Resetting expectations for VC investing in health tech
We have been unicorn hunting for way too long
Here’s something I probably shouldn’t say out loud as an investor at a venture firm, let alone write about. But here goes.
Not everything and everyone should be backed by venture capital.
There are plenty of alternatives to this type of capital source and we don’t talk about them nearly enough. Because we are obsessed as an ecosystem with the venture model and the potential for startups to become unicorns. The vast, vast majority in health care will not be. And that’s okay. What worries me is when we try to force it - which I see far too much of and I’ll elaborate on this theme throughout this post.
Let’s start with some hard truths. We are in a period right now of disillusionment, preceded by a period of hype. For more on that, check out Bessemer Venture Partners’ recent excellent report on the valuations and exits in health-tech over the past decade or so. The authors noted that many of the financings of the 2020-2021 hype cycle were driven by the perceived increase in billion-dolla…