Entrepreneurs and the Economy: Tips for Healthcare Startups Entering a Bear Market

Historically, the market has had its fair share of ups and downs. The only constant guarantee in the economy is uncertainty, so nothing should stop you from growing your business and focusing on what factors you can control.  

As of June 2022, the U.S. stock market officially entered a bear market due to increasing investor concerns due to unpredictable COVID-19 variants, less overall funding in digital health in Q1 and rising inflation rates.  


Before this shift, where did the market stand? 

Back in 2019, investments in digital health were booming because of the integration of mental health services into broader virtual care platforms. The COVID-19 pandemic spurred greater investments as technology became a necessity in everyday medical delivery. This need led to a record-breaking $29.1 billion invested in digital health funding in 2021.  


What does a bear market look like for healthcare startup founders? 

It means greater caution from investors, who are looking for steady startups with an established payment pathway and strong clinical evidence base. Now, startups face a double burden to combat an existing conservative strategy that investors employ while continuing to refine and innovate their business models.  


What steps can startups take to prepare their teams and attract investors?  

Be proactive.  

Plan for lower valuations, less capital for funding rounds and fewer deals. 


Take advantage of the circumstances  

See this time as an opportunity to choose the right people for your team, enhance your existing product and carve out your unique space in your sector with less competition. 


Focus on scalable, new technology that addresses unmet needs. 

See if there is new technology backed by robust clinical evidence that can support your product. 


Demonstrate the ability to build a profitable business with limited funding. 

Investors want to see how you can think resourcefully. See where you can cut costs in your business or refine your messaging to communicate better with your target audiences.   


Create plans to mitigate and address reimbursement challenges.  

Outline possible reimbursement challenges and how to address them. 


How can payers and providers support startups? 

Payers have an opportunity to collaborate with providers and entrepreneurs to make quality care more affordable. Partnerships of this kind can offer data and sturdy infrastructure for creating streamlined treatment plans that provide clear timelines for startup founders. 

Providers can help entrepreneurs establish a strong clinical evidence base by sharing expertise and leading practices with startups. They also can get involved early in the design cycles, offer feedback about the product content and help integrate the product into clinical workflow. 


So, what’s next? 

The bear market is here to stay for a while, but there’s no need to pause operations or panic. Now’s the time to stay smart about your long-term strategy and be prepared for investor pushback. Remember, the current state of the economy will never define your success and learning how to stay agile despite the ebbs and flows will only make you a better entrepreneur. 


Looking for more advice? Head to our blog here. 


  1. Chandra, Tarum. “Healthcare in a Bear Market.” Seeking Alpha. 
  2. Chem, James. “Bear Market.” Investopedia. 
  3. David G. Anderson, PhD. “Healthcare Venture Investing: How to Succeed in a White-Hot Market.
  4. “Is Healthcare Recession-Proof?” Health Capital Topics. 
  5. Landi, Heather. “Digital Health Startups banked Record-Breaking $29.1B Last Year. Will the Momentum Continue in 2022?” Fierce Healthcare. 
  6. Landi, Heather. “New AMA Hub Connects Doctors with Early-Stage Healthcare Startups, Investors.” Fierce Healthcare. 
  7. “New Strategies for Medtech Startups.” Deloitte.  
  8. Pifer, Rebecca. “Hospitals Bet Big on Venture Capital amid COVID-19 Revenue Flux.” Healthcare Dive. 
  9. “Q1 2022 digitial health funding.” Rock Health.  
  10. Ren, Yumeng. “Payer-Provider Partnerships May Fuel Future Affordable Care.” Techtarget. 
  11. StartUp Health. “How Startups Can Partner with Large University Health Systems.” StartUp Health. 
  12. Tower, Jonathan. “The Bull Case for Venture Capital in a Coming Bear Market.”13. Wilhelm, Alex, and Anna Heim. “As the Pandemic Wanes, VCs Are Investing Less in Health-Focused Startups.” TechCrunch.