How the 2022 funding atmosphere affected digital well being startups

MobiHealthNews spoke with a number of digital well being stakeholders about 2022’s funding atmosphere and the way it affected digital well being startups.

Investments in 2022 decreased drastically in comparison with the swells of economic capital raised in 2021, and that lack of funding pressured firms to rethink their enterprise fashions.

Learn digital well being execs’ insights on how this yr’s decreased funding pressured layoffs, enterprise mannequin redesigns and an elevated concentrate on firm worth.

Dr. Jon Bloom, cofounder and CEO of Podimetrics 

“The funding atmosphere for digital well being startups in 2022 was, effectively, tough. As an business, we went from being a beacon of progressive hope amid the pandemic to an unintentional harbinger of bloated valuations and a destroyer of shareholder worth.” 

Dr. Jennifer Schneider, cofounder and CEO of Homeward

“The present market dynamics have pressured entrepreneurs to focus clearly on what really issues for the enterprise and the business extra broadly. Whereas the latest widespread layoffs have actually been unlucky, it has additionally prompted a reset within the expertise market, offering alternatives for brand new companies to rent world-class expertise that won’t have been beforehand accessible.”

Dan Trigub, cofounder and CEO of MedArrive

“This yr’s funding atmosphere shortly separated the ‘good’ from the ‘unhealthy,’ which means companies constructed with poor unit economics on day one won’t survive. It additionally pressured firms to discover different funding options like enterprise debt or taking down rounds. Founders and government groups leaned into being extra diligent with capital and deliberate for the worst.”

Corey McCann, president and CEO of Pear Therapeutics

“We had been all pressured to adapt shortly. Spend to develop was changed by develop to spend. We have all been pressured to concentrate on scaling our most core enterprise.” 

Myoung Cha, chief technique officer and president of home-based care at Carbon Health

“It has been brutal for mid-to-late-stage digital well being startups, and we now have seen quite a lot of it play out with restructurings, layoffs, and even bankruptcies and shutdowns. There’s nonetheless much more to come back in 2023 because the funding atmosphere is unlikely to enhance materially subsequent yr. “

Russell Glass, CEO of Headspace Health

“The slowing of digital well being funding this yr accelerated merger and acquisition exercise, and this pattern will proceed in 2023. The psychological well being house, particularly, skilled an enormous inflow of entrepreneurs constructing digital psychological well being options amid the pandemic. It’s inspiring to see a lot consideration and energy being put into fixing the psychological well being disaster, however there’s now excess of the market can maintain. We’ll proceed to see these founders come collectively by consolidation to raise and increase their choices to stay aggressive.” 

Christopher Lis, managing director of world healthcare intelligence at J.D. Power

“The drop in funding appears to be extra in response to macroeconomic forces in the marketplace general as an alternative of disinterest in digital/digital well being ventures. Whereas there was a drop in general funding, the variety of deals being made only fell by about 14%. Many traders and organizations wish to make the healthcare house extra superior and environment friendly, and that can proceed within the years forward.”

Vijay Ravindran, CEO of Floreo

“This yr’s funding atmosphere is pushing startups to boost what they want, settle for valuations in decrease ranges and extra urgently take into consideration income streams forward of regulatory approvals and payments such because the prescription digital therapeutics legislation on the Hill. Corporations should assume it will likely be more durable to boost in 2023 and that fundamentals round market match will likely be extra extremely prized.”