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7. Conclusions and recommendations
The conclusions and recommendations in the section below are based on findings and learnings from the 25 interviews performed with active Nordic Health Tech investors representatives of all Nordic countries, as well as from the overall findings from the survey.

The rise of Nordic Health Tech

Nordic Health Tech has experienced a lot of momentum since COVID-19 and has become one of the most important industries for the Nordic Venture Ecosystem. Nordic Health Tech ranks among the top 5 industries in the Nordics that attract the biggest amount of venture capital, together with Energy, Manufacturing, or FinTech. The Health Tech sector has also become a strategic industry for most Nordic countries, with almost all of them having developed national strategic plans to increase entrepreneurship, investments, and exports in health and life science, as the public healthcare systems are struggling to keep up with the cost and demands of an aging population. Investors are aware of the increased growth and relevance of the sector and more and more are choosing to invest and be active players in Nordic Health Tech. Of all the investors interviewed for this report, almost 70% had at least one investment in the space, and over half of those had made 2 to 5 health tech deals in the last 3 years. Nordic Health Tech is attracting both generalist and health specialist investors alike, and most of them are expecting to increase their investments in this asset class, as the Nordic health tech ecosystem grows and matures, and as they see the quality of the companies in the sector to improve.

The rise of the health investor

As of today, and based on the results of the survey, only 30% of the active investors in Nordic Health Tech are considered to be health-focused investors, defined as either thematic investors with a focus on health or health specialist investors. These health-focused investors can be anything from angels, to Family Offices to Venture funds, and they are very important for the Nordic Health Tech ecosystem as they tend to invest more and more often (with 50% investing in almost 2 Nordic health tech companies a year), they are more likely to take the lead investor role in a Health Tech deal, and they invest equally in both high scientific-based sectors, such as BioTech or MedTech and less scientific-based sectors such as Digital Health. As the Nordic Health Tech Ecosystem evolves and new investors enter the space, we predict the number of health-focused investors to increase. In particular, as the Nordic venture ecosystem becomes more sophisticated and specialised we predict more generalist investors that are currently investing across industries to begin narrowing their investment focus across selected industries, to become more competitive against other investors, and to become more attractive for leading companies in the Nordics. In that line, we predict that more of the generalist investors investing in health and more of the new investors in Nordic health would become thematic investors in health, a group that currently represents less than 15% of Nordic health investors. Innovestor in Finland and People Ventures in Denmark are examples of this new up and coming trend. 

Digital Health, where tech and health converge

Digital Health is and will be the favorite and most attractive sector for all types of investors. Currently, 75% of the active investors in Nordic Health Tech, both generalists and specialists, have made at least one investment in the sector in the last 3 and is pointed out by most investors to be one of the most promising sub-sectors in Nordic Health Tech. It is also the most attractive sector for non-Nordic health tech investors considering making a first investment in the space. One of the main reasons for this is that Digital Health, compared to BioTech or MedTech, has lower entry barriers for investors. According to the investors interviewed, it is recommended to have some sort of knowledge and expertise in health if you want to invest in Digital Health, but this is not as important as it is for BioTech or MedTech. Furthermore, Digital Health deals, compared to BioTech or MedTech, tend to require less exhaustive due diligence processes and tend to involve fewer investment risks associated with market regulations and market approvals. Digital health, in its broader definition, is the application of technology to the medical industry. As the name suggests, Digital Health is digitizing healthcare, an industry that many believe is not as digitized as other industries, that is very expensive and that is experiencing a fast and upward demand as the population ages and diseases become more chronic. In that sense, Digital Health is a sector offering infinite investment opportunities that are attractive for both generalist investors and specialist health investors.  Digital Health is the sector where tech specialists and health specialists converge.

BioTech and Life Science, a promising sector with many challenges

Biotechnology and Life Science represent an increasingly promising sector in the Nordics, particularly endorsed by specialists, and it has become a strategic national industry for many Nordic countries. The sector, however, currently faces many challenges, such as below average levels of funding, compared to other Nordic Health Tech sectors, high levels of expertise in health required to invest in, or few active Nordic investors in the field. While it may not yet be the go-to choice for generalist investors, it has captured the attention of niche players, with a substantial 44% of investors interviewed having already ventured into the realm of BioTech, and it is winning the interest from many non-Nordic investors and investors yet to invest in Nordic Health Tech. The Nordic Health Tech ecosystem could benefit from more Health specialist and academics actively involved in the venture industry as health industry experts, advisors or venture partners. Roles that could support generalist investors understand and invest in those types of deals. Also, more co-investments in BioTech could be facilitated and incentivized between specialist and generalist, to allow more players into the field and to remove some of the barriers preventing investors to invest in it.

Consumer Health Tech, an invisible sector where a lot can be done

Consumer Health Tech or health tech products that targets consumers directly without going through traditional medical industry distribution channels, it is as of today a small and irrelevant Health Tech sub-sector for many active investors in the field. Only 35% of investors currently investing in Nordic Health Tech indicated to have at least one investment in the sector, and only 24% of the investors surveyed believed it to be a promising sub-sector in the Nordic Health Tech industry. One of the most famous Nordic Health Tech startups, Oura ring, could be considered a Consumer Health Tech startup, and opposite to most Health Tech companies, it focuses on preventing disease, rather than to cure it, and tends to rely on B2C or B2GC business models, rather than B2B or B2G models. Preventive Healthcare is becoming a more and more relevant sub-sector within Health Tech, and it is particularly relevant for Health Tech authorities and Public buyers, that are trying to understand how to reduce costs and improve efficiency of the Public Healthcare System by empowering the patient and shifting from the sick care system to the preventive care system.
 However, from the survey we can conclude that there is either a lack of awareness of the opportunities in the sector or lack of understanding on what Consumer Health is and how is it different from the other sub-sectors, particularly form Digital Health. Furthermore, few investors believe that the integration of health data into digital apps will be one of the main trends impacting Nordic Health Tech, a very important element for the success of these types of companies. For Consumer Health Tech and Preventive Healthcare to fully take off in the Nordic region, many efforts need to be done to level up its relevance with the other Health Tech sub-sectors, and to increase investor awareness of the investment opportunities that the space provides.

