How to raise funding for digital health startup? What are the different stages? A healthcare consulting India, Africa and GCC perspective.

Funding for your digital healthcare startups:  Digital health industry in India is growing at a tremendous pace and is expected to expand more and more in the coming years. However, health care start-ups do face a lot of hiccups, the critical among them being funding. Investors have found it risky and unsafe to fund a digital health care start-up because of the inherent lack of use of technology in the sector as well as the unpredictable nature of the industry. The good news is that, as the digital health sector matures, investors are slowly becoming more confident in investing in digital health startups. As part of our healthcare consulting India, Africa and GCC, we did a study to know more about this topic.

So, what are the types of capital available to digital health startups at its various stages?

  • Though not many investors invest in a project that is only at the stage of an idea, there are options for early stage investment. If you have a fully developed business plan, grants / government programs are the cheapest form of capital. India Aspiration Fund, SIDBI, NSIC are some of the schemes that provide capital support to the early stage start-ups in India. Many healthcare consulting companies India helped healthcare institutions for both green field ( new), brown ( existing)  field & M&A stage of the business.
  • Once you have a strong business pitch or a minimum viable product, venture capitalists and angel investors are the best option, with traditional VCs being the most prominent investors in the digital health space. Some of the investors who concentrate particularly on health care startups in India include Matrix partners, Sequoia Capital, Accel partners etc. Venture capitalists have expertise in bringing new ideas to life and can leverage an extensive network of contacts in healthcare industry. Indian angel network is the biggest group of Angel Healthcare Investors , listed by many healthcare consulting companies, India.
  • Digital health is no longer exclusive to venture capital, as private equity firms and larger companies have begun to enter the field, especially in the later stages of the startup, targeting digital health companies that are profitable. Equity is the purchase of shares for ownership of the business and corporate investors are acting as strategic investors.
  • Debt is less common for early stage businesses as it needs to be repaid over set periods. It comes from social lenders/impact funds and banks.

Though in a nascent stage, digital health startups in India have successfully raised funding from various investors and venture capitalists. For e.g., Practo Technologies Pvt Ltd, a digital health care start-up, has raised US$ 55 million in Series D round of financing led by Chinese investment holding company, Tencent Holdings Ltd, which will be used for expanding its product portfolio.
Healthcare consulting India companies,  helped many health startups on the block and only a few health-tech focused seed stage venture funds, there is much competition to get funding. The key is that the entrepreneur seeking investment has a clear idea of how the cash will be used. Generally, what the investors are looking for when discussing with an early-stage startup in the digital health space are –

  1. Clear understanding of the digital health ecosystem
  2. Creative business model
  3. Access to customers and market strategy.
  4. Engaging and unique product
  5. Health sector experience in the team
  6. Clinical validation, or endorsements from medical community.

In recent times with the success of the various health apps, the trend is changing in digital health landscape for the better. The pressure to remove the inefficiencies while addressing changing consumer expectations are fueling the funding of new digital healthcare start-ups. The best funding option is ultimately based on what is most suited for your product and to your strengths. Once you have a business plan in which your path to success is accurately documented, you are on track for growing your business and attracting more investors. Sarathy Advisory as an initiative of  healthcare consulting India, Africa & GCC, specializes in advisories for selection and recommendation, as well as providing end-to-end hand-holding for procurement of financial assistance to healthcare providers. To know more, please write to us to info@sarathyadvisory.com



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