Early Investing

Amazing Growth in the Medtech and Healthcare Sector

Amazing Growth in the Medtech and Healthcare Sector
By Andy Gordon
Date February 3, 2021

Usually, a sector’s growth is driven by one or two things. It could be consumer trends — like the current surge in alcoholic consumption during the pandemic. Or it could be technological advances. Think of how drones and self-driving cars will upend the delivery of goods and services. 

As an early investor, it’s important to look for sectors that have many drivers acting at once. The more drivers at work, the better the investment opportunities will be. If one driver stalls or fails, others will be able to keep sectoral growth going. More drivers also provide more pathways for startups to make an impact in the market. Thirdly, it allows drivers to merge and reinforce each other. Sometimes, technologies rise to the occasion to meet changing consumer needs. Other times, they emerge as part of a new product’s ecosystem, as we’re seeing with charging stations for electric vehicles. 

Personally, I’ve always liked the medtech/health sector for early-stage investments. The chance to support AND make money off of live-saving or life-extending technologies holds great appeal to me. But now I love it even more because of what’s happening in the sector. It’s nothing short of a great confluence of drivers coming together to generate dozens upon dozens of exciting growth opportunities in the medical and healthcare fields. 

I simply can’t take my eyes away from all the exciting solutions cropping up right now. It still comprises a small part of the overall startup deal flow I look at. But to a surprising degree (even to me), it dominates the top echelon of startups I consider either for a personal investment or for a recommendation to the thousands of subscribers to my First Stage Investor research service.  

I recently did a quick count of my top-ranked 26 startups. And a full 16 were medtech or healthcare related! That surprised even me. I knew I liked this group. I just didn’t know I liked them this much. But I make no apologies. They migrated to the top of my list on their own merits, not solely because they were part of a sector I like. 

Not surprisingly, the group with the most intriguing upside were companies that have commercialized breakthrough medical technology that addresses either huge problems or particularly vexing ones. Quadrant Biosciences (raising on Wefunder) is a good example. It makes one-of-a-kind FDA-approved saliva tests for autism. The tests have an 82%-to-86% accuracy rate of indicating the likelihood of autism in children — and they can do it at a much earlier age than current assessment methods. 

Another company is developing an even more impactful technology — but it’s in a much earlier phase of development. It’s just about to enter into clinical testing. If it passes — and this is far from a sure thing — Phoenix PharmaLabs (raising on Netcapital) will have developed a non-addictive and extremely effective pain-relieving drug that could replace current dangerously addictive opioids.

I have four other exciting startups with potentially ground-breaking technologies in this group. I’ll mention one more — SnapDNA (raising on Republic). Its breakthrough technology indirectly — but vastly — improves our ability to lead healthy lives. Its highly accurate food pathogen tests can be done at the food facility and identify lurking contaminants in just 20 minutes. It used to take three days and require an outside lab. Companies using these tests will be much better equipped to avoid pathogen outbreaks — and consumers will be exposed to unsafe food far less often.

A number of startups have come on the scene to help us manage the pandemic. I have given high marks to Canopy, which makes high-quality, reusable N95 masks entirely in the U.S. Another startup in my sights is Remuv. Still in the pre-production stage, it uses UV light to kill microbes — including COVID-19. The company says it’s over 99% effective. 

But my highest rated startup in the pandemic-related group is ShiftPosts. Its nimble and user-friendly platform connects pharmacies in need of certified and available pharmacists, including those certified to give injections. COVID-19 vaccine rollouts can’t happen fast enough. And pharmacies are slated to play a big role. Drug store chains — and stores with their own pharmacies like Walmart and Costco — are weighing plans to hire thousands of extra people to give injections. ShiftPosts could be playing a key role in connecting those facilities with certified pharmacists just when they’re needed most. 

My biggest group of companies are those offering healthy lifestyle options — in other words, what we put into or on our bodies. Consumers crave these products. Whatever the demand is today, it’s going to be greater tomorrow. And startups are pouring into this sector. It’s getting very crowded, which means only the ones that really stand out have a chance to succeed. At least on those terms, I give Pit Liquor (raising on Wefunder) a fighting chance. It offers a natural, toxin-free whiskey deodorant — with the apt and funny tagline of “quench your stench.” And it’s showing some nice early traction. 

Another startup thinking outside the box is Asarasi. Its tagline is more serious — but just as intriguing — than Pit Liquor’s: “The future of water, sourced from trees.” When maple trees are tapped for sap to make syrup, the sugars are completely removed from the sap. And what’s left behind is — according to the company — the purest water on the market.

The above is just a partial peek of startups in the healthcare or medtech sector that have caught my attention. I haven’t even mentioned the cancer-detection company, the amazing hip and knee replacement robotics company or the startup offering tiny implantable cardiac devices using AI. Nor have I mentioned those companies building on CRISPR technology, addressing our broken healthcare system, or improving how we care for the elderly… all big drivers to watch.

Consumers are demanding more — healthier food and drinks, safer medical technology. Hospitals and healthcare providers need better tools. Our healthcare system needs a major overhaul. And startups are answering the call. Not all will succeed. But some startups with effective answers are emerging. And the best will not only survive, but thrive. 

It’s an amazing time — a unique time where a great confluence of trends and factors is taking place — to be an early investor in the medtech and healthcare sectors.

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