ROI and Clinical Validation Will Determine Digital Health Startups’ Success in 2023, Investors Say

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.

By Katie Adams | MedCity News

Image Credit: oatawa / Getty Images

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About Peter Coffaro 458 Articles
A growth-driven and strategic executive, Peter Coffaro commands more than 25 years of progressive management success within the medical device industry. Recognized by the World Journal of Orthopedics, Exponential Healthtech, and MedReps.com as one of the top medical sales influencers in the industry; he has 10 years of combined sales management experience and has held positions as a Director, General Manager, Distributor, and Vice President. Peter has worked for some of the top orthopedic companies in the world - Zimmer, DePuy, and Stryker. He is also the founder of OrthoFeed: a popular blog that covers digital orthopedic news and emerging medical technologies. Peter is a three-time Hall of Fame award winner at Johnson and Johnson and has an extensive background in organizational development, business development, sales management, digital marketing, and professional education. Peter holds a B.S. degree in Biology and Chemistry from Northern Illinois University.

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