Fundraising for health-tech

Summary of main points and differences between fundraising for European health-tech hardware startup and SaaS startup based on my discussions with founders and VCs.

I spend a fair bit of time with my friends and acquaintances discussing fundraising. Be it tactical or broader trends and challenges we see with fundraising in Europe.

And since there were a few discussions recently focused at health-tech, I'll summarize the main points and differences when fundraising for health-tech startups, especially startups planning to make any hardware.

First, let's address the elephant in the room; the big truth is there are very few VCs in Europe (and globally) who will even consider investing in health-tech hardware.

Here's a graph from friends at OpenVC where you can see why! The execution risk is enormous in pharma and health-tech and part of it is, of course, heavy regulation.

Health-tech hardware fits to the bottom right with medical devices. It's just hard, hard, hard thing to do right and capital requirements are enormous. It's almost certain that if you can execute = people will buy it, because you are executing on known pain (aka health issue). You just don't know if your solution will work before it goes through lengthy trials and approvals and once it goes through, you still have to go through all the supply chain and go-to-market issues that other startups have.

So, how exactly is fundraising for health tech startups different from pitching SaaS companies? Here are some of the key differences listed by the importance as I see it;

What areas are different in health-tech pitching

Regulatory Expertise

Any startup touching healthcare needs to demonstrate an understanding of regulation and the ability to secure approvals. This could include FDA submissions, HIPAA compliance, PII data handling etc.

SaaS startups rarely need to deal with this complexity in the early stages.

You have to demonstrate this understanding even if you can, in the end, avoid these approvals!

Clinical Evidence

Most European investors will look for rigorous clinical trial data validating the medical claims, efficacy, and safety of health-tech products. In health-tech, this is something like user experience feedback for SaaS startups.


Anyone dealing with hardware must prove an understanding of medical device design principles and manufacturing at scale. You will need a credible person to tell the story of how you'll get your device from design to a prototype and to small batch production and then (if needed) how you plan to scale the production.

Something your SaaS friends don't need to worry about at all.

Revenue Models

Many times, founders get so caught up in "solving the problem" and getting "the hardware on the market" that they forget to think about all possible future revenue streams. I totally get it. But you must understand that investors need some highly positive future vision and love recurring business models based on consumables, replacements, service contracts, etc.

This creates downstream value beyond a one-time device sale. Think creatively about potential ways to create a SaaS-like recurring revenue model. Take examples from the consumer electronics world.

Domain Experience

This is kind of expected as table stakes that there's healthcare and health-tech expertise on the team. Medical credentials or experience bring credibility.

Again, comparing it with SaaS, founder backgrounds are more flexible there. You don't really need credentials if you can build it.

Market Opportunity

Lastly, health-tech startups must emphasize the massive addressable market in improved lives and reduced healthcare costs. Healthcare is about 18% of the GDP (in developed countries), with ubiquitous problems to solve. As a founder, you must quantify your target region's clinical need and market opportunity and make it stand out.

One of the great things about health-tech is that it always solves a real pain point for customers! That is hard to say for most SaaS startups. So here you go, one lucky point for you :)

In summary, the healthcare ecosystem brings added complexity around regulation, efficacy claims, supply chains, reimbursement, and domain expertise. Health-tech founders must demonstrate they grasp these dynamics and have mitigation plans to stand out to investors.

Some links which might be useful. These are mostly overview articles listing active European VC funds focused on health-tech or startups from the space. Mind you that health-tech in most investors' minds means digital health and not hardware, but you'll figure that out as you talk to them or browse through their portfolios :

  • Active European Health-Tech Investors list from Pitchbook can be your initial pointer for VCs to research... read here
  • Speedinvest has a good list of pre-seed and early-stage investors (wait for the embedded table to load 😉), and they're pretty active health-tech investors themselves, albeit mostly in digital here
  • I'm including Dealroom's article for reference on the most active global VC funds, but most are US based. You will see EIC (European Innovation Council Fund) there but it's very special beast and not your typical VC here
  • The most recent article from PitchBook focusing on European health-tech startups to watch will hint at how scarce hardware is among startups. But if nothing else, I'd recommend reaching out and chatting about fundraising process and potential introductions with any startup from the space that resonates with you or is working on a problem close to your area of expertise. If nothing, you can make new friends or find interesting here

And that's finally it. Fundraising in Europe is generally harder than in the US and it's even more true for health-tech startups. So wish you good luck!
If you have any questions, feel free to reach out, maybe I can help.

health-tech in most investors' minds means digital health and not hardware