2024 has gotten off to a somewhat shaky start, with news of layoffs, longer sales cycles, and a slowdown in hiring. It is not all gloom and doom, however, with some encouraging signs from a technological advancement and funding standpoint! Despite the uncertainty, the future is very bright for health companies that harness the power of AI. As we move into the second half of 2024, it is a great time to reflect on the past six months and try to predict what the rest of the year has in store.
Investment and the Wider Funding Landscape
Stabilized Funding:
The digital health venture capital landscape has stabilized post-COVID-19 pandemic. U.S. digital health startups raised $5.7 billion across 266 deals in H1 2024, with early-stage deals comprising 84% of labeled raises. AI-enabled startups also dominated Series A rounds. However, deal values decreased by 27% compared to the previous year, and deal counts dropped by over 9%.
Market Correction:
The peak funding of $21 billion in 2021 has significantly reduced to pre-pandemic levels, with many previously well-funded companies now shuttered. Silent raises are on the rise, indicating a cautious approach to valuations and fundraising.
Few Exits and M&A Activity:
Limited IPOs have been observed, with only companies like Waystar and Tempus AI going public.
Decline in Unlabeled Rounds:
Unlabeled deals have decreased from 55% in Q4 2023 to 33% in Q2 2024, indicating companies are meeting growth benchmarks.
Diverse Investment Trends:
AI-driven solutions are not just gaining traction, they are reshaping the future of healthcare. With 34% of H1 funding going to AI-enabled digital health startups, the potential for transformation is immense. Key funded areas include disease treatment, nonclinical workflow, and mental health.
Public Market Activity:
Q2 2024 saw IPOs from Nuvo, Waystar, and Tempus AI, though overall acquisitions have decreased.
Key Takeaways:
- Digital health funding is stable but significantly lower than pandemic highs.
- The market correction has resulted in fewer deals and lower valuations.
- Strategic M&A is expected to drive future growth, especially in digital therapeutics.
- Telehealth shows promise in specialized and hybrid-care services despite recent struggles.
Top 10 Biggest Trends Revolutionizing Healthcare in 2024
- Generative AI: Driving widespread adoption of AI applications, from creating synthetic data for refining medical algorithms to enhancing patient care with advanced chatbots and virtual assistants.
- Personalized Medicine: Leveraging genomics and AI to craft individualized treatment plans, significantly boosting patient outcomes and treatment efficacy.
- Virtual Healthcare Assistants: Utilizing sophisticated chatbots and virtual assistants to provide medical advice, streamline appointment management, and ensure adherence to treatment plans.
- Digital Twins: Employing virtual replicas of real-world systems to deepen understanding of treatment impacts and optimize service delivery.
- IoT-Powered Virtual Hospitals: Facilitating comprehensive remote patient monitoring and care coordination from a centralized hub, transforming traditional care models.
- Preventative Healthcare: Emphasizing proactive health measures, supported by AI and wearable technology, to prevent diseases and minimize long-term healthcare costs.
- Virtual and Augmented Reality: Enhancing pain management and surgical procedures through immersive, real-time augmented experiences, improving patient outcomes and practitioner efficiency.
- Elderly Care: Pioneering innovations that promote independent living for seniors and advance treatments for age-related conditions, improving quality of life.
- 3D Printing: Revolutionizing the production of medical tools, implants, and potentially organs, addressing shortages and reducing costs associated with transplants.
- Convergence of Mental and Physical Healthcare: Standardizing the integration of mental and physical health services, acknowledging their critical interconnectedness for holistic patient well-being.
Regulatory & Data Considerations:
- In Europe, the EU Data Act shapes data accessibility for connected medical devices, creating opportunities and challenges for data sharing.
- Privacy laws are evolving globally, demanding stricter health data sharing and cybersecurity measures.
- Integrating hardware and software in medical robotics requires navigating complex regulations and ensuring data protection and liability management.
Future Outlook:
The healthcare landscape in 2024 will be marked by significant technological advancements and a shift towards preventive care. Staying current with these trends will be crucial for healthcare providers to navigate the evolving environment and leverage new opportunities for improved patient care and operational efficiency. AI and IoT innovations are set to transform healthcare, but organizations must navigate evolving regulatory landscapes and ensure robust data protection and privacy measures.
Hiring and Salary Trends
Despite the widespread uncertainty and “bad press” surrounding the current market, there is still massive demand for strong 360-degree sales professionals with a “black book” of contacts. However, we have seen a marked drop in the demand for “Sales Team Managers,” which are the layer most impacted by the downturn.
Remote work is still the priority for experienced sales executives, but at BDR and SDR levels, there is a big push for “in-office” work arrangements, something more commonly seen around the larger tech hubs of San Francisco, New York, Austin, and Denver. Despite the layoffs and increased competition for fewer vacancies, top sales executives are still receiving multiple opportunities.
Top 10 Things Candidates Look for in Companies:
- Strong current ARR run rate
- Number of unique customers
- Financial position
- Size of the current sales team
- Product-Market Fit
- Average sales cycle, with anything north of six months viewed as less attractive
- Average deal size, with deals around $100-$250k ARR being the most common
- Sales support and resources on offer
- Compensation and OTE
- Market opportunity
Top 10 Things Companies Look for in Candidates:
- Proven track record
- Consistency of billings
- Success working in a startup
- Network of contacts
- Deep technical knowledge
- Entrepreneurial mindset
- Comfort with ambiguity
- Solid tenure in companies
- New business logo hunter mindset
- Cold calling ability
Salary Snapshots:
**BDR/SDR:** 70/30 split, OTEs circa $100-120k
**AE/SE:** 50/50 split, OTEs circa $250-$350k – New business hunters
**VP Sales:** $220-$250k plus OTE, circa $400k
**Sales Engineer:** 80/20 split, OTE circa $180k
As we progress through 2024, the digital health and AI landscape continues to evolve, offering both challenges and significant opportunities. For those navigating this dynamic and rapidly changing industry, staying informed and adaptable will be essential.
