AI tools continue to flood the healthcare market, but not every startup will survive the hype cycle.
Uma Veerappan, a vice president at Flare Capital Partners, believes the companies achieving long-term success will be the ones that embed into clinical workflows, build defensible data assets and quickly figure out how to sell their technology.
Workflow integration is the key to sticky products.
Veerappan thinks healthcare tools should become embedded into operational systems rather than sitting on top of them.
“Healthcare, in particular, is an industry where any degree of friction causes issues with distribution, and also scale,” she remarked.
She cited the success of ambient AI scribes as an example. These solutions were designed to fit seamlessly into clinical workflows, then physicians adopted them quickly in an effort to reduce burnout. Clinical and financial ROI came later, not necessarily on day one, Veerappan noted.
Healthcare needs action-oriented tools, not more dashboards.
Clinicians are already inundated with various alerts and dashboards, which often become noise, Veerappan pointed out.
“Healthcare needs solutions that close the loop and actually carry out the action,” she declared.
She thinks tools that actually carry out tasks will likely have a greater workflow impact and clearer ROI.
Longitudinal data strategies could determine success.
Veerappan is hesitant to label categories as crowded because there are many AI solutions that may initially look commoditized. Instead, she evaluates startups based on whether they have a long-term data strategy, whether their product can generate a proprietary longitudinal dataset, and whether that data can become their defensible moat.
In other words, she looks for companies that can start with a single “wedge” product to gain adoption, then use the data generated through that product over time to build a broader platform that is difficult for competitors to replicate.
Distribution strategy is a major weakness for early startups.
One of the most common issues Veerappan sees in early-stage health tech companies is that they have strong technology but a weak sales and distribution strategy.
Her advice for founders is to invest early in go-to-market expertise, as well as to really understand who their buyer is and how to sell into them. Without that, Veerappan said even the best technology won’t succeed in healthcare.
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