There are over 6,000 HealthTech startups in the UK, with a combined turnover estimated to be over?￡88bn. But many of them fail to secure funding that could lead to Series A success. So if you’re gearing up for funding, there are some important questions to answer to put yourself in the strongest position for success.
Your business, strategy, product and audience will likely have evolved since your initial grant or first phase of funding, and the way you present yourself for your next round has to evolve too.?Based on our experience working with digital health startups and scale-ups, we’ve developed this comprehensive guide with insights and actions in six critical areas.
1. Review the problem and opportunity
Has this evolved and are you presenting the true opportunity?
If part of your intended investment will be to develop a new or existing product,?ensure you understand the problem you're solving and its importance to your target market. That may seem obvious but it’s easy to be internally focused on product features, fixes and existing customers, whereas investors will want to zoom out and see growth potential. They want to see if you have verified the market demand and appetite, and considered scalability through viable revenue models. This applies to existing products too, having usage data showing the traction you've already gained will help here.
Revisit researching the market, audience and your competitors, and testing what you’re doing on real potential customers.?This will help you identify?the scope of the opportunity and define the core problem. You’ll be able to show that you understand the target audience, size and prevalence of the problem and its impact, and have validated your proposed solution.
- Conduct primary research. This phase is user-centred, interviewing real people (e.g. public, patients, clinicians, healthcare staff) and testing your hypotheses on them. Their opinions and insights are essential for you to be able to design a solution that’s specific to their needs.
- Be prepared to pivot and explore alternative directions based on these insights, so that you're aligned with user acceptance and market demand. This will also give you confidence that you have something people want and will use.
- Conduct secondary research – both market and competitor deep-dive into existing solutions so that you understand your competitors’ products, strategies, strengths and weaknesses. Research the target audience e.g. look at existing data and insights from reputable sources and large-scale surveys.
- Synthesise your findings, to uncover trends, behaviours and the unmet needs that your product can address. Check what assumptions you've made and validate these with real people in your target audience.
Product design is iterative and non-linear, requiring a build-test-measure-learn approach.?Continuously test prototypes with users and iterate as necessary.?Doing this work establishes a strong foundation as you progress through the phases to effectively position and differentiate your product.
Regularly revisiting the steps given here – especially when getting ready for a funding round – can reveal new insights, validate assumptions, refine your understanding of the problem and improve the viability of your solution.?Ultimately this can strengthen your proposition and make it less risky to proceed.
2. Build your brand and narrative
Do people understand your proposition and does it connect with them?
However useful and medically robust your product is, it doesn’t speak for itself.?The market for digital health tools is packed and highly competitive. Strong branding and a clear, relatable narrative will help yours stand out and connect with people.
Founders and clinicians often overlook branding at the beginning, often due to budget constraints. But for subsequent funding rounds, it's essential: your product needs a compelling narrative that not only tells people what it does but shows them how it will improve their health or their life in a tangible way. Consider these elements:
- An inspiring visual identity.?A clear, unified and distinctive identity shapes people’s perception of you and helps them instinctively relate to you, seeing you as an authority and expert in your sector.?Visual identity communicates a brand’s personality, values, and mission to its audience. This can include logo, colour, typography, graphics, illustration, photography, UI, UX and brand assets.?Consistent use across all your assets and channels creates recognition, familiarity and trust.
- Your vision and mission statements.?Your vision statement articulates your overarching purpose and the positive change you aim to have?e.g. on people, patients, healthcare and society.?Your mission statement details the specific, measurable steps to achieve this vision.
- Your value statement. Investors need a concise value statement explaining the problem your product solves, its target audience, why it’s unique and the impact it will have?e.g. an improvement in patient care, a specific health outcome, or how it will make clinicians’ lives easier.
- Emotional connection. Show your audience the emotional transformation and positive outcome of using your product. Feelings, not just functions. What’s the journey they will go on? E.G. from worried to confident, despair to hope, or unsupported to supported.
- Engage stakeholders?and current and potential users,?and incorporate their feedback as you shape your narrative so that you’re aligned with their genuine needs and expectations.
- Real-life stories. Tell the stories?of people who have been helped by your product, in their own words (interviews, videos, reviews): their health issues, struggles and positive outcomes.
