It is essential to look for a venture capital firm with the right relationships and expertise with many new participants who hope to succeed in digital health. The priorities for healthcare organizations and venture capital firms are shifted at the Covid-19 outbreak.
To understand the process, the VC firm has classified into five steps; they are Calm, Vision, Balance, Partnership, and Results. Let’s discuss each step in detail.
Many people are excited to invest in health tech companies. For the first time, some companies think about their customers and enterprise technology priorities due to the shifting needs and financial constraints. Today, digital health has a significant role, but that won’t always remain the same.
Most startup companies need a venture partner who will be calm in a bull or bear market. Now, the investors need to lean on the data at their clearance. A critical part of their research to their networks and to know all the market trends and make informed decisions. Even going with your guts is also risky at some times.
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Many startups rush to the digital health space by diving directly into consumer healthcare solutions. Also, they will dive into DTC products for the other verticals too. It works for only some startups, like an experienced venture partner who helps founders identify and sell ultimately to the right customers.
All the startups (payers, providers, brokers, unions, and government agencies) have an opportunity to sell to an established company with a dedicated user base. Each pitch has different shades like ROI expectations or the threshold for clinical and financial risk. Venture partners can understand these shades and push startups to the customers for those who need the best match for their vision.
A digital health startups can pitch from a venture partner based on two key factors. One is a balanced team. Investment bankers are not the only ones who should provide advice to digital health startups. A venture partner of its leadership team offers a breadth of assistance, expose founders to more professionals.
And the other one is a balanced portfolio. Healthcare is considered as many billion-dollar markets, not as a single trillion-dollar market. It suffers from tunnel vision if the investment firm only focuses on any one of the markets. An investment is invested in various markets like consumer engagement, medical devices, care management, and IT infrastructure. All these have a clear view of what’s happening in the healthcare organization and where to find innovation opportunities.
Some venture capital firms are approaching to invest. But, a dedicated venture partner is the one who provides expertise, creates connections, and builds pipelines for long term growth.
The partnership helps founders to fill the gap that occurred. Many startups have the idea, knowledge, and technology to start, but they need help to execute and make their vision real. With the augment of the senior management team, it is possible by implementing a specific plan, financial audit, appointing an investor to the board of directors.
It is tough to make a startup business into a successful business and takes more time and effort.
The one thing that the venture firm helps a startup is to raise capital early. The real success comes from a long-lasting partnership. Below are the examples of the success of startups backed by the venture fund.
- LetsGetChecked, an expanded business model that works with the companies to provide Covid-19 tests to the workers.
- DermTech, a skin cancer testing Startup Company, announced a $65 million private placement in March 2020.
- Welbe Health, an innovative elder care provider who closed numerous financing and has grown its business successfully.
- Redox, an EMR interoperability pioneer, has closed three successful financing rounds at a higher valuation.
Digital health startups should work with a venture capital firm in these changing markets that looks beyond short-term gains to get long term success. First, focus on a calm demeanor, a clear vision, a balanced approach, and commitment to the partner. And all these strategies are not only for digital health startups but also for the companies who need to succeed with the vast experience and network venture firms provide.