Digital health investors say generative AI, oncology care and the challenges posed by clinician shortages are transforming their startup funding strategies and investment outlooks for the healthcare industry, according to the results of an online survey from GSR Ventures. Startup company valuation expectations among backers, however, are significantly lower than in 2022.
GSR Ventures, an early-stage digital health investment firm with over $3.5 billion in assets under management, invited its investment community to participate in an online poll in September 2023, garnering responses from more than 40 participants from some of the world’s leading firms. The online poll asked investors about topics ranging from the volume and valuations of deals this year compared to 2022 as well as industry opportunities and the sectors of most and least opportunity for startups.
“Digital health investors are a small, but highly influential community driving the innovations that will transform how care is delivered and managed, and blockbuster new therapies that are discovered,” said Sunny Kumar, MD, a partner at GSR Ventures. “That means investors hold a prescient view of the changes we will see in healthcare in the coming years, making the results of our poll informative for the industry, as well as startup founders designing solutions driving these transformations.”
Notable poll results include:
- Nearly two-thirds (62.5%) of investors expect to make the same number or more tech investments for the remainder of 2023 compared to 2022.
- Most investor valuation expectations for seed stage, Series A and Series B companies decreased by 20% or more compared to 2022 – with the vast majority expecting lower valuations to continue for the remainder of 2023.
- Nearly 9 out of 10 (87%) said generative AI solutions have influenced their investment strategies.
- The oncology specialty holds the most promise for startups, according to 55% of investors, followed by cardiovascular care (37.5%). Nearly one-third (31%) of investors say ophthalmology offers the least opportunity.
- Half of investors (50%) said the provider shortage and burnout crisis presents the biggest problem-solving opportunity for startup companies, followed by changing reimbursement models (26.3%).
“We expected that generative AI innovations had impacted the digital health investment community and our poll results certainly confirmed it, with nearly 1 out of 5 respondents attesting that it is ‘significantly’ influencing their strategy,” said Justin Norden, MD, MBA, a partner at GSR Ventures and adjunct professor at Stanford Medicine where he teaches courses on the subject to medical students. “It will be exciting to witness over the remainder of 2023 into 2024 the many new generative AI healthcare startups that enter the market. Hopefully, investor enthusiasm drives greater adoption of such technologies across an industry that would massively benefit from greater automation and efficiency.”
To review the full survey results, click HERE.
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