Health startups are flush with cash, but still need to prove their merit

Health startups raised $7B in Q1 2021, a near decade high. Benefits departments think there are too many options, though.

May 5, 2021

You’ve def seen them: digital health startups… they’re everywhere.

Per The Wall Street Journal, $7B of VC money hit the sector in Q1 2021, the highest figure in at least 10 years.

The main customers for these health services are corporate-benefits departments…

… and they are revolting against the flood of choices

Benefits execs are pushing startups for a few changes:

  • Expand offerings: There are a number of individual apps that specialize in one niche (e.g., heart health, sleep tracking, mental health). Corporates want combined offerings, so they don’t have to subscribe to a million options.
  • Pricing: Corporates want to pay by use, instead of purchasing monthly subscriptions that often go unused.
  • Most importantly: They want companies to prove that the product actually delivers better care and lowers costs.

Health companies are taking note

Telemedicine provider Teladoc moved into diabetes monitoring with a $13.9B acquisition of startup Livongo.

That’s one of many deals for Teladoc, while its main competitors — like MDLive, Doctor on Demand, and PlushCare Inc. — are active on the M&A front, per WSJ.

And in a very meta development, here’s another hot investment area: apps that help you manage other health apps (AKA care-navigation apps).

At the current funding pace, you’ll soon see these apps everywhere too.

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