Today in health, it digital health funding cools down. My name is bill Russell. I'm a former CIO for a 16 hospital system and creator of this week health instead of channels, dedicated to keeping health it staff current and engaged. We want to thank our show sponsor shore investing in developing the next generation of health leaders.

Accordion dynamics, Quill health Taos. So site nuance, Canon medical, and current health. Check them out at this week, health.com/today.

All right. So this story is probably not news to you. You've seen a couple of headlines now of unicorns laying some people off. And you've seen a slow down in some of the digital health startups. , let, let me tell you how all this is related. I will get to that in the SOA, but let me give you some of the excerpts from the article. This is from fierce healthcare, Heather Landy market downturn, damp it's digital health funding, M and a in 2022.

These sectors raked in the most cash. All right funding. Isn't the only thing slowing down this year. According to rock Hills report after 23 public market exits in 2021, digital health public exits came to a halt in the first half of 2022 as zero startups went public. Hmm. , after reaching a fever pitch in 2021 digital health funding cooled down in 2022, raising 10.3 billion across 329 deals in the first six months.

That's down from the 14.7 billion raised during the same period last year. , according to the first half 2022 funding report from rock health, a venture fund. Dedicated to digital health, but it should be noted. 10 billion is still a hefty amount of cash pouring institutional health. That is true. And this year's funding is on track to outpace funding in 2020. This year's overall funding is now pacing to land around 21 billion significantly less than 2020 ones.

Total of 29 billion in well ahead of 2020s, 14.7 billion.

It goes on while the first quarter of 2022 funding generally matched the same period in 2021. The second quarter of 2022 with 4.1 billion raised was the lowest funding quarter since the second quarter of 2020. With 2.9 billion. Funding. Isn't the only thing slowing down this year. According to rock health report after 23 public market exits in 2021 digital health.

Public exits came to a halt. We've talked about that earlier. Digital health had a wild ride in 2021 with startups raising an eye-popping 29 billion across 729 deals. According to Raquel's year end report. But there were questions in the market about whether digital health companies would sustain the record level of growth in 2022.

Now the signs are pointing towards funding in 2021, standing out as an anomaly rather than the norm. All right. , let's go down here and see where investors did put their money.

After a slow first quarter in 2022 funding for digital health startups, catalyzing, R and D in biopharma and med tech picked up in the second quarter and finished the half at 1.6 billion with rounds raised by biopharma analytics player. SEMA for

clinical trial accelerant, Verena health. And real world data solution provider concert, AI. Digital mental health care. Also continued to be a hot sector, raising a combined 1.3 billion. In the first half of 2022. And again, reach top funded clinical spot led by liras $235 million raise in January. However of that 1.3 billion, just 300 million closed in the second quarter of 2022, possibly.

Signaling a slowdown. Funding for digital health solutions monitoring disease brought in 1.4 billion. The category jumped. Was largely drew by raises from biopharmas and omega health. Which offer remote monitoring comparisons for its diabetes and hypertension program. With hospital labor costs at an all time high and staff burnout.

And DEMEC investors also are pouring funds into clinical and nonclinical or administrative workflow support. Funding for starters. Augmenting nonclinical workflow reached 1.3 billion. Led by cloud analytics and payments. Platform clarify health. All right. That's the end of the article. My, so what on this is, there's a couple of things going on.

I could layer in some stories here about. The layoffs, we just had olive AI. , lay off some people, we had some other, , unicorns layoffs and people as well. And so that's going on. And that is an indication that the

Investors. are coming to the health tech startups. And they're essentially saying, look, cash is going to be tight over the next.

A year, maybe two years. So get your, , your cashflow in order, make sure you have enough to weather the storm. , there's an old saying that companies don't go out of business because they're not making money. They go out of business because they run out of cash. And that is absolutely true. In my experience, I've been through a chapter 11, a filing, and, , I've been through one that led to a final closure of.

, the organization and when it runs out of cash, that is the end of the operation. So. The portfolio companies are being asked to essentially shore up their house. , make sure that they're spending their cash burn is under control. And in most cases, that cash burn is related to staffing.

All right. So that's one of the things that's going on. The second thing that's going on is we are entering a time where you will probably see some of these health tech startups, either fold into other companies. , at a desperation go way. , but you will see the potential for, , some of the startups.

, just disappearing. So if you are utilizing them in your health system, , be aware of that, have conversations with them about their cashflow. It is a safe conversation to have you are allowed to have that conversation. , around their financials and their financial health. Especially if you are doing pilots or are implementing them within your health system. And I think, it's critical to have those conversations up front.

So the next two things may sound contradictory. , one thing I'm going to say is that this is a very tough market to do a health tech startup. And the next thing I'm going to say is essentially there are winners during a downturn in the economy. And so you have to sort of balance those two things and say is now the right time to launch a new company.

And the answer to that might be yes. , because in the downturn of an economy, you have different priorities. You have people prioritizing things like efficiency over some other things, and you may have a great efficiency play in which case. You should be investing heavily and selling into the downturn.

, on the flip side, if you're doing something that's a little more cursory and not tied directly to a revenue and cash. , the sales cycle might be extended. And if the sales cycle are extended, then the cashflow situation only gets worse. So , you gotta be a.

Discerning, going into this kind of market. , whether you do a startup, whether you invest in a startup. , whether you bring a startup in to utilize them. , these are all things to consider as well as the fact that there are going to be winners. And I don't know, you might have a winner right in front of you, and it might be time to fund that winter and to really.

, step on the gas. So, ,

interesting time for startups. Interesting time for the digital health funding space and definitely something we will keep an eye on. All right. That's all for today. If you know someone that might benefit from our channel, please forward them a note. They can subscribe on our website this week, health.com or wherever you listen to podcasts, apple, Google, overcast, Spotify, Stitcher, you get the picture. We are.

Everywhere. We want to thank our channel sponsors who are investing in developing the next generation of health leaders, Gordian dynamics, Quill health tau site nuance. Canon medical and 📍 current health. Check them out at this week. health.com/today. Thanks for listening. That's all for now.