Reimagining opportunity and innovation in digital health

Over the last ten years, digital health has transformed healthcare. Digital health innovators have developed and scaled game-changing solutions that have enabled: patients to monitor their glucose levels, assess sleeping patterns, and attain medical products and services through virtual marketplaces; providers to monitor the health status of high-risk patients and engage with other patients that live in remote settings, and payers and employers to provide an expanded array of services to increasingly diverse populations.

Since 2011, 1900+ U.S.-based digital health firms were founded and individually raised at least $2M in venture funding.¹ From 2019 to 2021 alone, the total number of venture-backed deals increased 77% (from 411 to 719), and the total amount of capital that flowed to digital health ventures increased a staggering 254% (from $8.2B to $29.1B) – though funding has slowed in 2022. The pace of growth in digital health is expansive, increasingly noted by several experts, and well on its way to transforming health for all humanity.

This is all exciting news. However, a stark reality presents itself when examining who is developing digital health ventures and where venture investment dollars are flowing.

Rock Health’s Diversity in Digital Health survey and report found that though there is a diverse group of founders developing digital health innovations—of 253 digital health founders, 46% self-identified as white, 25% identified as Asian, 11% identified as Black, 6% identified as Latinx, and 1% identified as multiracial. Meanwhile, across gender founders self-identified—57% as men, 41% as women, 2% as non-binary, and 2% preferred not to say. There is unequal access for these founders to receive venture-backed investment.

When disaggregated by founder race/ethnicity, funding-related data showed that:

Among white-identifying founders (n=117), 55% were venture-backed, 16% were angel-backed, 23% boot-strapped, and 6% leveraged other capital forms.
Among Asian-identifying founders (n=63), 63% were venture-backed, 10% were angel-backed, 22% leveraged boot-strapped, and 5% leveraged other capital forms.
Among Latinx-identifying founders (n=14), 43% were venture-backed, 21% were angel-backed, 21% leveraged boot-strapped, and 14% leveraged other capital forms.
Among Black-identifying founders (n=29), 24% were venture-backed, 17% were angel-backed, 41% leveraged boot-strapped, and 17% leveraged other capital forms.

When disaggregated by founder gender, funding-related data showed that:

Among men founders (n=141), 62% were venture-backed, 18% were angel-backed, 14% leveraged boot-strapped, and 6% leveraged other capital forms.
Among women founders (n=104), 40% were venture-backed, 13% were angel-backed, 38% leveraged boot-strapped, and 8% leveraged other capital forms.

Noting these facts, what is the lost opportunity to all of us if we don’t meaningfully support a diverse pool of entrepreneurs addressing our most pressing health concerns? And what is the opportunity if we do?

We believe that the restricted ability of women+ founders and founders of color in digital health presents meaningful challenges and opportunities that have implications for the digital health industry and society at large. Urgent action is needed.

To explore these questions and to prompt action, RockHealth.org launched the Equitable Investments Initiative. The initiative is intended to elevate the challenges that UUDH innovators face when attracting venture investment resources, amplify the impact and work of UUDH innovators, and catalyze increased investment for these leaders. We are excited to kick off the initiative’s work with our inaugural publication—Reimagining Opportunity and Innovation in Digital Health.

From January-June 2022, the RockHealth.org team partnered with an advisory committee of digital health experts— including digital health innovators, venture investors, impact-oriented funders, network builders, physicians, and tech executives—to identify near-term opportunities to direct investment resources to underrepresented and underfunded (UUDH) innovators. During our time together, we worked to:

Articulate the impact of solutions created by UUDH innovators and the lost value—both economic and health-related—of not investing in their innovations.
Acknowledge and describe the critical barriers UUDH innovators face when accessing venture investment resources.
Identify solutions to direct an increasing flow of investment resources to UUDH innovators.

Through our work, we identified six near-term opportunities for change and tactical actions to increase support for UUDH innovators. We share these items below as part of an ongoing iterative process and invite others across the field to share your reactions, reflections, and learnings.

Develop the “building blocks” needed for field-wide discussion.
Acknowledge underrepresented and underfunded innovators as critical drivers of digital health innovation.
Expand investment criteria and sourcing strategies for digital health innovators.
Demystify the venture investment landscape.
Promote continuous learning about underrepresented and underfunded innovators and their innovations.
Create opportunities for innovator-focused, peer-to-peer learning.

What’s next? Ultimately, there are no easy fixes to alleviate the challenges that UUDH innovators face when attracting investment resources. Noting this, we hope that this work builds on that of comparable efforts and prompts digital health actors to meaningfully support underrepresented and underfunded innovators by:

Directing and allocating more funding to UUDH innovators that are leading innovations expanding the promise and potential of digital health.
Supporting field efforts and related organizations that amplify and support the work of UUDH innovators.
Determining your baseline and considering next steps—for investors, this may mean auditing your portfolio and investment pipeline to ensure that UUDH innovators are represented; for corporate leaders, this may mean entering into discussions with UUDH innovators to understand how their work may complement your strategic goals; for media, researchers, and advisors this may mean intentionally elevating the stories and work of UUDH innovators; and for peer-entrepreneurs, this may mean finding ways to support and champion the work of fellow innovators that are advancing digital health innovation.
Broadening your networks by asking who is not at the table and engaging with the expressed purpose of connecting with and learning alongside transformative UUDH innovators.
Sharing your reflections and learnings with colleagues in your organizations and your network.

We look forward to learning, engaging, and partnering with you to meaningfully support the efforts of underrepresented and underfunded innovators catalyzing innovation across the digital health space. We also invite you to read RockHealth.org’s inaugural report–Reimagining Opportunity and Innovation in Digital Health–and join us as we work to ensure an equitable digital health future for all. To learn more, please reach out to us at hello@rockhealth.org.

Footnotes

Rock Health Digital Health Venture Funding Database