Bill Evans’ Post

#Digitalhealth is not dead. Yet. Long live digital health! After the encouraging Rock Health Capital report on 1H 2024 investment, more positive signals from investors in this article. TL; DR: After pulling back from overcorrecting for earlier COVID era excesses, "most compelling investment environment we’ve seen in over a decade” says David Kereiakes, Windham Venture Partners Capital is available for high quality assets (with premium multiples), and much less so for B+ assets - Ian Wijaya, Lazard We're in an "anoint the winners" phase of the market, with investors flocking towards those firms with strong unit economics and sustainable customer acquisition and revenue generation. Best categories? Reducing administrative burden, reduce health system costs/redundancies. prevent revenue leakage (especially driven by AI) are all thriving. Which suggests (to me) that firms focused on actual clinical breakthroughs may continue to have a difficult time raising capital on attractive terms. What does your crystal ball say about 2H 2024? Drop a comment below :) https://lnkd.in/gmcaHbDe

At last, the digital health market seems to be settling into a steady investment pace. Investors are still waiting to see whether this can turn the sector’s tepid rate of exit activity around. The sector’s fundraising numbers for the first half of 2024 show that the investment environment seems to be normalizing for the first time since the Covid-19 pandemic. During the first half of this year, U.S. digital health startups raked in $5.7 billion across 266 deals, according to a recent report from Rock Health. The sector’s year-end venture capital fundraising totals for 2019 and 2023 were $8.2 billion and $10.7 billion, respectively. See what some of the investors, including David Kereiakes, has to say about digital health's funding environment. 🔗in comments. #digitalhealth #investment #venturecapital

Have you seen what VCs have said about demonstrating value? In their article "How to scale a health tech business to $100 million ARR and beyond," Bessemer Venture Partners say, among other things: “We encourage portfolio companies to invest early in measuring clinical and financial ROI…clear proof of these metrics requires time and dollars invested, but will pay future dividends.” (read their full article here: https://buff.ly/3AIPto4 ) A separate article describing a survey by GSR Ventures reports that: “ROI was deemed ‘important’ or ‘very important’ to the success of digital health companies by more than 94% of investor respondents...” (full article here: https://buff.ly/47866Wq ) It is clear from these sources that a credible, quantifiable demonstration of value is extremely important to investors in health tech!!

Have you seen what VCs have said about demonstrating value? In their article "How to scale a health tech business to $100 million ARR and beyond," Bessemer Venture Partners say, among other things: “We encourage portfolio companies to invest early in measuring clinical and financial ROI…clear proof of these metrics requires time and dollars invested, but will pay future dividends.” (read their full article here: https://buff.ly/3AIPto4 ) A separate article describing a survey by GSR Ventures reports that: “ROI was deemed ‘important’ or ‘very important’ to the success of digital health companies by more than 94% of investor respondents...” (full article here: https://buff.ly/47866Wq ) It is clear from these sources that a credible, quantifiable demonstration of value is extremely important to investors in health tech!!

Have you seen what VCs have said about demonstrating value? In their article "How to scale a health tech business to $100 million ARR and beyond," Bessemer Venture Partners say, among other things: “We encourage portfolio companies to invest early in measuring clinical and financial ROI…clear proof of these metrics requires time and dollars invested, but will pay future dividends.” (read their full article here: https://buff.ly/3AIPto4 ) A separate article describing a survey by GSR Ventures reports that: “ROI was deemed ‘important’ or ‘very important’ to the success of digital health companies by more than 94% of investor respondents...” (full article here: https://buff.ly/47866Wq ) It is clear from these sources that a credible, quantifiable demonstration of value is extremely important to investors in health tech!!

Black Book Highlights What’s Hot and What’s Not for 2025, VC and PE Healthcare IT Investments Survey Research #venturecapital #privateequity #healthcareit https://lnkd.in/e44hZPUc

In a recent Modern Healthcare article, Brock E.W. Turner discusses the challenges facing #digitalhealth companies preparing for IPOs in 2025. LRVHealth Managing Partner Keith J. Figlioli shares his insights on how improving macroeconomic conditions could influence the push for these companies to go public.    Read the full article here: https://lnkd.in/eu9XzYKE

In today's tight funding environment, digital health investors are prioritising key factors that signal success. From innovative technology to strong market traction, investors are seeking promising ventures poised to make a meaningful impact in healthcare. Understanding these criteria is crucial for entrepreneurs navigating the competitive landscape of digital health funding. By focusing on product-market fit, scalability, and a clear value proposition, startups can position themselves for investment and drive positive change in the industry. Check out this article to learn more about the 4 things digital health investors look for in a tight funding environment and share your feedback in the comments below. #DigitalHealth #HealthTech #InvestmentOpportunity 💰🚀🏥

We released our H1 2024 funding analysis a couple of days ago, and there's plenty to sift through. Have a look! https://lnkd.in/gVB4hEiq There's a fair bit we didn't get to, however. Here's a few market data points that summarize the moment we're in: 1. It's 2018 again Deal volume and average deal size are the same as six years ago. Notably, Rock Health ended 2018 and 2019 with predictions of a market pullback... that seemingly never arrived. 2. Extension rounds are (still) in vogue In Q2 2024, fully 1/3 of all deals appear to be extension rounds - down from 55% of all deals in Q4 2023. To put this in perspective, for the whole of 2019 _just 4% of all deals_ met the criteria to be counted as "extensions" in our data set. (Yes. You read that right.) 3. Around 1/4 of extension rounds *appear* to be extensions of extensions Caveat: This is tricky to track precisely (because deal terms are not generally made public). Methodologically, "extension of extension" is inferred in cases where we tracked SEC data that shows a company raising two rounds in a row that have no designated round label (e.g., "Series Seed" or "Series F"). With that caveat out of the way, it's significant to note that "extensions of extensions" wasn't really a thing in 2023 (because extensions in 2023 mostly followed Seed or Series A rounds). By extension (ahem), I predict that capital market appetite for extensions will begin to run dry by the end of 2024 (which has implications for VC funding in 2025). 4. VCs aren't raising much money from LPs right now - and big generalist funds are raising the bulk of it. Per Pitchbook, just two funds (a16z and GC) raised almost half (44%) of all VC dollars so far in 2024 - twice the proportion "large funds" typically attract. Specialist funds (like Rock Health Capital) are perhaps that much more "special." 😅 And we're likewise incredibly fortunate to have closed our most recent fund in Q3 last year.

In the US Who are the most impactful early-stage Digital Health Investors? Galen Growth | Insights You Can Trust's Blog "Most Impactful Digital Health Early-Stage Investors in the US Reduce Funding Stress for Their Portfolio Ventures" sheds insight. Of the 3,207 early-stage investors actively engaged in the US Digital Health landscape, 914 (28.5%) have consistently demonstrated a repetitive pattern of investment in this sector. These committed investors include leading venture capital firms and corporate venture arms, which have played a pivotal role in shaping the Digital Health ecosystem. The US leads the global Digital Health ecosystem, with $117.6 billion invested over the past five years. Investors like General Catalyst, Andreessen Horowitz, Gaingels, Lux Capital, and Alumni Ventures are among those most impactful early-stage investors in the US. These investors have played a crucial role in supporting Digital Health ventures and enabling healthcare innovation. https://lnkd.in/gQ6UH7HX #digitalhealth #digitalhealthinnovation #digitalhealthinvestment #digitalhealthecosystem #healthcare #healthcareinnovation