Healthcare Funding: From Traditional to Silicon Valley
It wasn't long ago when universities and federal government funds were relied upon for a significant portion of medical research purposes. Healthcare funding is now shifting toward the high-tech sphere. Traditional funding sources are quickly giving way to Silicon Valley powerhouses intent on rapidly advancing medical technologies.
Tech's Investment in the Healthcare Sector
Companies throughout Silicon Valley and other tech hotbeds are pouring money into healthcare startups. According to a report issued by Silicon Valley Bank, if early-stage investments in these startups continue at the current pace, they will hit a record $2 billion by the end of the year. The steady influx of funding for healthcare startups can be partially attributed to well-publicized success stories throughout the industry. As an example, Bloomberg reports that the popular 23andMe startup provides DNA mapping services and is currently valued at more than a billion dollars.
A growing number of these startups are centering their healthcare solutions on emerging technologies that generate significant interest from venture capitalists.
Out With the Old, In With the New
Venture capitalists have been gravitating toward healthcare startups partially because a large portion of these businesses is centering their medical supplies, equipment and treatments on breakthrough technologies. Healthcare startups are ripe with new therapies, entities and efficiencies that have flipped the industry on its head. In particular, venture capitalists are interested in medical equipment and diagnostics like genetics testing and biopsies that identify signs of tumors within a patient's bloodstream. Silicon Valley Bank reports that the first six months of the year have resulted in more beginning-stage Series A funding agreements than transpired in all of 2015.
Healthcare Startups Require Investor Commitment now More Than Ever
The steady flow of cash to new healthcare opportunities has not resulted in a surplus of investment exit opportunities like initial public offerings (IPOs). Modern day healthcare investors run the risk of being locked in for the long haul as fewer startups in the industry are making it to the IPO stage compared to past eras. Yet the lack of a foreseeable exit point isn't exactly scaring away venture capitalists. Investors see tech-focused healthcare startups as a prudent midterm bet as they provide massive reward potential. The payoff could be years or decades away, yet the odds are good that such a return on investment would trump that provided by other startup opportunities outside of the healthcare sector. This is excellent news for those pursuing an MHA degree at the University of Southern California.
The Natural Marriage of Tech and Healthcare
As time progresses, healthcare and tech are steadily merging into a united and powerful force. In particular, the diagnostics and tools space is attracting plenty of new money from tech venture capitalists that are looking for a piece of the healthcare pie. Tech aficionados aren't hesitating to jump right into this space due to its focus on emerging technologies as well as the lack of barriers to entry.
Healthcare's High-Tech Future
The burden of healthcare financing is clearly shifting away from the public realm and traditional medical companies toward the tech space. For more reads on trends in healthcare administration, visit University of Southern California online.
Sources
https://www.bloomberg.com/news/articles/2015-10-14/23andme-funding-said-to-value-genetics-startup-at-1-1-billion
http://www.businessinsider.com/silicon-valley-bank-early-venture-rounds-for-healthcare-rising-2016-7