Our 2024 Digital Health Thesis
Investing in technologies that democratize access to quality care for all.
At Bread & Butter Ventures, we’re investing in the future of how we feed ourselves, how we care for one another, and what the future of work looks like — from the heartland. We invest all across the country, and we lean into the strength in our own backyard. One of our core sectors of focus in digital health, shaped in part by our geography: Minnesota is fondly nicknamed Medical Alley — home to more than 1,000 healthcare companies headquartered here and quickly becoming the #1 health tech cluster globally. The in-ear hearing aid and wearable pacemaker were both invented here, and Minnesota leads the nation in pre-market approvals granted by the FDA. We are home to the #1 ranked hospital in the US for seven consecutive years, Mayo Clinic, and the nation’s largest private insurer, UnitedHealth Group. And, we are a hotbed of startup innovation.
Our northstar when we look at investments in healthcare is to invest in technologies that democratize access to quality care for all. There are many dimensions embedded in this — from increasing access through telehealth to looking at rural vs. urban to investing in the infrastructure and software that power the industry. We focus specifically on seed stage investments where companies have live MVP or product in market and we typically invest in rounds that are between $1.5M-$3M. We leverage a wide array of partnerships with health systems, payors, providers, and corporations in Minnesota and beyond as part of our thesis and support for companies.
We have made 13 investments in digital health in the last few years and we are actively adding to our healthcare portfolio. These investments span a range of areas — for example, River Health (affordable healthcare for individuals and employers), Delfina (intelligent pregnancy care for all), Itiliti Health (AI automation for payer-provider communications) YourPath (a population health solution for people with substance use disorders), Betterleave (comprehensive grief and bereavement care) and many more. We are so excited about companies who are expanding access and transforming care. As we reflect on these investments, we feel grateful to partner with mission-aligned founders improving outcomes through technology.
Our 2024 Digital Health Thesis
In 2024, we are sharpening our focus on diving into the following themes:
Access to care
Payment models and the fintech layer of healthcare
Labor, workforce, and AI
Population health solutions
Preventive care & social determinants of health
Access to Care: We believe the future of healthcare will involve care that is largely out of just traditional settings — via telehealth, in-home health, remote patient monitoring, and more. During the Covid-19 pandemic we saw rapid telehealth adoption out of necessity; now we want to support innovative models that provide convenient, quality care where and when users need it most. Specifically, we see opportunities in asynchronous care, laser-focused solutions for areas like women’s health and pediatrics, and tools bridging care from hospital and clinic to home.
Payment Models & Fintech: We see room for innovation both in who pays for care and the systems and tools behind how it is paid for. We are exploring new business models pushing new frontiers in value-based care and direct primary care alternatives. We are looking at financing platforms tackling revenue cycle management, making care affordable upfront for more individuals, while still allowing practices to run profitable and sustainable operations.
Labor, Workforce, and Artificial Intelligence: We’re excited about companies leveraging AI and automation to empower the healthcare workforce — solving for issues like burden and burnout. Tech-enabled solutions supporting documentation, care coordination, customer support and more can have tremendous impact freeing up clinicians’ time while improving patient experiences. We also see opportunities around better leveraging non-traditional talent sources like community health workers via workforce platforms.
Population Health: We strive to support technologies assisting very large underserved groups — including the elderly, those with behavioral health needs, rural residents, underrepresented and more. Innovations focused specifically on the unique needs of these segments have potential to move the needle on access and outcomes. We want to help unlock solutions tailored to populations left behind by the current system.
Preventive Health & Wellness: We’re looking at a range of exciting models focused on nutrition, behavior change, social determinants of health and avoiding the onset of disease altogether. We believe data is paramount here to both fuel consumer choices and also to help incentivize adoption and stickiness of emerging tech by patients, providers, and payers.
The Digital Health Landscape
It’s been a rollercoaster of a ride in the digital health funding landscape over the last few years, and it’s as imperative as ever that the venture industry continue investing in this ever-important sector of the economy.
When we first launched our Bread & Butter digital health investing practice in 2020 the world was in the early stages of navigating the Covid-19 pandemic. This was a driving force for the record funding that digital health startups saw in 2021 — a whopping $29.2B (an increase from $14.3B in 2020). The pandemic drove demand for quality care, stress tested and in some cases broke the infrastructure and labor market, catapulted telehealth into a household term, and shed light on vulnerabilities in our healthcare supply chain. We saw a flood of generalist investors begin to invest in the sector as well…much of which has dried up over the last 12–18 months. In 2022, funding for digital health startups decreased to $15.3B and dropped again in 2023 to $10.7B, the lowest funding in the sector in four years.
The decrease in funding levels does not mean digital health companies have stopped launching or innovating. We believe that the last four years have sharpened our understanding of what pain points are most acute for the industry to solve.
Up Next
We’re excited to sharpen our focus and deepen our work in digital health in the coming years. Today, we are excited to announce a partnership with Medical Alley® — an agreement which we believe will enable us to take our digital health practice to the next level. Medical Alley is a global organization, based in Minnesota, that represents a network of more than 800 leading health technology and care organizations working together to change healthcare for the benefit of patients around the world. Their vision is to elevate the Medical Alley® region as the epicenter of health innovation and care by amplifying and activating healthcare transformation.
We are thrilled to be part of the inaugural Starts Venture Partners program! Starts Venture Partners brings top healthcare investment funds alongside Medical Alley’s innovation initiative, Starts®, to source global healthcare startups, enhance our Platform efforts, and build a stronger health innovation ecosystem. We believe that working closely with the team at Medical Alley will give our firm and our portfolio companies an incredible advantage in the digital health space through network, experience, and expertise.
If you’re building our investing in digital health, we’d love to hear from you. Get in touch via our team’s office hours here.
