The HealthTech sector is upping its external communications and search for investment.
The recently added “Health Conf” stage at this year’s Web Summit was definitely one of the most popular ones. But even having its own stage didn’t seem enough for a topic with roots and ambitions in so many different sub-categories, and the unique communications challenges that come with it.
Between active learning uses in drug discovery and neural interface technology taking over the DeepTech stage, personalised nutrition and wellbeing apps owning a growing share of consumer tech conversations, CRISPR innovation showing up in venture and start-up showcases across the event, and major corporates demoing their latest R&D in healthcare and biotech hardware throughout all three days, HealthTech was ubiquitous at the world’s largest technology event.
And this en masse representation reflects the direction of travel for tech investment: this year is on pace to set a new annual record for healthcare funding, with start-ups in the space seeing over 3,400 deals so far in 2019 (CBInsights).
As HealthTech start-ups and scale-ups invest more in events like Web Summit, particular attention was paid to discussions about what investors look for when choosing what companies to put their money in, and most importantly, what these companies should focus on when looking at the next stage of their growth.
Navigating hype vs clinical proof and hardware gimmicks vs scalable solutions, a panel including Fusion Fund, AV8 Ventures and Ping An Global Voyager Fund gave useful insights into how medtech – and HealthTech - start-ups can differentiate and gain credibility in an industry getting increasingly crowded with products and promises.
We’ve selected our top three learnings from this discussion and conversations from our week at the Lisbon Altice Arena:
Localisation of strategy is key
VCs see Europe as a huge pool of talent for machine learning and data analytics, with local entrepreneurs getting a unique opportunity to leverage that pool to create cutting edge teams and companies. Support from academia and government is also praised. But one key concern in a such a complex regulatory environment as healthcare is the ability to understand local regulations and the specificities of each health system.
Driving efficiencies in healthcare and increasing positive patient outcomes cannot be achieved by a one-size-fit-all technology, approach or team. VC s and partners expect from start-ups who pitch them to prove they are intimately familiar with the local health system they are present/will be launching in, and they will pay particular attention to those who show smart choices for local partnerships on their path to international scale.
It’s not just about what VCs want, it’s about what’s right for the product
VCs spend on average 10-20 minutes deciding which companies to invest in – so they consider it the start-ups’ job to do the background research on whether or not a partnership makes sense, if they’re a right fit, and if it’s the right time.
Some investors evoked the fact that sometimes, particularly in MedTech and Healthtech where the timelines for commercialisation and returns are very different to that of other tech subsectors, start-ups made the choice to go to VCs too early. Growth targets end up distracting them from perfecting their technology, which requires their undivided attention for longer, in order to deliver on its lifesaving promises.
VCs want to know about ARR and path to scale - but even they recognise that the pressure to match ambitious financial expectations on both levels doesn’t always yield the best results. Particularly in an industry where timelines for success are often counted in years, not months.
Different stages call for different tactics - it’s about defining the top priority
Raising money when you don’t have a clear plan on how you are going to spend it or obsessing about fundraising when what you really need is better visibility and credibility with partners and talent are common pitfalls of start-ups across sectors. Web Summit provided a very interesting overview of the different needs and objectives of HealthTech start-ups relating to their stage in that regard.
Basel based Medtech startup Nutrix, which won the 2019 PITCH competition, doesn’t have any issues convincing that its mission is compelling or that it’s got a well-connected team – their pitch was tight and inspiring. But their key business challenge, as explained by Maria Hanh, CEO and founder, was that they needed money to develop the prototype product itself.
For Babylon Health, Europe’s leading AI doctor, who raised $550 million just this summer, and whose work with the NHS is a huge success, it seems to be more about scaling successfully to other continents while continuing to invest in new technical capabilities to answer different markets’ needs as they grow, as mentioned by CPO Gary Mudie.
Butterfly Networks, on the other hand, is a well-funded scale-up whose co-founder, Nevada Sanchez, gave a breath-taking demo of its hand-held ultrasound scanner, showing how it can revolutionise access to medical imaging in remote areas of developing countries. To them, the top priorities seemed to be gaining exposure in those communities that can use their technology at scale to save lives, and navigating the B2B /B2C spectrum.
All three of these businesses approach fundraising in a very different way and investment is only part of the solution for each of them. That’s why nailing the key frontier to reach the next stage of growth – whether it is clinical proof, team credibility, hardware improvement, local market penetration or team expansion – helps understand exactly what type of investors can help, and if now is even the right time to look for them.