Things Digital Health Investors Look for in a Tight Funding Environment

The need to secure investment for your digital health company in an eve-tight, hyper-competitive funding environment has never been more important.

Despite the challenges posed by climbing interest rates, there are still opportunities for industry-leading organizations to attract venture capital. 

In fact, since interest rates started climbing, digital health companies have faced a tighter VC market, with funding dropping from a 2021 high of $29.1 billion to just $10.7 in 2023.

So, what exactly are digital health investors looking for in such a competitive space?

First up is the total addressable market (TAM). Investors want to know: Are you solving a big problem that people care about? Take gut health, for example. Over the past few years, it's become a mainstream concern, presenting a significant market opportunity for companies committed to making GI care more accessible.

When pitching to investors, be sure to educate them about the size of your addressable market and the potential impact of your solution.

Next, let's talk about strong unit economics and product-market fit. These are essential metrics that digital health investors will scrutinize closely. Can you create your product profitably on a per-unit basis? And perhaps more importantly, does the market actually want and need what you're offering?

It's crucial to demonstrate both profitability and scalability while showing evidence of a solid product-market fit.

Of course, none of these matters without a world-class team behind you. Investors want to see that you can build and scale a team capable of executing your vision. Look for domain expertise and experience in growing similar organizations when assembling your team.

And remember, building a great team isn't just about securing funding—it's about setting yourself up for long-term success.

Last but not least, you need a compelling plan for the future. Investors want a big vision paired with a concrete execution plan. Present your five-year projections, detailing how you'll achieve your goals and highlighting past performance to add credibility.

Additionally, consider outlining structured optionality—potential business segments and product enhancements that expand your TAM and support future digital health growth.

In today's ever-increasing tight funding environment, digital health investors are looking for companies that can demonstrate a clear understanding of their market, solid unit economics, a talented team, and a compelling plan for growth.

So, by focusing on these key indicators, you can position your company for success and attract the investment you need to thrive. Reach out to us and we can help you on this journey.