Speaker: Jason Foster
Event: Unlocking the UK opportunity for Tech (London Tech Week 2022)
Organiser: The UK Launchpad
Summarised by: Haoyue Xue
This blog provides the key points outlined by Jason Foster as part of his speech at London Tech Week 2022.
Jason Foster, an investor and advisor with 20 years of health tech industry experience, gave his key insights into how to enter the UK and European health tech market and raise funds.
Market Entry
Regarding entry into the UK and European markets, startups usually start in the UK market and then gradually move on to the rest of the European markets. And one place where many health tech startups want to come to showcase their products is often the NHS. Whereas the NHS is a challenging client, piloting is often feasible because it is relatively straightforward to get clinical champions who want to test new technologies. However, the difficulty is the transition from pilot to customer. Many startups might face the so-called “death by pilot” after one pilot and another with NHS.
The private healthcare system in the UK is smaller but much easier in comparison. Therefore, companies who want to scale their businesses in the UK healthcare system can demonstrate value to private payers, such as insurers, pharmaceuticals, med techs, etc. However, investors in the UK and Europe are overall more risk-averse than US investors. The US is the largest healthcare market in the world and healthcare is a business in the US. So, from an economic point of view, the strategy could be demonstrating a proof of concept in the UK by piloting with the NHS as a great banner and then using these proof points and green shoots to transfer to the US market. There are organisations to help UK-based businesses move to the US, such as London & Partners and the Mayor’s Office for London-based businesses, the Department for International Trade (DIT), Association of British HealthTech Industries (ABHI), which provide a nice way to get a warm introduction and a toehold in the new market.
Raising Funds
As for fundraising, health tech has been through quite a roller coaster over the last few years, the COVID pandemic seemed to be favourable for health tech investments at the beginning as awareness has been raised about health technology due to the fact that the technological solutions can help overcome some of the challenges we have been facing.
As the result, the first half of 2021 witnessed the largest number of IPOs of biotech companies in history. Nevertheless, as capital flows into the sector, it also has created asset bubbles and valuation blowups. There are a large number of companies with no assets in the clinic but raising billions of dollars pre-clinically in their IPOs. As the market was ahead of itself and the retrenchment began. And today, the biotech index is down 70% from its peak last year. Health tech investments are not as accessible in the private markets as crossover funds have taken massive losses.
Foster recommends entrepreneurs who need to raise capital be realistic about valuations considering valuations have fallen significantly. Painful decisions need to be made on flat ground or even down round to keep the business afloat. There is substantial capital looking for a home, but VCs do not get capital from LPs to sit on their laurels but to deploy it. He also recommends waiting for the market to stabilise before raising capital if possible. Hopefully, over the next six months, the public market is able to stabilise and then investment in the private market can also move forward.
Want to know more?
The UK Launchpad is an innovation ecosystem specialising in supporting tech companies looking to enter or raise money in the UK and European markets
If you would like to see if we can help your company:
• Email us at contact@uklaunchpad.com
• Visit our website at www.uklaunchpad.com
