Survey: Digital well being investments will depend on ROI and scientific validation in 2023

Return on funding (ROI) and scientific validation would be the most important indicators for achievement for digital well being firms in 2023, in accordance with a survey by funding agency GSR Ventures.

The survey, which included responses from greater than 50 buyers, discovered that greater than 94% deemed ROI to be “vital” or “crucial” to a digital well being firm’s success, and 79% stated scientific proof and trials had been prime indicators. 

Buyers anticipate digital well being funding in 2023 might be between $15 billion and $25 billion. In addition they anticipate valuations will lower by round 20% for seed stage funding. Sequence A and Sequence B+ valuations may dip between 20% and 40%. 

The prevalence of supplier shortages and burnout will present probably the most alternative for startups, in accordance with 48.1% of these surveyed. Practically 27% stated altering reimbursement fashions was the largest problem, adopted by 11.5% who cited interoperability.

Greater than half of buyers stated oncology was the brightest scientific space for startups, adopted by psychological well being at 37.3%, neurology at 27.5% and first care at 23.5%.

“Whereas digital well being buyers nonetheless imagine valuations will drop in 2023, most nonetheless imagine the general ecosystem is kind of wholesome and funding ranges might be akin to the previous few years at $15 to 25 billion,” Dr. Justin Norden, a associate with GSR Ventures, stated in a press release. “Additional, it is nice to see buyers place growing significance on scientific validation which goes to be important as startups go after these areas of big alternative comparable to oncology and supplier burnout.”

WHY IT MATTERS

Digital well being funding was rocky in 2022. In line with Rock Well being’s report, startups raised $2.2 billion throughout 125 offers within the third quarter this 12 months, making Q3 the lowest-funded quarter by {dollars} raised since This fall 2019. 

Throughout a panel dialogue at HLTH 2022, buyers relayed the significance of firms refocusing their enterprise fashions in anticipation of decreased funding in 2023.