What do health tech investors think is ‘hot’ these days? Where is the money going? I ran into Marvin Liao, partner at 500 Startups (a VC fund/accelerator program that has made more than 2000 investments in early-stage tech startups over the past eight years) at ICEE Health in Bucharest, Romania, last month and had a chance to ask.
With refreshing candor, Marvin weighs in on whether or not digital therapeutics, mental health, and biotech have room to grow — and if Apple, Google, and Amazon really have the power to change the future of health.
Where is he most bullish? It’s no surprise I ran into him outside the US. He’s got his eyes on bleeding edge innovations coming out of foreign markets…especially Japan. Have a look!
Filmed at ICEE Health in Bucharest, Romania, June 2018. Find more interviews about health & technology at www.wtf.health.
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?
As an ever increasing amount of money seems determined to chase an ever greater number of questionable ideas, it’s perhaps not surprising that inquiring minds want to know: (1) Are we really in a tech bubble? (2) If so, when will it pop? (3) What should I do in the meantime?
I’m not sure about Question 1: I’ve heard some distinguished valley wags insist we’re not in a tech bubble, and that current valuations are justified, but I also know many technology journalists feel certain the end is neigh, and view the bubble as an established fact of life – see here and here. The surge of newly-minted MBAs streaming to start-ups has been called out as a likely warning sign of the upcoming apocalypse as well.
I have the humility to avoid Question 2: as Gregory Zuckerman reviews in The Greatest Trade Ever, even if you’re convinced you’re in a bubble, and you’re right, the real challenge is figuring out when to get out. Isaac Newton discovered this the hard way in the South Sea Bubble, leading him to declare, “I can calculate the motions of heavenly bodies but not the madness of people.”
I do have a thought about Question 3, however – what to do: reconsider digital health — serious digital health.
Here’s why: Instagram and similar apps are delightful, but hardly essential; most imitators and start-ups inspired by their success are neither. It doesn’t strain credulity to imagine investors in these sorts of companies waking up one day and experiencing their own Seinfeld moment, as it occurs to them they’ve created a portfolio built around nothing.