As an early-stage healthcare investor, a common question I ask myself when speaking with entrepreneurs is “if this is a business or just a product?” By that I mean, can this company build a sustainable revenue model, establish lasting relationships with customers, and reliably deliver against its value proposition at scale? Or is it only developing a product that it will likely license or sell to another company for sales and distribution with limited potential for significant growth? Both are valid strategies for generating shareholder value, but each presents very different growth opportunities, risk profiles, and value propositions to key healthcare stakeholders.
For MedTech entrepreneurs, there is meaningful opportunity to create added value for consumers, payers, and providers by leveraging a broader platform strategy and building a business centered around their medical device. Strong examples of companies successfully implementing this strategy are digital health solutions leveraging connected devices as a core component of an integrated value proposition. Rather than focusing solely on developing a novel medical device, these companies address the broader market opportunity by answering the questions: How can I provide value to the end consumer? What information, tools, and services can I equip them with to help them better manager their personal health conditions?
Our 7wireVentures’portfolio company, Livongo, pioneered this model. Livongo is the market leader in Applied Health Signals, leveraging connected medical devices, including glucometers, blood pressure cuffs, and digital scales to continuously collect data, remotely monitor consumers, and help them manage their chronic conditions.