8 September, 2024

Merck Global Health Innovation Fund Proposes Five Strategies for Companies Raising Funding in Challenging Environment

The current year poses significant challenges for privately held digital health companies seeking funding. However, according to Merck Global Health Innovation Fund President Bill Taranto, implementing five specific strategies can enhance their prospects of securing investment. Taranto shared these insights with attendees at the Global Corporate Venturing Symposium, London, a premier corporate venturing and innovation event in Europe.

PitchBook data presented by Mr. Taranto revealed that in the first quarter of 2023, 10% of corporate venture capital rounds raised by Europe-based companies resulted in down rounds, the highest percentage since 2020. Additionally, an analysis by CB Insights indicated that European companies raised $10.4 billion during the same period, significantly lower than the $29.5 billion raised in Q1 2022 and the $22.3 billion raised in Q1 2021.

“European startups in the digital health sector and other industries are navigating challenging times, but there are reasons for optimism, especially for companies willing to adapt their strategies,” stated Mr. Taranto. “This is a crucial moment to carefully consider your approach in this environment,” he added.

Companies with less than two years of available cash can enhance their chances of withstanding the current market volatility and securing additional funding by implementing the following five strategies:

  1. Begin with a Transparent Assessment of Your Position: Companies must meticulously evaluate how each dollar spent contributes to building shareholder value.
  2. Strengthen Your Company: In economic downturns, adopting a high-burn and long-runway approach is not advantageous. Instead, focus spending on activities that drive the company towards significant value inflection points.
  3. Align Your Investor Network: Understand the motivations of existing investors and engage with them early on. Clearly identify investors with available funds, decision-making authority, and a willingness to invest in the present.
  4. Explore all Options: Dilution may not be fatal to a company, but running out of cash can be. Raising funds through a down round may ultimately ensure the survival of the company.
  5. Embrace a Positive Outlook: Market downturns have a tendency to filter out weaker business models, allowing strong companies to emerge stronger. Employ all necessary measures to fortify the company.

“Digital health continues to have a promising future, and companies that implement these five strategies will thrive,” emphasised Taranto. “Global healthcare systems still require expanded access to care, improved capacity, cost reduction, and better patient outcomes. Digital health innovations pave the way to achieve these goals and set even more ambitious ones,” he concluded.


News Team

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