ARTICLE SUMMARY:
Digital health funding soared in 2021, at the height of the pandemic, but a year later began a precipitous decline. Now, with valuations way down and investors harder to come by some digital health start-ups are struggling. We take a deep dive into the current funding environment, and what is on the radar for 2024 and beyond, with the help of Janke Dittmer of Gilde Healthcare, Karl Hess of Outcome Capital, Paul Grand of MedTech Innovator, and Jonathan Norris of HSBC Innovation Banking.
Coming off a pandemic-driven (and in hindsight, clearly frothy) high in 2021, venture funding for digital health start-ups continued to slide in 2023, reaching its lowest level since 2019, and the fallout is creating upheaval in the industry. With valuation resets well underway, a handful of high-profile company failures, and investors now harder to come by, many digital health start-ups are facing a difficult year ahead. Those with a strong value proposition and a solid business plan, with coverage and reimbursement in place and/or a clear pathway to profitability, are in the best position to weather the storm.
But it’s not all doom and gloom. Demand for digital solutions in healthcare remains strong and opportunities still abound. And with a renewed emphasis on the fundamentals, the industry could come out of this reset stronger than ever.
To understand how we got here and where we might be headed, it’s necessary to take a step back. We did so with the help of four thought leaders well versed in the healthcare and digital health funding space: Janke Dittmer, general partner and head of European investments for Gilde Healthcare, one of Europe’s most active investors in medical devices and healthtech; Karl Hess, managing director with Outcome Capital, a life sciences and healthcare advisory and investment banking firm, and leader of Outcome’s healthtech and digital health practices; Paul Grand, founder and CEO of MedTech Innovator, the world’s largest life sciences accelerator; and Jonathan Norris, managing director of HSBC Innovation Banking, who tracks healthcare venture investing in the US and Europe.
