What UK healthtech founders need to know: an investment director’s perspective
Early-stage fundraising is particularly challenging for UK healthtech founders navigating the crucial transition from development to commercial traction. Understanding what investors are looking for as key indicators of potential is paramount. Isobel Egemole, Investment Director at IW Capital, shares insights on what makes a start-up stand out and how founders can position themselves for success in today’s competitive market.
Isobel Egemole, Investment Director
Understanding the healthcare ecosystem
“With healthcare businesses, you’re never selling to just one person,” Isobel explains. This fundamental reality separates healthcare companies from businesses in other sectors, requiring founders to map the entire stakeholder ecosystem and understand that decision-making involves multiple parties.
A product might be designed for a medical professional to use, but they often won’t make the final purchasing decisions. Selling into a hospital requires buy-in from legal, compliance, finance, and clinical operations teams. “What sets them apart is that they already know what that ecosystem is,” Isobel says of successful healthcare companies. The best founders understand the value proposition for each stakeholder, whether it’s making a surgeon’s job easier, improving patient outcomes, saving time for the finance team or reducing costs for the hospital.
Navigating regulatory complexity and long sales cycles
Regulatory compliance remains a key challenge across the healthtech industry, regardless of sub-sector. Companies must also prepare for longer sales cycles as they work to secure buy-in from multiple stakeholders.
For businesses expanding into the US market, reimbursement codes add another layer of complexity due to the insurance-based system. Strolll, for example, is working to secure appropriate reimbursement codes for its product so that hospitals and clinics can be paid when they use it, particularly when prescribing for at-home use. “Getting the right codes, coverage decisions and payment levels in place is often what unlocks meaningful revenue,” Isobel explains. Understanding these market-specific nuances can be the difference between success and failure in healthcare.
Meanwhile, the NHS presents its own challenges, though recent policy developments offer cause for optimism. The NHS digital strategy and 10-year plan are pushing for greater adoption of new technologies, creating opportunities for start-ups that can navigate the system effectively.
Back to basics: problem and solution
“I always like to see the pitch deck first, making sure there’s a clear problem and solution,” Isobel explains. For investors, identifying a genuine market problem is non-negotiable, regardless of sector expertise. Whether the management team brings deep industry knowledge or a fresh perspective, demonstrating that there’s a real problem worth solving remains fundamental.
“At the end of the day, whatever the business is, someone has to buy it,” Isobel says. The challenge for many tech-heavy businesses is avoiding the trap of overdeveloped products without a clear value proposition. Whether the offering delivers cost savings, drives revenue, or adds value to customers’ lives, there must be a compelling reason for someone to purchase it.
Proving traction at the right stage
“We’re not looking to invest in businesses still trying to find product-market fit,” Isobel states. “We want companies where that’s been proven and now it’s very much about scale and growth.”
Companies approaching this level of funding need to demonstrate not just that their product works, but that they’ve proven the solution creates value for customers and have a clear commercial plan for scaling. This means moving beyond the question of whether the product fixes the problem to addressing how the company will scale, reach more customers and convert that value into revenue.
For healthcare companies, however, commercial readiness doesn’t always show in headline revenue numbers. This is where finding investors who understand the timelines of healthtech and life sciences is key. For IW Capital, the focus is on where the science or core technology has been de-risked and there is clear evidence that customers want to use it, whether that’s demonstrated through regulatory approvals, robust clinical data, meaningful pilots, early reimbursement pathways or committed strategic partners. Revenue is important, but it’s one of several lenses through which commercial readiness can be assessed.
Strolll, a portfolio company in the rehabilitation space, exemplifies this approach. Despite being earlier in revenue generation than typical investments, the company had secured extensive clinical validation, NHS traction, substantial grant funding and a partnership with Cleveland Clinic, all of which provided the confidence needed to support the investment.
The post-COVID opportunity in healthtech
“Pre-COVID, it was challenging investing in the healthcare space,” Isobel reflects. “It was an industry where digital transformation was slow and people were hesitant to adopt new technologies.” The sector’s natural caution, driven by the fact that people’s lives are at stake, made adoption difficult.
COVID changed that dynamic. The disruption to traditional ways of working accelerated openness to digital solutions and new technologies. Combined with an ageing population and increased focus on preventative treatments rather than reactive care, the sector is experiencing significant opportunity. There’s also growing emphasis on individual choice in health and fitness, evidenced by the rise in consumer devices and apps for wellness and remote monitoring.
AI: transforming diagnosis and drug discovery
When asked about emerging trends, Isobel points to artificial intelligence as the most significant transformation on the horizon. “Diagnosis is increasingly digital and pattern-driven,” Isobel explains. Historically, diagnosis has relied on highly qualified doctors and radiographers using decades of experience to analyse scans. AI can now replicate parts of that experience for less experienced practitioners in a fraction of the time.
“You no longer need everyone to have 30 years of experience looking at scans because the computer helps do that part for you,” Isobel notes. Rather than replacing clinicians, AI acts as decision support highlighting patterns, edge cases and anomalies that might otherwise be missed. The implications extend beyond diagnosis to drug discovery, with the potential to launch medications to market faster. This raises interesting follow-on questions: what complementary products and solutions become necessary as new methods are adopted, and which existing solutions become obsolete?
The rise of AI in healthcare is underpinned by the vast amounts of data collected in the sector. The real opportunity then opens to who can drive clear value from the data. Whether enabling AI to identify patterns across entire populations or providing early interventions based on lifetime health trajectories, it is identifying where the value lies in the data that drives adoption.
Augmented reality: finding value in healthcare before consumers
“Where AR has struggled on the consumer side, you can see how it works effectively in a healthcare setting,” Isobel observes. Augmented reality represents another promising trend, though its path differs from consumer applications. The hardware remains too expensive currently for mass consumer adoption, but the value creation in healthcare enables earlier adoption.
Strolll’s AR-based rehabilitation demonstrates this principle, with patients receiving significantly more therapy time compared to traditional one-on-one sessions, improving outcomes whilst reducing clinical time. “There’s enough ROI across both the patient and the clinical side,” Isobel explains. Similarly, another interesting application is AR surgical headsets allowing top surgeons to observe and guide procedures remotely, with 3D body scans enabling them to view anatomy from any angle without physical manipulation.
Building relationships in a people-driven industry
“It is very much a people business,” Isobel says. For founders wondering what it takes to break into the VC circle, Isobel emphasises the relationship-driven nature of the industry. Investors build long-term relationships with founders, working together for years before an exit. Deal flow often comes through personal networks, making it crucial for founders to build connections within the investment community and know the type of investor their business needs.
The current market: tough but fair
“A few years ago, there was significant capital available and valuations were high,” Isobel reflects. Today’s fundraising environment presents challenges, but Isobel suggests the correction was necessary. Reduced M&A activity and fewer IPOs have since forced a market correction, and we are now seeing increased activity.
“For high-quality businesses with strong fundamentals, this is actually what should have been happening all along,” Isobel argues. Competition for the best deals remains fierce, whilst businesses with holes in their plans face greater scrutiny. “Investors are being more selective,” Isobel notes. Founders need to know their KPIs, track the right metrics and clearly demonstrate traction appropriate to their stage.
The UK venture capital landscape continues to evolve, with programmes supporting university spin-outs and accelerators providing more entry points than ever. For founders who’ve built genuine value, proven traction and assembled the right team, opportunities remain strong. In a market that rewards quality over hype and substance over speculation, the strongest healthtech start-ups will continue to attract competitive funding rounds and build lasting partnerships with investors.
