In today’s digital world, setting your foot in business is not that simple due to the continuously raising competition. You’ll rule the market only if you have original, path-breaking ideas. For the past few years, healthcare start ups are progressing faster as many venture capitalist firms are investing in healthcare industry. The selection and investment process of VC firms can be divided into three separate stages, namely:
- Identifying the Trend
- Choosing an Idea
- Analyzing the Team
Once all the above-mentioned criteria are ticked off, the venture capitalist firm starts the actual investment procedure. As healthcare sector is relatively calm and certain, devoid of major fluctuations in terms of buyer inclination. VC firms are developing their interest in this field. Furthermore, healthcare startups are the perfect amalgamation of technology and biology, and can be treated as a progressive industry bringing forth new fields and astounding innovations to the fore.
Why Are Venture Capitalists in the U.S. Investing Heavily in Healthcare Startups?
Market experts reported that in the first three quarters of 2017, four out of five of the largest investments in the U.S. Midwest involved healthcare and healthcare tech startups. As a matter of fact, if these four deals are clubbed together the total investment amounts to $870 million, with a staggering collective valuation of $7.1 billion.
With more investment such as those taking place all over the country, it has been observed that investing in healthcare and healthcare tech startups is gradually outpacing other popular markets. However, the question still remains as to why are venture capitalists so keen on devoting their assets in the healthcare industry. The below-discussed factors are an attempt to unravel the possible reasons for healthcare startups being a current favorite of venture capitalists such as Adventus VC.
- 360 Degree Impact: The positive impact of healthcare and healthcare tech startups is not restricted to the patients and doctors alone. Other stakeholders of this market such as medical institutions, healthcare providers, administrators, etc. are also affected by the progress made by this industry. This is one of the key driving factors for investing in such startups. Moreover, leaders and thinkers from other industries also come together from time to time to present innovative solutions for the challenges the healthcare startup industry faces on numerous occasions.
- Long-Term Trend: Focusing on good health is a concept as old as time. Health has been, and always will be, our first priority. The healthcare startup market seldom loses credibility or experiences slump. There are basically two reasons that have made this industry flourish over the years. First, the aged segment of the global population is in constant need of all kinds of healthcare and ancillary support. Second, the middle class, which constitutes the majority of our socio-economic strata, has ample money to spend in the healthcare segment. These two reasons are the major force behind making healthcare startup a long-term trend.
- Health and Tech: The convergence of health and technological advancement has played a key role in bringing in essential VC dollars to the healthcare and healthcare tech startups. In the modern world, most of the healthcare technology depends upon data science and artificial intelligence to function. In 2015, 100 healthcare startups were recognized which functioned with the help of AI. These startups came up in the field of medical research, medical diagnostics and imaging, mental health, patient data and risk analytics, drug discovery, and many more.
For instance, people are increasingly depending on smartphone apps associated with medical care, to monitor their health. These apps could provide a wide range of services including pill identifying service, medical consultation, online doctor’s appointment, and more. Such innovative ideas are responsible for bringing in large-scale VC investments.
- Slump in Genetic Sequencing Cost: In the past few years, the cost of genetic sequencing has seen a steep decline from $100 million in 2001 to $1,000 in today’s price. This sharp decline has been termed as the boost behind the currently ongoing digital revolution. With the genetic sequencing cost doing downhill, it has now become possible and easy to have a detailed look at the genes of an individual and the impact it presents in their personal lives. Low cost of genetic sequencing and genomics studies has opened up a wide range of possibilities in the healthcare startup sector, which has attracted venture capital firms such as Adventus VC to invest in this industry.
- Helping the Global Population: While all business ventures, including healthcare, are started with the sole vision of earning profit out of the business, it cannot be denied that at the end of the day medical and healthcare ventures are considered a noble profession. Apart from profit, the final results are always intended to help people and the society as a whole. Thus, venture capitalists invest in such startups to promote goodwill and a better image of itself to the public, government, and other investors.
Investments in healthcare startups are slowly becoming a popular trend ushering in positive change for the global population. Venture capitalist firms and healthcare startups are collaborating thanks to the phenomenal growth of this particular industry. With medicine and technology coming together, the industry is witnessing a steady growth in the number of consumers, who are controlling and monitoring their own health, outside the sphere of hospital-based care.