Going into 2023, investors think the abilities to demonstrate ROI and clinical validation will be the most important factors determining digital health companies’ success, according to a new report. While the ROI factor is a given, clinical validation “is the best signal of patient value and historically has been under-captured in digital health,” said Sunny Kumar, a partner at GSR Ventures.
Going into 2023, investors think the abilities to demonstrate a measurable return on investment and prove technology’s clinical validation will be the most important factors determining the success of digital health companies, according to a recent report from GSR Ventures.
For the report, GSR gathered information from more than 50 digital health venture capital investors. A full 94% of respondents said that ROI was “important” or “very important” to company success, and 79% said the same for clinical evidence and trials.
The ability to demonstrate ROI has always been important for digital health startups, but it has become even more crucial amid a changing economic landscape in which investors are guarding their capital more closely.
In the third quarter of this year, digital health companies garnered the lowest quarterly funding total in the past 11 quarters. The sector raised $4.6 billion in the third quarter — this represented a 36% quarter-over-quarter drop and a 72% drop from its all-time high of $16.8 billion in the second quarter of 2021.
While the ROI factor is a given, it’s a bit more compelling that investors cited clinical validation as a major driver of company success in 2023, according to Sunny Kumar, a partner at GSR. In a statement, he said clinical validation “is the best signal of patient value and historically has been under-captured in digital health.”
Ian Wijaya, managing director at investment bank Lazard, told MedCity News in October that at the pace investment has been going this year, it’s doubtful that 2023’s digital health fundraising amount will reach even half of last year’s $29.2 billion total.