5 tips for healthcare startups fundraising in a down market
In fundraising, a founder’s greatest challenge is not selling any particular product or strategy. Instead, it is often unwinding and realigning the investor’s biases.
The competition is not your market competitor or incumbent. More often, it is the investor’s set of operating heuristics, many of which are quickly influenced by market conditions.
Fundraising in healthcare, especially in a macro environment like the one we’re in, is an opportunity to differentiate and take control of the narrative. When markets start to dip, most companies hunker down and focus on surviving. In moments like these, health tech companies can take advantage of the status quo getting upset and rise to the top of a crowded field, signaling to the market why they are the horse to bet on.
Reframe the macro view
When the market seems to be trending downward, it’s an opportunity for founders to take control of the narrative and reframe how investors view market conditions based on a deep analysis of their sector.
Broadly compared to other industries, healthcare often remains resilient during times of economic distress. When everything is going well, it’s easy to forget and even easier to underappreciate the acyclicality of the healthcare market as a whole. But a quick look at data from the Bureau of Labor shows that employment in the sector continued to grow during the last recession, a testament to how robust the sector is.
If entrepreneurs and investors treat every interaction as a one-shot game, we will all eventually lose trust.
While employment may not be a comprehensive barometer for all healthcare activity, the demand for real solutions to real pain points in healthcare will continue to be inelastic. If you’re in services, frame your business around this labor demand; if you’re developing solutions for software, operations and RCM, leverage this growing gap between the need and the adoption of technology.
In this environment, funds will be looking for acyclical markets to invest in. This is an opportunity for you to capture this capital pool.
Get granular
In a market inundated with “digital health” startups and “infrastructure solutions,” it’s vital to differentiate yourself.
Move beyond generic labels that no longer tickle the interest of healthcare investors, and instead map out the progression of your company in three acts, from seed to IPO, even if you’re already a late-stage company:
