Investors are Indifferent to the Technology Needs of Health-care Systems
A University of Montreal study recently found that technology designed for the health-care industry is not typically governed by the real needs and challenges of the health-care systems. The study was inspired by the desire to discover why only some health technologies make their way into health-care systems and to understand how capital investors choose their investments in new technologies. The study, conducted between 2008 and 2012, involved five spin-off companies from the Montreal area who marketed health innovations in the early 1990s. In addition to an analysis of annual reports, business plans and press coverage, 50 semi-structured interviews were conducted with capital investors, technology experts and economic policy specialists. “We wanted to understand how venture capitalists pick and ‘coach’ technology entrepreneurs. What value do they see in these entrepreneurs and the technologies they are trying to develop? We also looked at the decision-making power that capital investors gain in terms of the technological and strategic choices of these companies,” said the study’s lead author. The results of the study, recently published in the journal Science and Public Policy, clarify how venture capitalists evaluate the potential of new technologies. Whether an implantable device, a surgical device or a tele-health project, researchers found that new technologies are not assessed based on their intrinsic value for health-care systems, but on their commercial potential. They found that investors are interested in health technologies that meet their investment criteria and those that offer the possibility of short-term financial return. If they feel that there is no real growth area, if business projections are insufficient or if there are no marketing channels for integration — the technology will not be developed — even though there may be clear benefits for the population. To read more about this study, click here.
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