Adapting to a new healthcare investment market

Nearly $30 billion in venture capital (VC) poured into the healthcare services sector in 2021.¹ Companies with innovations that centered around streamlined analytics, clinical workflow support, patient engagement improvements and increased pricing transparency saw a spike in investments.

A few months later, however, the situation has changed. As companies look to raise capital in the second half of 2022, they will likely find a completely different market, said Frank Driscoll, Vice President of Middle Market Healthcare Services for J.P. Morgan Commercial Banking.

If you’re looking to raise funding in upcoming quarters, it’s imperative to plan ahead and make adjustments today. Here’s what you can do to prepare.

Streamline as much as possible

Runway extension, expense rationalization and finding a path toward profitability are key. The era of growth at all costs has shifted dramatically as valuations and fundraising have begun to decline. Finance teams need to be thinking 18 to 24 months out about how they are going to achieve sustainable profitability. 

Explore alternate investment options and find a long-term banking partner

Adding liquidity through debt financing can be an efficient and meaningful way to extend runway. It’s even more important to find a financial guide who can help you weather the turbulence of a downturn through insightful industry expertise, connectivity to potential capital partners and a range of technology solutions across treasury, merchant and cash-management solutions.

Maintain focus on the mission

The healthcare industry is still hungry for innovations that drive clinical outcomes and lower costs. Businesses that can demonstrably solve problems and show clinical value will likely continue to find strong investment opportunities. 

How J.P. Morgan can help

We’re focused on empowering you to reach your potential at every stage of growth—from pre-profit to IPO and beyond. We continue to invest in technology and customized solutions to help clients stay ahead of the curve.  And we deliver local healthcare banking expertise and access to the firm’s capabilities, empowering our clients to drive quality outcomes while optimizing operations.

To learn more, visit our healthcare page or connect with your Commercial Banking relationship team.

_{1. Trends in Venture Capital Q4 2021 Update, via PitchBook-NVCA Venture Monitor}

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