Four Tips for Raising Funding as a B2B Healthtech Founder
By Brad Otto
Raising venture funding as a healthtech startup is a challenge in the best of times, and is a true feat in the current economic environment. According to Pitchbook, seed stage deals were down 53% in Q1 2023 relative to Q1 2022. At SpringTide we often back founders who are in the early innings of selling to healthcare payers and providers. Here are a few tips that can help you stand out as a founder looking for funding in this tough market.
Strive to standardize your B2B contract terms. The more homogeneous your current deployed contacts are, the more value investors will put on your sales pipeline and forecasted revenue growth (standardization = predictability).
Unit economics matter now more than ever. It’s okay to do things that don’t scale with early customers as you iterate towards product-market fit. However, you can’t lose sight of the business model you’re working towards at the end of the tunnel. If you’re not there yet, show a clear benchmark and your path to getting there.
Strategic investors and CVCs can be a double-edged sword. All else equal, a customer who is also an investor in your company provides less market validation than an independent 3rd party customer. Try to maintain a minimum 2:1 ratio of independent customers to investor customers (or early ‘customers’ with stock options).
Find an executive sponsor with "yes" decision authority. This is especially critical as you begin to navigate larger B2B contracts. Many people will claim to have decision authority, when the reality is they only have the authority to say “no” to projects. Typically, very few people in an organization have the authority to say “yes” to projects. C-level is an easy, but crude, shorthand for a “yes” decision-maker.