- A pitch deck with a narrative. Include the usual financials, market size, potential to scale, challenge and solution – but?tell a story too. What’s happening in the world that means your solution is needed, and how do you uniquely meet that need? What’s your origin story? Show your successes from seed funding to now, but also how failures have helped you learn and pivot. Talk about your team’s skills and capabilities too; people invest in people. Your investment deck can be the difference between success and failure.
3. Be attractive to investors
Are you presenting a validated, viable opportunity?
In 2023, investment by VCs into health-tech startups stalled at a similar level to 2022 – which was a 37% drop on 2021.?Attracting Series investment will require more than a promising idea and a well-designed product.?Here are some key considerations:
- Show a compelling value proposition. Clearly define what makes your product valuable to users, patients, healthcare providers or other stakeholders. How will it achieve your intended outcome e.g. improve self-care, support medical treatment, create a community, help clinicians enhance the quality of care, or help providers reduce costs or save time? How will you attract users and then engage and retain them?
- Market differentiation.?Investors want to see what sets your product apart.?Highlight your unique selling points based on your earlier research?but look through the eyes of an investor to clearly articulate your difference.
- Market size and challenge.?Present data that shows investors the current market size and growth potential. Address commercial challenges, market trends, potential regulatory hurdles and opportunities for future expansion.
- Know your numbers. Be clear on your financials, such as costs, turnover, projected profits/losses, how you will use investment money, what the investor’s stake will be and when you anticipate they will make their money back.
- Have a funding strategy.?Outline your plan for securing funding, including grants, private investment and strategic partnerships.?Investors need to see that you have a realistic strategy for getting the necessary capital to bring your product to market.
- Do a risk assessment.?Be transparent about potential risks and mitigation strategies. Investors appreciate a well-thought-out risk assessment.
- Show traction.?Investors will be more interested if you can demonstrate that you've tested and validated your ideas and assumptions on real users and patients, and based your decisions on evidence (see section 1). This not only helps refine your product but also shows you're committed to addressing genuine needs.
- Build partnerships.?Use a strategic agency experienced in design, digital development, the healthcare market and investor requirements. It’s unusual to find an agency that does all this but at Studiomade we do. We can help you shape your proposition effectively and give you the edge.
4. Define your commercial model
How are you going to build revenue?
You need a commercial strategy for generating revenue and making your venture sustainable and resilient.?Successful products must be desirable (do enough people want it?), feasible (can it scale?), and viable (can it be profitable?).
A realistic (and ambitious) commercial model will make you more appealing to investors and potential collaborators. It should align with your value proposition and audience needs, and support your mission to improve healthcare outcomes.?Consider the following:
- Diversify revenue streams?to make you more sustainable and resilient. Think about models such as subscriptions, in-app purchases, pay per use, freemium/premium, affiliate marketing, licensing or b2b sales (selling to healthcare providers or insurance companies).
- Monetisation strategy.?Clearly define your pricing and monetisation strategies. Include affordability, competitive pricing and the value you deliver to users. Understand your user acquisition cost and the lifetime value of a customer, to fine-tune your pricing model.
- Lead generation and user acquisition.?Develop a marketing plan for this. It could include collaborative marketing – tapping into your established networks to support you – or collaborative distribution arrangements, working with bigger, more established healthcare organisations and platforms to help you reach your target audience more effectively.
- User retention.?How will you keep users engaged over time? Develop a strong user retention model to build a loyal user base and increase customer lifetime value and investor appeal.
- Data monetisation.?If your product generates healthcare data, find opportunities to monetise this data ethically and in compliance with privacy regulations. Investors may be interested in the potential of data-driven revenue streams.
- Partnerships.?Collaborating with healthcare providers, pharmaceutical companies, insurance companies or other startups could give you industry or medical expertise, access to a broader user base and possibly financial support.
- Futureproofing.?Ensure your model can scale, to accommodate growth and increased demand e.g. new regions, other areas of healthcare or additional products.?This is essential for long-term sustainability and attracting investors.
- Regulatory compliance.?Understand how the regulatory landscape in your market impacts your commercial model, and have a plan to deal with challenges. See the NHS England and NICE?Evidence Standards Framework for digital health technologies?and, for products built for the NHS, the?Digital Technology Assessment Criteria (DTAC).
