NextGen Ventures
Medtech companies are transforming the healthcare landscape with cutting-edge technologies that enhance patient outcomes, improve clinical workflows, and empower individuals to take control of their wellbeing.

by Monisha Das

Tables of Contents
Project Overview
Market Analysis
Pitch Deck Analysis
Startup Recommendation
Case Study
Due Diligence Recommendations
Term Sheet Analysis
Project Overview
Investment Thesis
To invest in startups at the intersection of B2B software and health tech that are at a pivotal stage of commercialization and scalability, showing clear product-market fit, impactful solutions, and potential for resilient growth.
Trend
Advancing Healthcare Through Software
Areas of Interest
Health Tech, Scalability, B2B Software, Healthcare Enhancement, Societal Benefits
Market Analysis
Market Size
The Medical Technology market is expected to achieve a revenue of US$610.20bn in 2024. Looking ahead, the market is anticipated to grow at an annual growth rate of 5.23% (CAGR 2024-2028), resulting in a market volume of US$748.20bn by 2028.
Customer Analysis
Depending on the device/ service, target audience might be physicians, hospitals, distributors, patients or a combination of several groups.
Customer Perception
Consumers are more open to using technology in medical diagnoses than providers. Providers worry about patient anxiety from electronic health records, a concern less shared by consumers. There's a notable gap between consumer enthusiasm and professional caution in digital healthcare.
Market Analysis
Market Outlook
The medical tech industry is a fast growing market, revenues in the Medical Technology market had regressed in 2020 due to decreased routine medical treatments apart from COVID-19 treatments, the market came back strongly in 2021. The United States leads the sector by size followed by China with both continuing with high growth rates. Due to the high demand for COVID-19 testing, the In Vitro Diagnostics market was the outlier among the medical technology products from 2020 onwards.
Market Analysis
Recent Trends
  1. Telemedicine Adoption: The pandemic drastically increased consumer use of telemedicine, from 11% in 2019 to 46%. Interest remains high, with 76% of US consumers open to using telehealth in the future. Venture Capital (VC) investment surged, with telemedicine startups receiving $3.2 billion in a 9-month period of 2020, reflecting a forecast Compound Annual Growth Rate (CAGR) of over 23% from 2020-2026.
  1. Artificial Intelligence in Healthcare: AI funding in healthcare reached $3.7 billion across 232 deals by Q3 2020. Over 500 AI/ML-based medical devices and algorithms were FDA-approved by mid-2023, indicating regulatory support. AI applications are diverse, with significant potential in diagnostics, where image recognition technology is expected to value over $3 billion by 2030.
  1. Medical Robots: The medical robots market is projected to reach $35.05 billion by 2030, with surgical robots leading the category. The use of robotic technology has been crucial during the pandemic for reducing human-to-human contact, and VC investment in robotic surgery companies continues to grow.
Market Analysis
Recent Trends
4. Digital Therapeutics (DTx): Interest in DTx has increased, driven by technical developments and consumer adoption of digital health products. The DTx market is expected to grow at a CAGR of 31.6% during 2021-2026, reaching a market size of nearly $17.7 billion in 2027.
5.Virtual Reality in Healthcare: The VR healthcare market is expected to expand from $2.14 billion in 2019 to $33.72 billion by 2027. Applications range from medical training to patient treatment, with significant investment and acquisition activities in the sector.
6. Devices and Wearables: The rise of products like the Apple Watch has led to mass adoption of wearable technology, contributing to the growth of the Internet of Medical Things (IoMT). The wearable tech industry is anticipated to experience a CAGR of over 25% from 2020-2027, reaching more than $60.4 billion by 2027
Market Analysis
Deal Activity
  1. Increased VC Funding for Telehealth: Telemedicine startups saw a dramatic increase in venture capital funding, receiving nearly $1.8 billion in 2019, which then jumped to $3.2 billion in just a 9-month period of 2020. This surge reflects the growing investor confidence in telehealth as a sustainable and essential part of healthcare delivery.
  1. AI in Healthcare Attracts Investment: By Q3 2020, healthcare AI funding had reached $3.7 billion across 232 deals, highlighting the significant interest in artificial intelligence applications within the healthcare industry. The FDA's ongoing projects to develop AI-specific regulatory frameworks further validate this area's potential.
  1. Growth in Medical Robotics: The medical robots market is on track to reach $35.05 billion by 2030, with surgical robots leading this growth. Companies specializing in robotic surgery have been key targets for VC funding, indicating the high potential investors see in robotic-assisted medical procedures.
