By David Shaywitz, MD

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?

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