Digital health investments have been on track to hit a record of 4 Billion USD last year. Investors are looking to invest in companies with experienced entrepreneurs, a good grasp of market dynamics and a unique idea. They are more willing to invest in riskier ventures who are going to make it big in the market in the future rather than a perfect solution which will limit itself.
Digital health investment companies and their policies
‘We invest in a whole spectrum where digital products are relevant,’ says Klaus Stöckemann, CEO, and co-founder at Peppermint Venture Partners. He invests not only in apps but only in connected devices and medical devices which are analog. He believes in moving all the stakeholders into the system and 1 out of 100 companies that pitch, gets funding. Usually, Peppermint Venture owns about 50% of the total assets of the company which they invest.
Besides the capital investment, health insurance companies are also willing to partner up with series B and series C companies. German economic development agency provides other non-financial resources like information and support to set up their offices in Germany and introduce them to private funding businesses and incubators to become a part of German startup scene.
European Commission – Agency for SMEs (EASME) receives around 10,000 applications every year and fund less than 7% of the total applications received. They have two types of funding schemes, and Phase 1 includes feasibility assessment in which one lump sum of 50,000Euros is provided to do initial feasibility assessment. Phase 2 funding scheme requires applicants to have a feasibility assessment and elaborate business model and provides a grant of 5 Million Euros in the health sector.
High-Tech Gründerfonds is the largest seed funding group, and about 1000 business plans come knocking on their door for financing. They invest in about 40 companies in a year and up to 600,000 Euros in the first round of funding.
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What are investors looking for in a company?
Different companies focus on various aspects of a business plan while investing.
Some investors look for evidence-based proved record of the efficacy of the digital health product they are trying to sell. On the other hand, other investors want to invest in entrepreneurs who understand the industry problem and can explain to investors about the market dynamics of the product.
One compelling reason for the investors to fund a company is their uniqueness and what separates them from the herd. Investors want the companies to broaden their horizons and not limit themselves to solving a small problem with their technology. They are not willing to invest in a solution which is too useful for a problem, but a solution which is riskier and can be a trendsetter in the times to come.
Total investments in digital health since 2010 have amounted to 20 Billion*USD. There is a consensus among the experts that digital health is still in its early stages and we are from a market bubble. Investors are willing to provide capital investments up to 5 Million Euros to outstanding startups who will be the torch bearer for the digital health industry in the future.
|Investing companies||What investors are looking for?|
|High Tech Gründerfonds, Startupbootcamp Digital Health Berlin, Germany Trade & Invest, Peppermint VenturePartners, mIsrael, Bereich Digital Health||Experienced team of entrepreneurs, A unique solution to a problem, Knowledge of industry problem and market dynamics.|
Dr. Martin Pfister, investment manager, High-Tech Gründerfonds, Germany
JulianeZielonka, Managing Director at Startupbootcamp Digital Health Berlin, Germany
Vanessa Ricci, Project Adviser “H2020-SME Instrument”, European Commission – Agency for SMEs (EASME)
Julia Rühle, Manager Investor Consulting at Germany Trade & Invest, Berlin, Germany
Klaus Stöckemann, Managing Director & Co-Founder at Peppermint VenturePartners, Berlin, Germany
Levi Shapiro, formerly Veritas VC, current mIsrael, Israel
Min-Sung Sean Kim, Venture Capitalist, Allianz Gruppe, Bereich Digital Health, Berlin, Germany
Prof. Dr. TalyaMiron-shatz
Upload Date: 27th November 2016
Video code: 16R203
Image credit: www.istockphoto.com