Sustaining Impact: A New Model for Digital Health Investment
Despite predictions that recent years’ upsurge of digital health investment would subside, the sector continues to grow steadily to the tune of $3.3B in venture funding as of the third quarter of this year. Digital health startups combining next-gen technologies like social, mobile, analytics, cloud, and sensors to improve patient care have disrupted the traditional U.S. health care market – and analysts project that funding these stand-out organizations will reach $6.5B by 2017.
So why are half of all early stage digital health startups failing within two years of launch?
It’s a combination of factors: health care investment requires a specific set of skills and many digital startups lack the right kind of access to funding and long-lead timeline to achieve ROI in a sustainable manner.
In response to this gap in the investment community, Echo Health Ventures was created.
Formed as a strategic collaboration between Cambia Health Solutions and Mosaic Health Solutions, two leading organizations aligned by the same relentless focus on the health care consumer, Echo Health Ventures is innovating with a new model for digital health investment – one that addresses the investment gap by leveraging relationships, talent, capital and a long-term view from established industry leaders and corporate investors.
Echo Health Ventures is working to solve the biggest challenge digital health investors currently face: scaling innovative companies so they can connect to legacy enterprise and solve pressing problems. It takes a lot more than capital to understand the digital health landscape, and growing companies need more than simply funding to be successful. The role of a strategic investor should be that of a bridge connecting the savvy health care leaders of the future with established operational structures that will efficiently and effectively drive the developing company to the next level and beyond. Unfortunately, this is not a concept that’s been adopted widely.
An additional complexity is that many investors do not have the right time horizon to be able to support new innovations in the market. Instead, they expect investments to create value much sooner than most health care companies are able to deliver.
Rather than playing by outdated rules, Echo Health Ventures takes a stage-agnostic approach to investment that allows us to be patient and take advantage of market cycles to our benefit. This long-term strategy positions us to be a significant strategic investor that can move very aggressively when opportunity arises.
Our ability to take a long-term view doesn’t stand in the way of us being a good partner either: we’re also solving for continual scale by creating an “API layer” that allows our investment companies to connect to the resources and distribution of our parent companies. This approach helps entrepreneurs solve the right health care problem at the right time, with steady, sustained growth.
By committing to long-term investment and strategy, Echo Health Ventures is delivering real, strategic value to a diverse ecosystem of portfolio companies that accelerates innovations to the national level much more effectively than in the past. We look forward to how these investments will challenge the status quo and set a new direction for health care, bringing greater value to the industry and ultimately a better experience and lower costs to the consumer.
To find out more about this new and unique strategic investing model, read our strategic investment philosophy, our guiding “charter.”