The great healthcare investment shift

Why wellness companies are winning the war traditional digital health is losing

Your healthcare startup is dead and doesn't know it yet. Traditional digital health just experienced its worst funding quarter in five years, but founders are still building for a healthcare system that consumers are actively abandoning. The $6.3 trillion wellness economy isn't just growing at 9% annually, it's systematically cannibalising everything in its path.

The numbers don't lie

The statistics tell a story of two industries moving in opposite directions. Traditional digital health funding has collapsed by 75% since its 2021 peak, dropping from €47 billion to just €11.7 billion in 2023. Meanwhile, consumer health technology grew by 9% year-on-year in 2024, outperforming broader digital health by 50%. The latest quarterly data shows just 267 deals in traditional digital health, a five-year low that would make any venture capitalist nervous.

But here's where it gets interesting. While digital health companies struggle to raise their next round, wellness startups are securing substantial funding. For example Oura raised €66.7 million in November 2024, Kyan Health secured €11.3 million, and the fitness startup ecosystem attracted €1.26 billion. The market is speaking, and it's saying something profound about the future of healthcare.

The establishment prison break

Three structural forces explain why traditional digital health finds itself trapped whilst wellness companies roam free. First, there's the payor prison problem. Traditional digital health companies built themselves around complex reimbursement models, lengthy approval processes, and sales cycles that stretch longer than a doctor's waiting list. They're playing a B2B2C game where the person using the product isn't the person paying for it. It's like trying to sell Netflix subscriptions to cinema owners rather than film lovers. Second, consumer behaviour has fundamentally shifted. The same people who won't pay €18 monthly for digital therapeutics happily spend €267 on an Oura ring or €4.99 monthly for a meditation app. This isn't irrational; it's perfectly logical. Wellness companies offer immediate value, delightful experiences, and put users in control. They've discovered what Netflix learned about Blockbuster: consumers prefer direct relationships with brands that understand their needs. Third, there's a generational wealth transfer happening. Millennials and Gen Z, despite representing just 36% of the population, drive 41% of wellness spending. These digital natives grew up expecting technology to make their lives better, not more complicated. They've embraced the 1.2 billion smartwatches globally not as medical devices, but as lifestyle companions that happen to monitor their health.

The new winners

The companies succeeding in this new landscape share common characteristics. They've escaped the establishment prison by going direct-to-consumer. They price their products at what people actually pay for premium experiences, not what insurance companies reluctantly reimburse. Most importantly, they've recognised that wellness isn't just healthcare marketing, it's a fundamentally different business model. Take the broader picture: whilst analyst estimates suggest that only 2-4 percent of global health-care spending currently flows through digital channels, e-commerce achieved 20%. This gap represents a massive opportunity for companies brave enough to serve consumers directly rather than navigate bureaucratic healthcare systems. The winners understand that prevention and optimisation often matter more to consumers than treatment and cure. These alternative healthcare companies aren't just growing; they're redefining what healthcare means. They're transforming it from something that happens to you in sterile environments to something you actively engage with daily. The smartwatch on your wrist, the meditation app on your phone, the fitness tracker counting your steps: these aren't healthcare adjacent products, they're becoming healthcare itself.

The escape route

For traditional digital health companies willing to adapt, there's a clear path forward. Launch a direct-pay consumer version of your core product within 60 days. Price it between €4.50 and €45 monthly, matching what consumers actually pay for wellness tools rather than what insurance theoretically covers. If you can't make the unit economics work at consumer price points, you're building for the wrong customer. This test reveals everything. Companies that survive the coming transformation will generate more than 50% of their revenue from direct-paying consumers rather than traditional payors. The market has already decided; it's just waiting for entrepreneurs to catch up. The healthcare revolution isn't coming, it's here. The question isn't whether wellness companies will continue displacing traditional digital health, but whether you'll join the escape or remain trapped in a system that consumers are leaving behind. The choice, like the $6.3 trillion opportunity, is yours.

💥 May this inspire you to advance healthcare beyond its current state of excellence.