With so many potential entrants looking to cash in on the success of digital wellness, searching for a venture capital company that has the right connections and experience is more relevant than ever
While the priorities for healthcare companies and venture capital firms may have changed during the Covid-19 outbreak, by raising $6.3 billion in the first half of the year, digital health startups are currently breaking venture capital records.
It is more critical than ever, with so many new entrants, to search for a venture capital company that has the right relationships and experience. It is possible to narrow down the process of assessing a VC firm to five words: calm, vision, balance, collaboration, and performance.
Many are rushing to invest in health-tech enterprises, some for the first time, because companies are increasingly rethinking their priorities for consumer and business technology because of changing demands and financial constraints. As a consequence, digital health is already booming, although that will not always be the case.
In a bull or bear market, startups need a venture partner who will stay calm. Now more than ever, to identify market dynamics and make informed decisions, it is important for investors to focus on the data at their disposal from their own analysis as well as from their networks. In times such as these, “going with your gut” is much more of a risk.
Through pitching direct-to-consumer healthcare solutions, several startups enter the digital health space, just as they would pitch DTC products for other verticals. Although this can work for certain companies, an established investment capitalist can help entrepreneurs find the right business customers and eventually sell them to them.
Payers, providers, brokers, employers, unions, and government agencies all provide entrepreneurs with an opportunity to sell to an existing company with a devoted user base. Each pitch, however has subtle variations, whether it’s ROI expectations or the clinical and financial risk threshold. Venture capitalists identify these complexities and direct entrepreneurs to consumers whose needs suit their vision best.
A digital health startup should pursue equilibrium in two main forms from a venture partner.
A balanced team is the first one. Investment bankers should not be the only ones to provide a digital health start-up with advice. A venture partner on its leadership team of scientists, data analysts, and operations experts may provide a wide range of support, introduce entrepreneurs to a more diverse professional network, and vet opportunities from various angles. Moreover, it is less likely that a balanced team would be siloed-partners work together and make consensus choices.
A healthy portfolio is the second. Not a single trillion-dollar market, but several billion-dollar markets are also represented as healthcare. If an investment firm is only concentrated on one of those markets, the vision of the tunnel can suffer. A organisation that has invested in a number of these industries has a well-rounded view of what is happening in healthcare and where the greatest opportunities for innovation can be found, such as customer involvement, care management, medical devices, and core IT infrastructure.
A hands-off approach to investment is adopted by several venture capital companies. But a real venture partner is just that, a partner with an eye to long-term growth in providing experience, developing ties, and building a pipeline.
Partnership allows entrepreneurs to close the gaps. Many startups have excellent technologies, but they need assistance in implementing their vision. This may mean growing the senior management team, introducing a governance system, carrying out a financial or regulatory audit, naming an investor or any of the above to the Board of Directors. From the ground up, it’s difficult to create a successful company, and it takes time and effort, but this degree of collaboration helps a startup to succeed. It also demonstrates that when the going gets rough, a venture partner will not bail out.
Helping a startup raise money early on is one thing for a venture fund. The real accomplishment comes from subsequent funding rounds and exits-results that can only come from a long-standing partner. Read more from source