At FH21, Managing Partner at Digital Health Ventures (DHV) and Conference Steering Committee member, Min-Sung Sean Kim, delivered a plenary keynote providing an overview of the overall drivers, investment trends and activities in digital health.

Given the impressive attention the presentation rose, the author agreed on sharing an accurate synopsis of his talk, and an updated and open version of his thorough presentation for public fruition.

Keynote Synopsis

When in 2008 the financial crisis hit the world’s market, it changed banking. It also marked the birth of the fintech industry. In 2020, with Covid-19, another global challenge emerged that showed the need for innovation in healthcare and accelerated the rise of digital health. Indeed, 2021 was another record year for digital health. The investment volume doubled from $22bn in 2020 to over $44bn in 2021. Let’s remember: A decade ago, only $2bn venture dollars went to digital health start-ups. Not just the venture activity increased, it was also an active year for IPOs, SPACs and M&A-activities. Therefore, we at Digital Health Ventures joined forces with our friends at the investment bank Stout and Syte Institute to bring you a detailed 2021 review.

While the investment volume increased significantly, the increase of deal numbers is far more consistent (roughly a 25% increase from 2020 to 2021). The discrepancy of deal numbers and total deal volume is due to the increase of deal size. More and more deals are so called “mega” rounds, in which companies raise over $100mn. It’s not a surprise! It is just an indicator for the rising maturity of digital health start-ups. However, digital health per se is not at the end of the innovation cycle. While certain areas of digital health are indeed more mature (for example HIS, Consumer Wearables, Practice Management Software) other technologies are just in the beginning (for example, Digital Therapeutics, Clinical Decision Support, Digital bio-informatics). Exciting times are ahead of us.

When patients’ life’s are at risk, the old Facebook credo “move fast and break things” does not work. And therefore, innovation and implementing innovation in health care is a mostly slow process (unlike in tech). However, Covid-19 accelerated this process, thereby creating a digital infrastructure which will be the base of future digital health innovation. It also demonstrated to patients that user-friendliness is possible, something they’ve long asked for. Telemedicine is a great example: The percentage of virtual to total visits pre-pandemic went from below 1% to over 30%. The market for telehealth is projected to grow 22% per annum. Will it go back to pre-pandemic level after the pandemic? No!

While the US is at the forefront of digital health innovation, digital health’s importance has not gone unnoticed in Europe. Germany and Belgium are leading the way by reimbursing digital health applications, other countries following suit with similar or different approaches to facilitate the use of digital solutions in the healthcare system.