Investment in Divestment
Many (including us!) predicted that 2023 would be an interesting year for M&A activity given pullback on venture funding, talks of a looming recession, and panic in the banking industry—and, so far, we aren’t wrong. One interesting trend: the selling off of “parts” of a business. Sometimes, this type of activity can signal the broader sunsetting of a company (e.g., the sale of Mindstrong’s tech and potential sale of Pear Therapeutics’s assets), but in other contexts, it’s an important—dare we say necessary—move to sharpen organizational focus. In the past few weeks, digital health startups Olive and 98point6 both sold off assets to buyers as part of strategic tightening around winning product lines. This mode of activity can help companies maintain runway by shedding less efficient business units and, in some cases, even boost investor confidence, as demonstrated by 98point6’s $32M raise just weeks after their divestment. On a macro level, market emphasis on product sustainability rather than platform growth leaves us wondering: what does this mean for the platform wars as we know them?
Business models, financials, and other benchmarks, oh my! Rock Health Advisory is surveying startup leaders on business models and financial metrics. If you’re on the executive team of a startup, we’d love for you to participate by taking the survey—we’ll share back an exclusive report with all participants!
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