How To Invest in Healthcare Startups

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Contributor, Benzinga
December 6, 2022

Investing in healthcare startups is one of the smartest money moves you can make. Why? The answer is a question of simple math. There are nearly 300 million people in the United States, and all of them will need healthcare at some point in their lives. Think of it this way: Decades ago, UnitedHealth Group (NYSE: UNH), Cigna (NYSE: CI) and Anthem Inc. (NYSE: ANTM) were just startups. Now these healthcare companies are worth billions of dollars.  That makes it more important than ever to learn how to invest in healthcare startups.

Why Invest in Healthcare Startups

Right now, the combined value of the three biggest healthcare providers in the United States is close to $700 billion. The most valuable company, UnitedHealth, is trading stock at just under $500 per share. Five years ago it was trading at around $160 per share. That means the company’s stock value has increased by more than 200% since 2016. Needless to say, if you made an aggressive move on UnitedHealth stock in 2016, you’d have made a pretty penny by now. This is why you should be investing in healthcare startups. 

Today, UnitedHealth is an established company with a long history, and the $160-per-share price of five years ago may have been out of your price range at the time. However, If you’d invested in UnitedHealth at the startup stage, you would have been tickled pink at the $160-per-share price of five years ago. A large investment in UnitedHealth at the startup stage might well have set you up financially for the rest of your life. Numbers like that are exactly why you should be looking to add stock in healthcare startups to your portfolio.

If that’s not enough to convince you, consider the age demographics of the United States. Millions of baby boomers are set to retire in the next 10 to 15 years, and all of them will need varying degrees of healthcare. That includes everything from preventative maintenance to major procedures like bone replacements and other corrective surgeries. Even if they’re on Medicare, most of those services will be performed by private healthcare providers. As an investor, you would be remiss not to examine the kinds of opportunities a trend like this might create.

The other big consideration is that healthcare providers are always looking for ways to innovate care and cut costs. This creates a rich field of opportunity for any startup that can bring a major advancement in healthcare to the market. 

Look at the evolution of patient medical charts. Decades ago, these charts were literally papers on a clipboard attached to the patient’s hospital bed. Now, those charts are all on iPads or electronic tablets. The technology that made the transition from paper records to digital ones was probably pioneered by a startup. Now, that technology is being used in hospitals around the world. If you’d gotten in early on that healthcare startup, you would almost certainly be rich today. 

This is also true for the European Union, which along with the United States has hundreds of millions of potential customers who could benefit from the kinds of advancements in healthcare pioneered by a startup. The bottom line here is that healthcare is an absolute necessity for all 7 billion people in the world today, which means adding the right healthcare startups to your portfolio today could yield big dividends for you in the future. 

Where To Find Healthcare Startups To Invest In

As recently as 15 years ago, your ability to find healthcare startups to invest in was largely determined by your personal connections. If you didn’t know any high-powered venture capitalists who could bring you into a startup at the pre-initial public offering (IPO) stage, your best bet was a hot stock tip from a golf buddy who did. Of course, by that time, a lot of the early equity that paid the highest dividends was already spoken for, or the buy-in was so high that you couldn’t afford to make such a large, speculative bet on an unproven company. 

Thanks to the internet and the innovation brought about by the digital age, that isn’t the case anymore. Now, many of the venture capitalists who once relied heavily on their private network of personal contacts to raise money, have started equity crowdfunding platforms to help them obtain capital. That has created a tremendous opportunity for retail investors to get in early on healthcare startups of all kinds. 

The good news is that there is so much money to be made in innovating healthcare solutions or improving healthcare outcomes, that a simple search for “healthcare” on most equity startup crowdfunding platforms will yield a plethora of quality offerings. 

StartEngine’s home page has an offering called Future Cardia, which features a miniature implanted cardiac monitor for patients at risk of heart failure. The long-term goal of the company is to create a full line of what it calls “connected implants” that can reduce the risk of heart failure. 

If this technology works, it will revolutionize the way heart failure and related issues are treated all over the world. Future Cardia is offering investors equity shares at $2 each, with a minimum investment of $250. So, for less money than most people spend on iced coffee in two months, you could have an equity share in a blazing-hot healthcare startup!

Choosing Which Startups To Invest In

The reason most startup investments pay off so handsomely if they work out is relatively simple: Most of them won’t work out, and startup investing is risky. That makes choosing which healthcare startup to invest in difficult — especially if you don’t have specified knowledge or expertise in healthcare. However, difficult doesn’t mean impossible. 

Even if you don’t have specific knowledge in healthcare, you have a basic understanding of what the industry needs. Instead of investing in a new healthcare provider network, you may want to put your money into companies that make technology all healthcare providers need. 

Think about the automobile. A hundred years ago it was probably impossible to predict which automaker was going to last. Considering we’re down to just the Big Three here in America, you’d probably have lost money unless you bought early equity in just one of those three companies. On the other hand, if you’d invested in Goodyear, which provides tires for both automakers and car owners, you would have it made in the shade. 

Look at healthcare startups in the same way. When you browse crowdfunding platforms for options, try to choose the ones that will provide logistical support, technology or innovation that would be of value to all healthcare providers. Although this approach is not without risk, investing in these kinds of startups is likely to be less expensive, which will allow you to diversify your healthcare startup portfolio. 

Healthcare Startups Can Be Rocketfuel for Your Portfolio

You have needed or will need healthcare at some point. The same thing is true for your family, your neighbors, your co-workers and all of the other 7 billion people in the world. That means any company that can make healthcare better or more efficient can make a ton of money for its investors. 

Healthcare is a core industry that is never going anywhere. That’s why there is an almost limitless diversity in investment opportunities when it comes to healthcare startups. In the coming years, the healthcare industry will be looking for ways to innovate. That means healthcare startups dealing with record management, artificial intelligence and even robotics all have the potential to be lucrative propositions for investors. That’s why investors like you should take advantage of the chance to place early bets on startups that could be big winners in the long run. 


Is investing in healthcare startups a good idea?


Many healthcare startups have gone on to become profitable and large businesses, so it is typically a good idea to invest in healthcare startups.


Is investing in healthcare startups a short-term or long-term investment?


To be the most profitable, you should consider an investment in healthcare startups a long-term investment.


Can you use crowdfuning to invest in healthcare startups?


Yes, there are many healthcare startups offered on crowdfunding startups.

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