Wellness Warriors: Who Invests In Health?

There are many groups of people who invest in health and wellness, from consumers to venture capitalists.

Consumers are increasingly prioritising their health and wellness, with 79% of respondents in a McKinsey survey saying that wellness is important to them, and 42% considering it a top priority. This shift has been accelerated by the COVID-19 pandemic, with people paying more attention to their physical and mental health.

On the other hand, venture capitalists are also investing heavily in the health and wellness space. Early-stage technology companies in this sector raised at least $1 billion in venture funding in the last year, with companies focused on fitness alone raising hundreds of millions. Global investment in digital health companies is expected to exceed $10 billion in 2020.

The health and wellness market is growing, with consumers demanding more sophisticated products and services, and investors providing the capital to meet this demand.

Investors are increasingly interested in health and wellness startups, with billions of dollars being invested in early-stage technology companies in this sector

Investors Increasingly Target Health and Wellness Startups

The Rising Wellness Market

The wellness market, encompassing health, fitness, nutrition, appearance, sleep, and mindfulness, has witnessed strong innovation and expansion in recent years. Consumers are increasingly integrating wellness into their daily lives, driving up spending on these products and services. This trend was further accelerated by the COVID-19 pandemic, which shifted the focus on health and wellbeing. As a result, investors are taking note of the potential returns in this sector.

Digital Health Investments

Digital health startups have been a significant beneficiary of this trend, with record investment levels. In 2021, the US digital health market attracted a staggering $37.9 billion in investments, according to CB Insights. This represents a substantial increase from the $29.1 billion invested in 2020 and $15 billion in 2019.

Health systems, which include provider health systems and venture capital funds, have also joined the trend, investing $2.1 billion in digital health companies from 2011 to 2019. These health systems are uniquely positioned as they can offer both financial returns and strategic advantages by supporting companies addressing clinical and operational challenges.

Targeting Specific Wellness Sectors

Within the wellness space, several sectors have attracted particular attention from investors:

• Telehealth: Global investments in telehealth companies reached $17.6 billion in 2021, a 68% increase from 2020, as larger providers expanded their services beyond urgent care.
• Mental Health and Wellness Tech: Investments in this sector soared to $5.5 billion in 2021, a 138% increase from 2020, with companies like Cerebral, Modern Health, and Lyra Health leading the way.
• Digital Therapeutics: This sector has seen annual investment increases of 40% over the past seven years, offering evidence-based software to treat a range of conditions.
• Fitness and Wearable Technology: As consumers seek to improve their fitness and health, fitness clubs, at-home equipment, and wearables have gained traction, attracting investor interest.

Strategic Considerations for Startups

Founders of health and wellness startups should consider the following when seeking VC funding:

• Building a Strong Foundation: Develop a minimum viable product (MVP) and obtain measurable data to demonstrate the effectiveness of your product or service.
• Researching Investors: Ensure your capital raise aligns with the type of investor that matches your company's stage and profile. Be cautious about protecting your intellectual property and confidentiality during negotiations.
• Creating a Competitive Advantage: Generate a sense of urgency among investors by indicating interest from other investors.
• Navigating Market Conditions: Brutal markets can be advantageous for startups as talented employees become available, and costs tend to be lower.

In conclusion, investors are increasingly targeting health and wellness startups, particularly those leveraging technology to address consumer needs in fitness, mental health, digital therapeutics, and telehealth. This trend is driven by the growing consumer demand for wellness and the potential for high returns, making the health and wellness sector an attractive prospect for venture capital firms.

The health and wellness market is estimated to be worth over $1 trillion, with annual growth of 5-10%

The health and wellness market is a lucrative industry, estimated to be worth over $1 trillion, with annual growth of 5-10%. This presents a significant opportunity for investors and companies alike. The COVID-19 pandemic has accelerated this growth, with people prioritising their health and wellness more than ever before.

Who is investing?

A wide range of investors are backing health and wellness startups, from venture capital firms to angel investors and family offices. These investors often have different areas of focus, such as consumer health and fitness, wellness technology, or food and beverage. For example, the investment firm Comcast NBC Universal SportsTech has an accelerator program for sports tech startups, while the venture capital firm Empath Ventures focuses on mental health and addiction treatment solutions.

Investors are putting their money into a variety of health and wellness categories, including:

• Personalised nutrition and medicine: Companies like Persona and Viome offer tailored vitamins and supplements based on individual needs and goals.
• Metabolic health trackers and diagnostic wearables: Companies like Levels and Whoop have developed devices that track metabolic health and provide actionable data.
• Sleep management and optimisation: Companies like Eight Sleep, Purple, and Casper are helping people improve their sleep through technology and product innovations.
• Wellness tourism: This sector now accounts for 17% of global tourism and is growing faster than any other sector in the industry.
• Natural and clean products: Consumers are increasingly seeking out natural and clean products in areas such as skincare, cosmetics, and sleep enhancers.
• Digital channels: The shift to digital is accelerating, with companies creating seamless omnichannel experiences and leveraging social media influencers to connect with consumers.

The health and wellness market is expected to continue growing and evolving, with consumers demanding more innovative, effective, and science-backed solutions. Companies will need to be strategic and adaptable to succeed in this competitive and dynamic industry.

