecting again up throughout the board. We’ll additionally seemingly see a powerful early seed funding setting as traders will have the ability to get investor-friendly phrases and supply a enough runway to get via this down market.”
Matthew Stoudt, cofounder and CEO of AppliedVR
“It is undoubtedly an fascinating and difficult time for funding, however I feel 2024 will produce a lightweight on the finish of the tunnel. It is necessary to keep in mind that these early years of the pandemic, the place funding and valuations skyrocketed (what I known as the “orgy of capital”), had been an anomaly. We are actually seeing a return to some fundamentals and a flight to high quality.
A number of elements will drive traders again into the market. One, traders have loads of dry powder that they should deploy and can proceed the flight to high quality.
Two, loads of corporations took the exhausting medication on valuation, making it simpler for brand spanking new traders to return in.
Third, the market will proceed to rationalize itself. These corporations with clear pathways to profitability (and clear reimbursement pathways inside digital well being) will thrive, whereas weaker corporations will both get acquired or fail, making it simpler for traders to return in. Personally, I’d like to be a savvy investor on this market.”
Ankit Gupta, CEO and founding father of Bicycle Well being
“I learn the identical newspapers and articles that everybody else does, and I do assume 2024 can be a tough yr to get funding for corporations which have but to search out product-market match. Nevertheless, sensible traders purchase in down markets. Digital well being startups which have demonstrated the power to develop sustainably and have a path to profitability ought to nonetheless be at a premium.”
