2022 Big Bets: Reflecting on the New Normal in Health Tech
The COVID-19 pandemic has caused an explosion in the development of health technologies and new care models around the world, accelerating the demand for services such as virtual healthcare visits, at-home testing, and digital health assistants
Now, the question for both industry players and venture capitalists is: will this accelerated demand continue to attract the investment capital needed to enable the digital transformation of the healthcare sector as we begin to ease out of the pandemic?
From where we are sitting in the corporate venture capital (CVC) space, we think it will. And the focus for this year is largely on opportunities that enable a hybrid healthcare experience for consumer convenience and improved access to care. Sights are also set on companies and businesses that are helping to digitize and streamline the entire continuum of care for patients, particularly mental health.
For context, according to the latest Canadian data from the CVCA, in 2021 over CAD $15 billion was invested in the VC ecosystem across 753 deals which represented the highest on record; CAD $1.75 billion was invested in the life sciences and the healthcare sector, involving 96 deals.
The expectation is that this upward trend will continue in 2022 with one of the most coveted sectors – health tech and digital healthcare – helping to drive more record numbers. As we look at the last two years as indicators, with USD $15 billion in 2020, USD $29 billion in 2021 according to a recent study by RockHealth, we believe there is lasting power in digital health venture funding and investment levels will remain steady.
In Canada, and around the world, people have watched this evolution in real time. The first year of the pandemic highlighted the quick pivot from in-person, bricks-and-mortar clinical visits to virtual healthcare. Last year, start-ups and other businesses were focused on optimizing the virtual model, with patients and physicians alike catapulted into embracing virtual care because of its accessibility.
As we begin year three, and hopefully the last, of the pandemic, the question top of mind for investors is whether this demand for virtual healthcare services has peaked or will it ultimately represent the new normal.
We believe we are in the early stages of the new normal – with a caveat. Health tech must now evolve to solve not only accessibility issues for patients and physicians, but also to ensure the most efficient management of resources and data so that the best care is being delivered at the right time and at the right cost.
In this way, investment will flow into start-ups and companies that are moving the needle by solving and balancing these complex challenges of coordinating all aspects of a patient’s care – from physical and mental health appointments, managing medications and chronic conditions, to nutrition, and exercise – both in person and virtually.
At the same time, we can’t ignore the other revelation from the pandemic – that our societies, young and old, are facing a mental health crisis. Some experts are referring to this as the “echo pandemic” with one in five Canadians reporting they’re suffering from stress, anxiety, or depression.
There is a need – and venture capitalists will be looking — for new ways to deliver and administer physical care while simultaneously supporting mental and behavioral health needs. Technology can enable integrated and personalized care plans to support an individuals’ medical conditions and comorbidities, taking into account severity.
Wellness leaders such as Calm and Headspace have expanded their offerings to better address the needs of individuals along the curve of severity. Specialty-focused organizations, such as TELUS Ventures’ musculoskeletal-focused portfolio company RecoveryOne, are incorporating capabilities to address the impact that behavioural health has on overall efficacy – meaning, how is the patient’s mental health impacting recovery time from physical injuries.
These are not just one-off apps focused solely on one area of treatment or disease. Rather, they are connecting the patient’s long-term care journey and, as innovation continues to drive synergies and interoperability throughout the healthcare ecosystem, patients will begin to experience a more integrated and holistic form of care, allowing practitioners to make more informed care decisions.
At TELUS Ventures, we’ve invested in 22 digital health companies across virtual care, digital pharmacy, clinical operations & enablement, and patient engagement. This year, we’ll see that number grow as we are committed to the evolution of virtual and digital health, in all its forms, from birth to old age.
The healthcare landscape continues to be ripe for innovation and investment as we look past the pandemic to keeping people healthy and creating a more efficient and affordable healthcare system.
To learn more about TELUS Ventures connect with us at telus.com/ventures.