Bridging the healthtech funding gap: The crucial role of collective angel investments in early-stage healthtech innovation by Nanna Liebregt

Authors: Nanna Liebregt, Content Manager at NLC Health Ventures , Lars Olthof, Investment Manager at at NLC Health Ventures

Bridging the healthtech funding gap: The crucial role of collective angel investments in early-stage healthtech innovation

The world of healthtech innovation is pulsating with potential, offering transformative solutions to longstanding healthcare challenges. Yet, most scientific inventions do not reach medical specialists and their patients, even though we know that they could positively impact patients’ lives. The difficulty with securing financing is especially prevalent among healthtech startups, as investors often struggle with the fact that deep sector knowledge and expertise are needed to understand whether an investment is potentially worthwhile. In addition, venture capitalists and private equity firms often favor later-stage investments with larger ticket sizes, unintentionally exacerbating the funding crisis in healthtech’s infancy. As a result, many startups are left stranded in the well-known ‘valley of death’, leading to an impoverishment of the European innovation landscape.

Angel investors: the early-stage pioneers in healthtech innovation

This is where collective angel investment comes into play. The appetite among angel investors for early-stage investments certainly exists as one of the most attractive aspects of investing in healthtech startups at an early stage is the potential for high returns. Not only are investment multiples highest during the first phases of a company’s development, but healthtech startups often target large markets with substantial unmet needs. Investing at an early stage allows angel investors to support ventures that have identified critical gaps in the healthcare landscape, positioning them to address pressing issues and capture untapped market opportunities. Further, beyond financial gains, healthtech investments allow angel investors to make a meaningful impact on healthcare outcomes. Supporting ventures that address critical healthcare needs allows angel investors to nurture groundbreaking innovations from their infancy but also reap substantial returns as these ventures mature into industry leaders.

However, investing in healthtech startups is also risky, especially for those lacking medical expertise. Investing in medical technology demands a nuanced understanding of the complex healthcare and regulatory landscape, and many angel investors find it challenging to evaluate the scientific and clinical merits of a medical invention, hindering their ability to identify the most promising healthtech startups. While individual angel investors may lack the specialized knowledge to thoroughly evaluate a healthtech startup, a collective approach, in which several (angel) investors invest collectively and independently invest in multiple healthtech startups, might be part of the solution to overcoming the early-stage funding gap in healthtech.

A portfolio approach to mitigate risk

Recognizing the funding gap in the early-stage healthtech landscape, NLC Health Ventures is trying to be part of the solution by making early-stage investment accessible to investors. As Europe’s largest healthtech venture builder, NLC identifies top-notch early-stage healthcare inventions, provides extensive support to grow the venture, and brings them to market. NLC’s current portfolio consists of over 100 ventures within medtech, biotech, and digital health, and so far NLC ventures have collectively raised over €122 million and impacted more than 120.000 patients. Through initiatives like the NLC Health Impact Fund, investors gain access to a diversified portfolio of impactful healthtech ventures. With one single investment, investors spread their risk across various healthtech startups. As such, NLC’s portfolio approach acknowledges the uncertainty in the early-stage healthtech landscape, increasing the likelihood of nurturing groundbreaking innovations from their infancy but also to potential substantial returns as these ventures mature into industry leaders.

Interested in becoming a part of the solution? The Health Impact Fund is currently open for investment. For more information, have a look here.