In defense of tech-enabled services
Why we remain bullish on services, even as the market has shifted to favor software
U.S. digital health funding hit an all-time high at $29.1 billion in 2021 – or approximately 8.8% of the total U.S. venture capital investment. But there’s no doubt that 2022 is a very different year.
With health-tech companies taking a beating in the public markets, there’s been a lot of questions about the “investability” of the sector. Every day when we read the news, we hear about companies sharing layoff announcements and struggles to raise follow-on rounds. And given that health-tech is still relatively nascent, there are fewer examples to point to of long-term success in the public markets.
With this uncertain macroeconomic backdrop, the debate we hear often in the VC world is essentially this: Software versus Services. In other words: Is the optimal pathway to making a return in health care and improving the lives of patients, providers, and other stakeholders to invest in software, or services made more efficient by software?
It’s not surprising. SaaS companies tend to be fav…