While the evolution of the digital health ecosystem has seemed at times almost painfully contrived, it now appears to have reached the point where it requires but a few sprinkles of magic fairy dust to be truly alive.
The basic idea behind digital health is pretty clear: we can (and must) do health better, and technology should be able to help,
There’s also an ever-increasing amount of support for early-stage innovators in this space. A remarkably large number of digital health incubators have sprung up around the country, as Lisa Suennen captured with characteristic verve in a recent Venture Valkyrie post.
On top of this, a slew of corporate VCs have now emerged – many from payors, but some from communication companies, and even a few from big pharmas such as Merck – all keen to invest strategically in the digital health space.
Deliberately, many of these large corporations also represent likely buyers for the products or services that will be produced, so it really does seem like an example of the savvy external sourcing of innovation.
So we’re good, then – right?
Well, not so fast.
It turns out that many high profile VCs continue to eschew this space, other than perhaps an occasional investment or two. The reason? As one extremely well-regarded VC – with extensive healthcare experience – told me yesterday, “I haven’t seen a viable business model yet.”
Translation: how do you make (serious) money here? Where’s the revenue?
This is a reasonable critique – though one that seems equally applicable to the many tech start-ups that seem deliberately geared to fulfill a niche need at Google or Microsoft or Oracle, rather than to thrive as a stand-alone company. While not IPOs, a number of these exits have generated sizable returns for their venture backers.
Without question, it would be terrific to see some truly disruptive, stand-alone companies emerge and arise, the Google of Medicine, the Facebook of Health.
I understand and deeply resonate with the urge to reach for the sky, and to build something significant and durable – an aspiration eloquently reflected in a recent NPR profile of former Intel CEO Andy Grove.
In the early days of Intel, NPR reports,
“Grove emphasizes they were trying to create products of value and a company that would last. Today, Grove thinks that many in Silicon Valley are merely hoping to make a quick profit. There are two words that make him cringe: ‘Exit strategy,’ he says. ‘I hate it!’
Perhaps Big VC (a term that seems apropos these days) is smart to wait it out, until the time is right for the next new, new thing. But the question the major funds should be asking isn’t whether this moment is perfect, but whether it’s good enough.
Visibly, there are important problems that digital health can help solve today, and large corporations — with deep pockets and lots of cash — who seem genuinely interested in seeing these problems solved, and who are looking eagerly outside their own walls for the solution.
We might also revaluate our view of salvation, and consider the possibility that the next great revolution in health might not arise from a new player appearing heroically upon the scene and changing forever the rules of the game; perhaps part of the problem here is that we’ve been waiting expectantly for such an arrival.
What if the change we seek is already here, in the form of established players who realize they must rapidly evolve, and profoundly reinvent themselves if they are to survive? What if their corporate venture groups aren’t simply pro forma gestures towards innovation shaped by cynical management consultants, but serious efforts to scope out the future, and figure out how to adapt to it?
Too much to ask? Try a bit of fairy dust. Perhaps it’s time to start believing in digital health.
It’s also possible I should watch a bit less Disney with my kids.
David Shaywitz is co-founder of the Center for Assessment Technology and Continuous Health (CATCH) in Boston. He is a strategist at a biopharmaceutical company in South San Francisco. You can follow him at his personal website. This post originally appeared on Forbes.