In fundraising, a founder biggest challenge is not to sell a particular product or strategy. Instead, it is often the unwinding and realignment of investor biases.
The competition is not your competitor or incumbent in the market. More often it is the investor’s set of operational heuristics, many of which are quickly influenced by market conditions.
Healthcare fundraising, especially in a macro environment like the one we’re in, is an opportunity to differentiate and take control of the narrative. When markets start to fall, most companies crouch down and focus on survival. At such times, health tech companies can capitalize on the status quo becoming upset and rise to the top of a crowded field, signaling to the market why they are the horse to bet on.
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Reframe the macro view
When the market appears to be on a downward trend, it’s an opportunity for founders to take control of the story and reframe how investors view market conditions based on an in-depth analysis of their industry.
Compared to other sectors, healthcare often remains resilient in times of economic adversity. When all goes well, it’s easy to forget and even easier to underestimate the acyclical nature of the healthcare market as a whole. But one quick look Bureau of Labor data shows that employment in the sector continued to grow during the last recession, a testament to how robust the sector is.
If entrepreneurs and investors treat every interaction as a one-time game, we will all lose faith eventually.
While employment may not be a comprehensive barometer of all healthcare activities, the demand for real solutions to real healthcare pain points will remain inelastic. If you work in the service sector, prepare your company for this demand for labour; as you develop solutions for software, operations and RCM, take advantage of this growing gap between technology need and adoption.
In this environment, funds will look for acyclical markets to invest in. This is an opportunity for you to capture this pool of capital.
In a market flooded with “digital healthcare” and “infrastructure solutions” start-ups, it is essential to differentiate yourself.
Go beyond generic labels that no longer capture the interest of healthcare investors, and instead chart your company’s progress in three steps from inception to IPO, even if you’re already a late-stage company: