Article in today’s NY Times that looks at where the Silicon Valley Venture Capital (VC) firms are likely to place bets in 2009. Some highlights and our comments follow:
1) Article starts by saying almost anything Web2.0 that is ad-supported and free to the consumer will fall out of favor. No argument there. This new reality will not be limited to just Web2.0 companies but encompass Health2.0 firms as well.
2) Venture Capital firms are not too crazy about funding iPhone/smartphone apps and instead are investing in mobile hardware/infrastructure plays. They are much closer to this market than we are, so maybe they know something we don’t. From our vantage point, however, we see plenty of opportunities for new mobile apps, thus remain bullish on smartphone apps, particularly those targeting health & wellness. Despite some 400+ health apps for the iPhone, most of those apps are simplistic, me-too apps and only a handful truly capture the imagination. On top of that, there are the platforms for Google Android, Nokia’s Symbian, Blackberry and even Microsoft Mobile. None of these other mobile platforms have come close to replicating the AppStore, but if they do, watch out. There is still a deep vein to tap here that the article and maybe some VCs fail to see.
3) Despite not seeing much opportunities in the mHealth, VCs do see a lot of promise for healthcare apps, especially, at least the article infers, consumer-facing apps. While we would like to share their optimism, we are skeptical that quick returns will come easy for several reasons including:
- Consumer adoption is a challenge on two fronts, education to drive motivation/adoption and privacy,
- Liquidity of health information is still in the dark ages and
- Mixed response among care providers. While some encourage use of such tools, there is a significant number of care providers who are not supportive and even discourage consumer use of these tools.
Yes, there are opportunties here and yes, IT is still fairly new to healthcare, but there are some deep structural issues to overcome. VCs looking to invest will need patience, something that is rarely found.