Companies focused on personalised nutrition, diagnostic trackers, and stress management are likely to experience substantial growth in the future

Health and wellness is a broad industry that encompasses a wide range of products and services. Companies that focus on personalised nutrition, diagnostic trackers, and stress management are likely to experience substantial growth in the future, as these areas become increasingly important to consumers.

Personalised nutrition is an emerging field that uses an individual's genetic information, lifestyle, and health goals to create tailored dietary plans and recommendations. This approach has gained traction as people seek more customised solutions for their health needs. Companies in this space may develop mobile applications or other digital tools that analyse an individual's data and provide personalised meal plans, supplement suggestions, and nutrition advice.

Diagnostic trackers, including those for COVID-19, have become increasingly important in recent years. These trackers provide individuals with real-time data and insights into their health, allowing them to make more informed decisions about their well-being. The development of at-home testing kits and wearable health-tracking devices has contributed to the growth of this sector.

Additionally, stress management is a critical aspect of overall health and wellness. Companies focused on stress management offer a range of solutions, including relaxation techniques, meditation, deep breathing exercises, yoga, talk therapy, and lifestyle changes. These techniques help individuals cope with stress and improve their overall mental and physical health.

Investors have recognised the potential of these sectors, and there is a growing trend of investment in health and wellness startups. Venture capital firms, family offices, and accelerators are among those providing funding to companies in these spaces. This support enables the development and growth of innovative businesses focused on personalised nutrition, diagnostic trackers, and stress management solutions.

By leveraging technology, customisation, and a deep understanding of consumer needs, companies in these sectors are well-positioned to drive substantial growth and create long-lasting impacts on the health and wellness industry.

Health and wellness businesses can take various forms, including personal services, physical products, physical locations, and technology/media offerings

Personal Services

Personal services are a great way to build a health and wellness business, especially if you enjoy working with people. Examples include:

• Health and wellness coaching: helping clients make sustainable, healthy changes to achieve their personal goals.
• Corporate wellness services: working with companies to improve employee health and reduce sick days.
• Yoga instruction: teaching yoga safely and regularly to individuals or groups.
• Personal training: creating fitness routines and working with clients to achieve their health and fitness goals.
• Nutrition and dietary therapy: offering personalized nutritional advice and guidance to help clients achieve their health goals.
• Massage therapy: providing massages and complementary therapies such as aromatherapy.

Physical Products

If you're interested in creating physical products, there are numerous options within the health and wellness space:

• Essential oils: selling essential oils and complementary products to support natural health.
• Dietary supplements: creating or selling supplements to help people with specific illnesses, dietary restrictions, or lifestyle goals.
• Natural beauty products: developing and marketing skincare and beauty products free of chemical and synthetic elements.
• Healthy food products: producing and selling nutritious and delicious food options, such as breakfast bars, shakes, or healthy snacks.
• Healthy cooking products: designing and marketing kitchen gadgets and tools to make healthy cooking easier and more accessible.

Physical Locations

For those interested in creating a physical space for health and wellness, here are some ideas:

• Wellness centers or studios: creating a cozy and inviting space for various wellness practices, such as yoga, meditation, or fitness classes.
• Spas: offering hydrotherapy and treatment rooms for a range of wellness services.
• Juice bars and healthy restaurants: providing nutritious and delicious meal options, including fresh juices, smoothies, and plant-based dishes.

Technology and Media Offerings

The health and wellness industry has seen a boom in technology and media offerings, providing numerous opportunities for entrepreneurs:

• Mobile apps: developing health and wellness apps focused on nutrition, fitness, sleep tracking, or corporate wellness.
• Online blogs and podcasts: creating informative and engaging content centered around health and wellness topics, generating revenue through advertising, sponsorships, and affiliate marketing.
• Software for wellness practitioners: building software to support the growing needs of wellness practitioners, such as coaching tools, email list management, or meal planning software.
• Meditation apps: offering technology-based tools like mood trackers, guided meditations, and meditation timers to help users improve their mental wellness.

Examples of health and wellness startups to look out for in 2024 and beyond include Eight Sleep, Meditopia, Included Health, Noom, and Sun Genomics

Eight Sleep

Eight Sleep is a "sleep fitness" startup that manufactures and sells temperature-controlling mattresses and systems. The company’s product range includes a smart mattress and a special temperature-controlling cover. According to the company website, their products have helped deliver 90M+ hours of sleep.

Meditopia

Meditopia is a mental health and wellness platform that provides expert meditation coaching and content designed to help overcome mental disorders, improve sleep, and lead a healthier life. According to their website, more than 32 million people currently use their app.

Included Health

Included Health (formerly Grand Rounds Health) provides a digital healthcare platform to employers, which they can offer as a benefit to their employees. With more than 6 million members, the app can potentially help users connect with quality healthcare experts. Over 140 companies, including names like Walmart and Salesforce, currently use their platform.

Noom

Noom is a digital wellness platform that provides online coaching and content on weight loss and diabetes prevention. On their app, users get access to fitness coaches and technology to help them manage their diet better. An independent study found that 78% of people who used Noom successfully lost weight. In 2017, the CDC recognized Noom as the first mobile solution for diabetes prevention.

Sun Genomics

Sun Genomics is a biotech startup that specializes in providing personalized probiotics designed to improve digestive health. They employ whole-genome sequencing to create custom probiotics based on the unique microflora of their customers. Their flagship product, Floré, won the NEXTY Award for best digestive health product.

Frequently asked questions