What’s the next billion dollar digital health idea?

I’ve spent the last year and a half meeting healthcare startup founders. About six months ago, I wrote about several challenges in consumer healthcare and why I hadn’t invested yet. Since then, I made one investment (which I’ll be excited to share more about soon!) and our team at Maven has continued to get smarter on the market and opportunities. In addition to our own research and diligence, we are thankful for the many passionate founders and experienced healthcare investors who have shared their knowledge with us. Based on all I’ve learned about the digital health landscape and opportunities, I’m ready to share more on what makes an exciting potential digital health investment for Maven Ventures:

  • A product that’s used by individual consumers. This particular element of my thesis is unique to our team. We specialize in direct-to-consumer, hypergrowth software investing. For a healthcare company to make sense for Maven, it needs to have an end product, driven by software, that consumers can choose to adopt. The business models might vary (for example, selling direct to consumers or through self-insured employers), but the end products will be consumer software. This means the ideal fit is not clinician-focused, not a medical device or hardware, and not saas or other operational tools for healthcare companies.
  • A clear path to acquiring customers. Customer acquisition has been one of the biggest sticking points for healthcare investments I’ve passed on. It’s often very expensive to acquire users through direct-to-consumer channels. Largely that’s because consumers aren’t searching or paying for solutions (though that seems to be changing), or when they do, there’s a plethora of confusing, unreliable, or click-baity information. I’m always impressed with companies that have figured out how to clear the direct-to-consumer acquisition hurdles, and would love to meet more of them. Because that’s hard, many products sell through payers or providers to get to the end consumers. I like that model, but to invest, need to see proof points that (1) the customers have demand and are buying your product and (2) once they do, the end consumers adopt the product and stay engaged.
  • A product that gets used frequently. At Maven, we love analyzing adoption, engagement, and retention because it’s core to who we are as consumer investors. One of the challenges with health-related products is that repeat usage isn’t that high because, thankfully, most people are well most of the time. Paid customer acquisition can be tough because with infrequent usage, companies have to recoup their spending in just one interaction. So, we like products that engender frequent usage. I’d encourage consumer healthcare founders to borrow from what’s already working in consumer engagement. Sarah Tavel at Greylock recently updated her Hierarchy of Engagement — it’s incredibly informative reading for any software company, especially consumer-facing ones. Changing consumer habits is very hard, so in the early days, engagement matters more than growth.
  • A solution for important, massive, and growing problems. Part of Maven’s core investment thesis is to fund companies that have “a vision worth fighting for.” Perhaps that’s why I have such a passion for healthcare companies. For example, I’m excited about technology-centric companies working on heart disease, drug and alcohol addiction, billing or pricing, and increasing the innovation for and access to pharmaceuticals. In addition to being big business opportunities, there is so much good that can be done by bringing these companies and products into the world. Since I’m not a doctor or clinician, I need founders to help convince me that the product they are releasing actually works in addressing these challenges, but I’m ready and willing to hear the story.

I expect the Maven team will fund more companies in consumer digital health this year. I love hearing about new opportunities startup founders have uncovered and am always excited to discuss how consumer growth tactics can be adapted for the healthcare market. If you’re working on an early stage digital health company that fits the thesis above, I’d love to hear from you.