Healthtech is exploding with M&As: major players like Walmart, CVS Health, Walgreens and other smaller entities are buying innovative technologies/startups to grow their own solutions with additional capabilities. There is a proliferation of healthtech and other healthcare-related startups (5,000+ of known entities around the world and counting) financed by venture capitals and other investment vehicles. It is no surprise that the U.S. and China lead the way.
Investments in digital health reached a record of $8.5 billion in funding in 2019. Some market analysts believe that the market is living in a bubble and decreasing M&A activity.
Accelerated by the COVID-19 crisis, the investments are down across early stage, VC, and corporate investments, so you need to work harder to get it. We agree that with the proliferation of startups around the world, the market, which was empty and easy to penetrate 3-5 years ago, is facing stiff competition now. However, if your business idea or venture is in the field related to COVID-19 or supports the new reality of working from home and/or social isolation, this is your time.
How do you attract investors or partners? BDMT Global clients frequently approach us with the challenge of finding them a buyout investor and making them more attractive to investors.
What we advise and build for entrepreneurs is a 6-12 month plan of making themselves more attractive to buyers. The plan usually consists of, among others, the following investments:
- Conducting a meaningful PR campaign and engaging media, publishers, podcast hosts, etc.
- Elevating your brand with thought leadership, local influencer endorsements, speaking ops, etc.
- Conducting local product market testing and adjustments.
- Aligning your company and your product with some existing technologies, ensuring compatibility, and therefore, interoperability.
It is challenging to find the right investor/buyer, but it is even more challenging to sell a company that has no market traction, presence, or customers while getting a decent price for it. As an entrepreneur, you have to show growth, traction, potential, and a vision of success to investors or buyers.
As you proceed, keep an open mind: focus on drumming up your core capabilities. Current use cases of your innovation may or may not be what buyers have in mind – keep your options open. In fact, most healthcare acquisitions take place in the core technology space, where buyers are seeking to add new technical capabilities and functionality to their existing products and solutions, rather than purchasing a fully-baked, complete product and slapping their logo on it.