  1. Expansion of Digital Therapeutics (DTx): The DTx sector has seen rapid growth, with global VC DTx funding increasing fourfold since 2017 to approximately $1.2 billion in 2022. This growth is indicative of the sector's potential to transform healthcare delivery and management.
  1. Venture Funding for Biometric Wearables: Oura, a company specializing in biometric wearables, raised $28 million during its Series B round, marking it as the largest VC deal for a biometric wearable in Q1 2020. This reflects the growing interest in wearable technology for health tracking.
Market Analysis
Deal Activity
6.Acquisitions in Virtual Reality (VR) Healthcare: The acquisition of Digital Surgery, a British startup focused on VR applications in surgery, by Medtronic in February 2020 showcases the increasing value seen in VR technologies within the healthcare sector.
7. Rapid Growth of Teladoc Health: Teladoc, a leading telehealth company, reported revenue of nearly $300 million in Q3 2020, up 109% compared with the same quarter in the previous year. This growth underscores the rapid adoption of telehealth services.
8.Regulatory Approvals Accelerate: The number of AI/ML-based medical devices and algorithms approved by the FDA grew from 64 in early 2020 to over 500 by mid-2023, indicating a fast-paced development and acceptance of AI technologies in healthcare.
9.Investment in Health Monitoring Devices: The wearable tech industry's projected CAGR of over 25% from 2020-2027, with the market expected to reach upwards of $60.4 billion by 2027, highlights the significant investment and interest in health monitoring devices.
10.Strategic Investments in Digital Health Solutions: Pear Therapeutics, a notable player in the digital therapeutics sector, has raised a total disclosed funding amount of $409 million, focusing on applications for treating chronic insomnia and substance abuse. This demonstrates the strategic investment in solutions addressing a broad spectrum of physical, mental, and behavioral conditions.
Market Analysis
Key Players
Abbott
Abbott is driven by innovations in diabetes care, structural heart, and electrophysiology.
The company's commitment to research and development
(R&D) has yielded notable FDA approvals for products such as Navitor, Eterna, Aveir, the FreeStyle Libre 3 system, and the CardioMEMS HF remote monitor.
Medtronic
Despite a slight decrease in worldwide revenues by 1.4% on a reported basis, the company saw an organic revenue increase of 2.1%.
Challenges such as unfavorable exchange rates, inflation, and reduced demand for ventilators have impacted its earnings. However, Medtronic continues to innovate across various health conditions with its extensive portfolio.
Johnson & Johnson
The division's focus on orthopaedics, surgery, interventional solutions, and eye health, coupled with strategic acquisitions such as Abiomed, has positioned J&J as a leader in heart recovery solutions.
The company's emphasis on digital capabilities and innovation is poised to drive future growth, reflecting a strategic pivot towards leveraging AI, data science, and intelligent automation.
Pitch Deck Analysis
Based on my research here are three startups:
  • Cedar
  • We fitter
  • Healx
Pitch Deck Analysis
Cedar
Cedar is a payment and engagement solution used by hospitals and medical groups
  • Challenge Addressed: Simplifying the complex landscape of healthcare billing in the U.S., which often leads to significant unpaid bills.
  • Cedar’s Innovation: Unifying patient-provider interactions by replacing multiple EMR systems with a single, streamlined platform.
  • Competitive Edge: Cedar differentiates with a fintech approach focused on the patient experience, integrating advanced technology to enhance every step from pre-service to payment.
  • Impact and Benefits: Aimed at exceeding financial objectives for providers while boosting patient satisfaction and engagement.
Question for the Startup:
A detailed financial performance metrics and long-term customer retention rates would be essential
Pitch Deck Analysis
2. We fitter
WeFitter is a mobile health-data-driven solution that helps businesses do better.
  • Wellness Challenge: Many businesses struggle with inadequate tools to promote and track employee wellness, impacting productivity and escalating healthcare costs.
  • WeFitter’s Solution: A SaaS platform that harnesses health data from various sources, providing businesses with critical insights and tools to enhance employee wellness.
  • Strategic Advantage: WeFitter sets itself apart by offering actionable health data insights that foster engagement and improve wellness outcomes in corporate environments.
Question for the startup:
The results from clinical trials, partnerships in the healthcare ecosystem, and a clearer path to revenue
Pitch Deck Analysis
3. Healx
Healx is transforming the rare disease treatment path for patients and their doctors by generating insights and enabling actionable recommendations that drive improved outcomes
  • Urgent Challenge: Over 95% of rare diseases lack approved treatments, leaving a vast unmet need in healthcare.
