The decline in first quarter digital health investment was a notable shift from the steadily rising levels since 2010.
That’s probably the most striking development in StartUp Health’s latest report which otherwise highlighted some pretty consistent trends. In the the first three months of 2015, big data attracted the most investment (led by Health Catalyst, which raised $70 million). Plus, more venture capitalists are moving into the sector – at least 20 made two digital health investments.
But the second half of the report, which looks at digital health subsectors and deals relevant to the graying market – ie. almost every aspect of consumer health – was a promotional, business-intelligence look at what’s happening with the constituents of one of its sponsors, AARP. Reading the report, I wonder if it really provides enough firepower for innovators to help that 50+ population.
The 50+ section looks at nine areas AARP defined two years ago as part of its Health Innovation Frontiers report. StartUp Health makes its strongest point in the report when it highlights the meager investments in companies dedicated to seniors – 4 percent or $13 million – compared with the 900 million invested across 88 deals. Disappointingly, the recipient(s ) of the 4 percent remain anonymous here.
In a phone interview with Unity Stoakes, a co-founder of StartUp Health, he said it was important to show the opportunities that entrepreneurs are missing by neglecting the significant senior population. “The problem is entrepreneurs are designing services with only one audience in mind,” he said. “I think there’s a huge opportunity when you start to see how product design is impacted…when you think of who the users are.
He added: “Too often if you have a group of entrepreneurs who aren’t 50 or older themselves, they may be building the product for themselves but not for the market who will be using it.”
It’s a fair point but the problem with developing health technology for such an enormous population is the diversity of their needs, interests, lifestyles and how technology fits into their lives. If the goal is to spur the development of products that address specific needs of seniors, what’s needed is a better understanding of how these solutions match their lifestyles. What tools would be of most use to them?
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
I have no doubt that some seniors are interested in the latest technology and would even use it, given the option. But given the increasingly diverse product development underway in digital health, the nine areas of opportunity seem bland and pointless.
What’s really needed is a report that gives entrepreneurs a more detailed understanding of the range of specific gaps within each of the nine categories that reflect the perspectives of seniors and care givers.
Going back to the decline in Q1 investment, ($900 million this year compared with $1.5 billion last year) Stoakes said the lack of deals of more than $100 million announced during the first quarter had a major impact as these deals have historically driven the funding numbers up. But he noted that just because none were announced, doesn’t necessarily mean $100 million deals weren’t closed.”
He added: “Coming off a hot funding environment in 2014, this year is off to a slower start. Although less capital was invested in Q1 2015 than in Q1 2014, we believe this is due to an increase in investor focus and a sign of a maturing market emphasizing more developed companies that move beyond offering “features” to delivering outcomes and/or reducing costs.”
