Investors are taking an increasing interest in the healthcare industry with the emergence of healthtech startups using innovative technologies and disruptive solutions to reshape patient care and boost operational efficiency. A report on India’s digital healthcare market estimates the sector to be worth INR 524.97 billion in 2021 and expected to grow at a CAGR of 28.50% from 2022 to 2027, reaching INR 2,528.69 billion. Securing funding for healthtech startups requires more than just a compelling concept, and investors factor in aspects such as Total Addressable Market (TAM), intellectual property protection, the target market, first-mover advantage, and the team caliber when assessing startups. Here are five key factors investors consider when evaluating healthtech startups:
1) Focus on Total Addressable Market (TAM): Investors place importance on the startup’s potential market size. A large TAM provides an extensive customer base and opportunities for expansion, ensuring long-term success. Startups that can show potential market size and a compelling strategy for market penetration are more likely to attract investor interest.
2) First Mover Advantage: Investors look for startups that have a competitive edge in the market. Being a pioneer in a given market can provide brand recognition, build customer loyalty, and establish industry norms. Disrupting the market with innovative and groundbreaking solutions guarantees long-term success, and startups that present clear plans to sustain their leadership position are more likely to garner investor attention.
3) Intellectual Property: Robust intellectual property protection shows the startup’s dedication to safeguarding its cutting-edge technology and deters potential rivals from copying innovations. Investors carefully evaluate a startup’s intellectual property portfolio, including patents, trademarks, copyrights, and trade secrets, to determine their level of protection and market value. Startups that can show a robust intellectual property strategy and legally protected innovations reduce the risk of infringement and maintain a dominant market position.
4) Target Market: Investors evaluate a startup’s target market approach to determine their scalability and revenue potential. Startups must define their key customer categories and have a well-defined go-to-market strategy. Investors look for businesses with a strong understanding of their target market, a clear value proposition, and a scalable business model.
5) Notable Advisors and Team Members: Investors seek founders and team members with in-depth knowledge of the healthcare sector and a track record of success. A talented and varied workforce shows they can successfully execute their business plans. The engagement of well-known advisors or subject-matter specialists can offer invaluable startup advice, industry connections, and credibility.
Healthtech startups can position themselves strategically to attract investment and thrive in this dynamic industry by understanding factors such as TAM, intellectual property, target market, first-mover advantage, and team caliber. By presenting a compelling strategy and clear path to success, startups can impress investors and secure the necessary funding for growth.
