Digital well being executives predict funding in 2024 will improve for corporations with platforms confirmed useful for healthcare suppliers and sufferers, whereas these not displaying worth can be compelled to dissolve.
Leaders additionally relayed to MobiHealthNews that mergers and acquisitions can be outstanding within the digital well being business, and genAI corporations could 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 compelled to dissolve.”
Amit Khanna, senior vice chairman and basic supervisor of well being at Salesforce
“Digital well being funding can be break up into two elements. The standard digital well being funding we noticed throughout and post-pandemic can be diminished drastically. That is in keeping with the macro situations we’re seeing available in the market–inflation, margin pressures and the upper rate of interest setting. However now, genAI has the ability to rework the business, particularly inside scientific and drug discovery, the place genAI may help work in direction of decreasing the documentation burden, decreasing the time for a trial and/or enhancing the effectivity of the trial. We imagine GenAI is the place we’ll see measured funding improve.
From a startup perspective, digital well being funding can be dramatically impacted and most probably diminished. This can be a constant theme for digital well being funding if the Federal Reserve retains elevating rates of interest. And even when giant 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 giant tech corporations will rise as much as the problem of fixing non-clinical use instances 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 preserve a excessive bar for brand spanking new investments in 2024, prioritizing corporations with a confirmed product-market match, strong margins and a transparent path to profitability. We are going to seemingly see a pivot in well being tech funding in 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 plenty 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 grasp what generally is a byzantine set of incentives and should have a enterprise mannequin that is smart and scales. We have now seen these cycles earlier than–a number of years of overinvestment with too many corporations getting funding, adopted by a significant pullback as many battle to succeed in 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 number 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 Health
“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 amass struggling corporations or ideally buying with inventory. Secondly, I would 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 choosing again up throughout the board. We’ll additionally seemingly see a robust early seed funding setting as traders will be capable to get investor-friendly phrases and supply a ample runway to get via this down market.”
Matthew Stoudt, cofounder and CEO of AppliedVR
“It is undoubtedly an attention-grabbing and difficult time for funding, however I believe 2024 will produce a light-weight on the finish of the tunnel. It is essential 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”), have been an anomaly. We at the moment are 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 a whole lot of dry powder that they should deploy and can proceed the flight to high quality.
Two, a whole lot of corporations took the laborious drugs on valuation, making it simpler for brand spanking new traders to come back 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 come back in. Personally, I’d like to be a savvy investor on this market.”
Ankit Gupta, CEO and founding father of Bicycle Health
“I learn the identical newspapers and articles that everybody else does, and I do suppose 2024 can be a tough yr to get funding for corporations which have but to search out product-market match. Nonetheless, 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.”