  • Healx's Innovation: Utilizing AI to repurpose and combine existing drugs, Healx accelerates the discovery of treatments for rare diseases at scale.
  • Unique Positioning: Healx distinguishes itself with a tech-driven approach that not only meets but also addresses previously unmet medical needs in the rare disease space.
Questions for the startup:
For WeFitter, more precise revenue figures, customer acquisition costs, and evidence of sustained month-over-month growth would be crucial. Additionally, testimonials or case studies demonstrating the impact of each startup's solution on their customers or end-users would significantly strengthen the case for investment.
Startup Recommendation
Cedar
Among these startups, Ranked highest due to its established market presence, clear revenue generation, and alignment with NexGen’s focus on B2B and health tech innovations.
Cedar's market size and growth, alongside significant customer satisfaction, present a compelling case.
Case Study: Theranos failure
Theranos was a biotech startup founded in 2003 by Elizabeth Holmes, promising revolutionary blood-testing technology that required significantly less blood than traditional methods. It attracted over $700 million in funding, reaching a valuation of $10 billion at its peak. The startup claimed its technology could diagnose a range of diseases with just a few drops of blood. However, investigations led by journalists, notably John Carreyrou of The Wall Street Journal, revealed that the technology was fraudulent, leading to legal battles and the company shutting down in 2018.
Theranos shut down due to legal challenges stemming from fraudulent claims about its blood-testing technology, which were exposed by investigative journalism and resulted in regulatory and legal scrutiny.
Case Study: Theranos failure
Theanos faced a number of challenges, including:
Bias:The narrative around Theranos showcases the bias of hype and the failure of due diligence in the startup ecosystem, where the charisma and vision of a founder like Holmes can overshadow critical evaluation of underlying technology
Accuracy: Theranos's claims was fundamentally lacking, as the promised technology did not work as advertised, highlighting the importance of skepticism and rigorous validation in healthcare innovations.
Due Diligence Recommendations
Intellectual Property
Ensure your medtech solution is protected by robust patents and trademarks to safeguard your competitive advantage.
Third-party verification of the technology's efficacy and reliability
Carefully review your product's adherence to relevant healthcare regulations and industry standards.
Market Validation
Verify the existence of a sizable, unmet need and the willingness of customers to adopt your solution.
Financial Viability
Scrutinize the financial projections, funding requirements, and potential for profitability to assess the long-term sustainability of the venture.
Term Sheet Analysis
  • The section is named "Liquidation Preference." Its purpose is to specify the financial rights of Series A Preferred shareholders.
  • Rights or Obligations Outlined: For Investors (Series A Preferred Shareholders): They are entitled to receive a per-share amount equal to twice (2x) the original purchase price of their shares, plus any declared but unpaid dividends, before any distribution is made to holders of Common Stock.
  • Influence on the Relationship Between the Parties Involved: For investors, it provides a degree of financial protection and prioritizes their investment in adverse events, making the investment proposition more attractive. This could enhance trust and confidence in the venture from an investment perspective.

  • The section is called “Drag-Along Agreement." This section aims to ensure that if a majority of Series A Preferred shareholders agree to a sale or liquidation of the company,
  • Rights or Obligations: Series A Preferred Shareholders- They have the right to initiate a sale or liquidation if the majority agrees, compelling all shareholders to support the decision. Founders/Common Stockholders. They are obligated to consent to and support the sale or liquidation.
  • Influence on Relationships: This agreement can centralize decision-making among Series A Preferred shareholders. However, it may also cause tension if the interests of the majority of Series A shareholders diverge significantly from those of the founders or Common Stockholders, as it limits their ability to oppose decisions that may not favor their outcomes.
  • This section is called "Pay-to-Play." It encourages Series A Preferred shareholders to participate in future financing rounds.
  • Rights or Obligations: For Investors (Series A Preferred Shareholders), they must participate in the Qualified Financing by purchasing at least their pro-rata share to maintain their Series A Preferred status. Failure to do so results in their shares converting to Common Stock. For the Company, It has the obligation to offer the right to participate in the financing round to all Series A Preferred shareholders and manage the conversion of shares for those who do not participate as outlined.
  • Influence on Relationship: This provision can incentivize investors to continue supporting the company. However, it might also pressure investors who are unable or unwilling to provide additional capital.

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