Rough seas in the health tech market sent many to shore last year. As 2024 gets going, there may be new optimism and new willingness to launch anew as continued technical innovation, more effective business models, and improved market conditions for healthcare turn the opportunity dial.
The storm last year resulted in the lowest VC investment in health tech in five years in the US and globally. The public markets for healthcare stocks remained largely stagnant punctuated by the occasional massive destruction of capital. The SPAC and IPO markets were witness to many failures impacting the flow of capital from investing sources. M&A as a source of exit and monetization was MIA.
Let’s waste capital! And did we ever. In 2021, during the hype days of digital health and health tech related to Covid, there was a massive inflow of low-cost capital to these markets that predictably included many firms that couldn’t reasonably make it. We clearly were following the old dictum to waste what exists in excess. And the one about learning from failures.
In the meantime, perhaps more rapidly than expected, health tech is pivoting based on among other things, the application of large language model artificial intelligence, the more rapid adoption of process integration through artificial intelligence-based analytic and process automation, information interoperability for care management, and the continued rapid application of life science discovery and development.
Reports from the front are more optimistic than we’ve heard in some time. The markets and individual firms are recalibrating to the results of the recent past and the opportunities now apparent. If you are out, look at getting back in. The timing could be good.