Coronavirus pushes digital health into the mainstream
With many governments enforcing stay-at-home orders in wake of the COVID-19 pandemic, civilians have limited access to critical health services, both physical and mental. In an effort to ease the burden on healthcare systems, digital health startups around the world have been rising to meet the occasion, providing services ranging from symptom-checking and video consultations to mental health chatbots and AR stress management. At Qvantea we believe this space is poised for incredible growth that will last long after the pandemic subsides.
The biggest challenge facing the digital healthcare and telemedicine industries prior to COVID-19 was getting doctors and psychologists on board with adopting the technology. However, the pandemic has accelerated the passage of legislation and the loosening up of regulations. We’ve been seeing both government and healthcare organizations encourage digital health services in lieu of face-to-face consultations; in France, teleconsultations will now [temporarily] be entirely covered; in Germany, health insurance companies removed previous restrictions on telemedicine consultations; the NHS encouraged GP surgeries to reduce in-person appointments. The coronavirus, despite all its drawbacks and tragedies, has created a rare business opportunity for the industry by speeding up legislation and the adoption of digital health. Willingness to adopt is no longer a major hurdle facing digital health startups who need to onboard medical professionals.
Let’s have a look at how this space might fare going forward. The entire future of the industry depends on the next few weeks and months, depending on whether these startups’ services truly change the playing field and remain defendable long after the pandemic. Hastily rolled out services and products could harm the industry’s brand and nullify any progress digital health has made in gaining consumers’ trust. Credit Suisse has said that it believes investments in digital health care will continue to grow after the pandemic, and as companies start to take a deeper interest in employees’ wellbeing, the potential for contracts with health programs – especially mental health services – continues to increase as well. The mental health tech industry alone was already on a path of exponential growth; Octopus Ventures, one of the largest early stage investors in Europe, published a study showing that global venture capital investment in this space increased almost five-fold between 2014 and 2019, to reach £580m in 2019. Throw other telemedicine and digital health services into the mix, and we can see that the potential market is absolutely massive.
Despite this massive growth, investing in the digital health space does not come without risks. Early-stage funding for startups has already begun to dry up as the coronavirus outbreak slows; according to CB Insights, seed-stage funding has declined by about 22% globally since January. In addition, this growth is partially attributed to the necessity of telemedicine services given the circumstances. Once patients can go back to vising their doctors in person, it’s unclear if the current trajectory will be sustained. However, we believe the best startups in this space will remain defensible because they will have overcome the key obstacle we mentioned earlier: adoption of the technology by professionals. Even if usage of digital health apps and services take a dip once people go back to work in-person, consumers’ and healthcare organizations’ openness to digital health will have undergone a crucial shift, easing the playing field for startups who previously faced large barriers to entry.
At a time when constant fear pervades the news cycles and a myriad of factors pose as obstacles to those working at home, we at Qvantea believe that investing in digital health services would be a smart move for employers. COVID-19 has exposed various weaknesses within current healthcare offerings, and in turn, several different niches our clients and other startups could tackle. We’d advise startups to make sure their products will remain relevant and defendable once traditional in-person consultations return as the norm. It’s been said that crises reveal humanity at its best and worst – the pandemic has created a unique pocket in history for startups to both expand their businesses and provide critical care to those in need. Qvantea’s team is excited to see what the future holds in store in this up-and-coming market. Below we take a look at some of the most exciting European players in the space:
***
Swedish telemedicine company KRY (known as Livi abroad) recently raised $155 million in a funding round led by Ontario Teachers’ Pension Plan. KRY allows users to consult qualified health professionals within minutes via their smartphones or tablets. KRY has been chosen by the NHS as one of the preferred digital healthcare suppliers to provide additional COVID-19 capacity, enabled access to free GP consultations in parts of Germany, and launched Care Connect in Spain, Poland, and Italy, a free platform that enables any European healthcare professional to see their patient via video.
Berlin-based Ada Health is a symptom-checker app has seen exponential increases in assessments. The #1 medical app for 140 countries, Ada has set up a “COVID-19 Taskforce” to focus on all the new features and solutions its partners (which include healthcare systems and health insurance providers in Europe, the US and Asia) are asking for. Ada is one of the more well-established players in the industry.
Swedish mental health startup Ahum serves as a marketplace of therapists and psychologists, providing users with access to a secure and private chat room. Ahum is trying to de-stigmatize therapy and cast it as a service that anyone can benefit from to become who they want to be. Although the company first saw a plunge in business when the virus first hit, business has since been booming as both clients and psychologists become more willing to adapt to digital psychotherapy.
Mindler, a Swedish digital mental health provider, announced on April 7 that it had raised €8m in Series A funding to help it meet increasing demand for psychology services. The company, which matches users with verified psychologists through a short questionnaire, is focused on expanding outside of Swedish markets and improving accessibility to psychological services outside metropolitan areas.
One particularly hard-hit demographic is expecting mothers, who fear going to coronavirus-overrun hospitals to give birth without a group of loved ones by their side. Berlin-based midwife app Kinderheldin is quickly producing a digitization of pre-natal classes that expectant mothers usually attend. This is certainly a unique pitch amongst all the appointment-booking and chatbot health startups, but one that tackles a critical niche with few competitors.
German startup HelloBetter announced on April 9 that it had secured seed funding “in the single-digit million range” to help grow its operations. HelloBetter wants to democratize mental health treatment, as more than 25% of adults in Germany meet the diagnosis criteria of a mental disorder in any given year, according to its CEO. The funding has allowed for HelloBetter to establish a scientific advisory board and a council of experts from the health and insurance industries moving forward.