5. Decide your route to market
Where will you focus and how will you grow user acquisition?
Getting your product or service to the people who need it is an essential part of success. Is it d2c or b2b, sold to hospitals, providers or insurers??Every route to market has its challenges and requires a strategy:
- D2C: direct to consumer.?A straightforward but slow route, requiring significant marketing spend and an expert user acquisition strategy.?Frictions: high user acquisition costs; intense competition for consumers’ attention.
- B2B: healthcare providers.?Selling your product to NHS trusts, hospitals, practices or private providers can quickly reach an existing patient base?and gain industry expertise.?Needs clear benefit to partner e.g. save them money, make staff more efficient or improve patient care.?Frictions: proving value and medical robustness; navigating complex systems; stringent requirements; integration challenges; cultural alignment with partners.
- B2B: pharma and insurance companies.?Reaches?a ready-made user base and could bring you industry expertise and financial support.?Appropriate for medical solutions, wellbeing products or products that reduce health risks.?Needs clear benefits for the partner e.g. increase their own user engagement and retention, generate revenue.?Frictions: proving value and medical robustness; navigating their processes; stringent requirements; integration challenges. Consider culture fit (do their values and objectives align with yours?) and ways of working: as a startup you may be used to working fast and lean but legacy organisations are usually the opposite.
- Distribution partnerships?with established healthcare organisations and platforms.?Frictions: negotiating agreements; shared values and objectives; ensuring smooth distribution.
- Telehealth platforms.?Integrate with existing and startup platforms.?Frictions: proving your value; integration challenges; creating frictionless user experiences.
Some of these frictions reiterate the need for your product to be evidence based, by following the earlier stages of test, learn and iterate at each stage of design, prototype and build. This way, you’ll be crystal clear on your audience's needs, your market and where you fit. You can demonstrate a clear opportunity and value proposition to potential partners.
These frictions may also show you where you need to do further review or bolster your proposition or capabilities, such as your medical review process, clinical testing, regulatory expertise or design expertise.
6. Assess your digital capability
Do you have the right tech set-up to scale?
Your digital infrastructure is the foundation of your product. It affects performance and user experience, it’s where you store all your product and user data, and is where you will scale it from. Investing in technology is necessary for current functioning as well as your future growth, and is something investors will want to see in place.
Undertake a digital evaluation, looking at the following:
- Technology.?Choose technology platforms and integration based on needs, such as cloud-based infrastructure, headless CMS, AI engine integration and specific environments for siloed data hosting. Allow for complete scalability so that data can be easily leveraged later to build additional features and expand the product.
- Data security.?Safeguarding data is paramount in healthcare, where you’re holding highly confidential and sensitive personal information. Evaluate your data security measures, including encryption, access controls and compliance with GDPR data protection law.
- Compliance with GDPR.?This is a non-negotiable. Know the regulations, work with an expert agency and ensure that your data management and storage are compliant. This includes robust security measures, data access controls and data breach response protocol.
- Integration.?Your solution may need to integrate with other systems – e.g. medical practices, electronic health records (EHRs) or users' existing health apps – in a way that is frictionless for the user.
- Scalability.?For user satisfaction, business growth and satisfying investors, your infrastructure has to be able to accommodate increased user demand, new features and advances in technology without a decline in performance. Set yourself up in the best way possible now to allow additions quickly and easily at a later date.
Before and after you secure funding
You don’t need to be an expert in all the areas we’ve talked about here but it shows what to consider and where to bring in specialist expertise, such as Studiomade. Ultimately this guide is to help you build not just a great digital product that improves people’s health but one that is investable, commercially successful for you as a growing business and ensures financial growth.
During the funding cycle you will make promises to investors, such as product revisions, platform updates, new technology, branding, audience growth, new territories and marketing campaign activation. We can help with the heavy lifting on all this and more, either acting as your design or digital team if you don’t have one or integrating with you (for example, UI and UX review and redesign, then handing over to your developers to build).
To talk about anything in this report or discuss a project, email our Founder and Strategic Director, Phil Reid, on [email protected]