Strong Health Tech Ecosystem, but lacking a strong capital market

Investors in the survey believe that the Nordic Health Tech Ecosystem possesses many of the ingredients to become a leading ecosystem in the global health tech landscape. Most investors agree that this ecosystem benefits from high-quality education and research institutions, high levels of IP produced, high levels of innovation, a strong healthcare system, and strong governmental support. In other words, investors believe the Nordics have the right infrastructure in place to support the development of the Health Tech ecosystem. However, for an innovation ecosystem to truly thrive, it needs to have three things in place: talent, infrastructure, and capital markets. When it comes to talent, Investors believe that the Nordic Health Tech ecosystem benefits from highly specialized talent, however they do not rank the levels of entrepreneurship to be very high, suggesting that probably more efforts can be made in the region to support more scientific products to become commercial products and to encourage the creation of new health tech companies. When it comes to capital markets, there seems to be a consensus among investors that one of the main risks to investing in Nordic Health tech is the lack of capital for the companies, especially at the growth stages. Many investors believe there is not enough follow-on capital for these companies, therefore investing in the early stages can have the risk that companies are not able to secure further capital to grow, to reach the market, and to start generating revenue. Some investors also indicated that another important risk is that exit strategies for Nordic health tech investments still look very unclear, and they would need to see a better exit landscape for Nordic Health Tech companies before they would consider investing in the space.

Main barriers preventing more investments in Nordic Health Tech

In essence, the Nordic Health Tech ecosystem has the infrastructure in place, the necessary talent, and even the right national strategic policies, however, what is really missing is strong and well-functioning capital markets. Nordic Venture has experienced a significant inflow of capital in the last few years, registering an increase of 250% in venture investments in the period of 2019 to 2022. However, investments in Nordic Health Tech only grew at a 92% rate for the same period, highlighting some subjacent barriers that are preventing capital from flowing into Nordic Health Tech. To understand how to improve capital markets Nordic Health Tech it is important to understand what are the main barriers preventing more investments into the space. Below we state the main barriers to investing in Nordic Health Tech and what investors believe can be done to overcome them.
Health Tech companies, compared to other industries, have longer sales cycles and take longer to market. Most investors indicate that the main risk to investing in Health Tech is how long these companies take to market, how long it takes them to start generating revenue, and how long it takes them to sell to the end customers. Health Tech companies, unlike other companies, address one of the most important human needs, which is health, and because of that, they need to show that their products and services are safe, that they are effective, and that they make a difference in people’s lives. Health tech companies, in essence, need to provide robust clinical evidence for their products and services to be able to get to market and for both public and private health providers to be able to trust and purchase their solutions. Furthermore, Health Tech companies, especially in Europe, rely on B2B and B2G2C business models, which by nature involve long and bureaucratic procurement processes that significantly reduce their growth prospects and make them less attractive or suitable for growth capital. A lot can be done to reduce Nordic Health tech companies' time to market and sales cycles and therefore reduce their perceived investment risks. Some investor suggestions include:
  1. More local testbeds for Nordic health tech companies to gain the necessary clinical evidence early on to start selling. Meru Health in Finland is a success story. Meru Health was able to test its solution with the Finnish Student Health Service, which was its first pilot customer, and now it offers its services to the main insurance companies in the US. “We need to offer more test beds for clinical testing at home, and these Nordic test beds should allow for larger tests and pilots. Clinical evidence is the market proof in this industry” says one investor.
  2. Better public procurement processes with local and national health providers to improve public sector engagement in the Nordic Health Tech ecosystem, to allow more health organizations to purchase from smaller health suppliers, such as health tech startups, and to speed up the public purchasing process. DFØ in Norway is an example on how Nordic countries could ensure that the public procurement process has more startup-friendly criteria and that more startups enter into a pilot agreement with the main healthcare providers.
Nordic Health Tech founders, compared to other countries, are not perceived as ambitious enough by investors. Investors, particularly Venture Capital investors, seek certain return targets on their investments, and for that, they need to invest in companies with high growth and high market potential. In that sense, Nordic Health Tech companies that are targeting one or a few Nordic markets for their solutions are not perceived as attractive enough, as these markets, even if addressed together, are still very small to provide outlier returns and they are very fragmented to efficiently enter and grow in each of them. Most investors interviewed for this report indicated that the Nordic countries could work together to support more Nordic health tech companies to establish themselves in the US and get funding from US investors, as the US health market is considered to be “the single biggest market for health tech companies by far”, pointed out a Finnish investor. One of the investors interviewed used the example of Oura Ring, a Finnish company now valued at 2.5 billion USD, and how pivotal it was for them to successfully establish in the US market, something that also allowed them to attract a lot of funding from US investors. “It is not necessarily easy to successfully establish your company in the US or other highly competitive markets”, explained. That is why investors believe that more can be done on a Nordic level to support Nordic health tech companies in developing sound go-to-market strategies targeting markets with high growth potential and in helping them to successfully establish their companies in new markets and attract capital from investors in those markets. 
Health Tech deals require a certain level of knowledge or expertise to invest in and many investors would prefer to invest with health specialist investors. Most investors, and especially health tech investors, believe it is somewhat important to have previous knowledge or experience in health in order to invest in Health Tech. Most investors currently investing in Nordic Health Tech indicated to have some sort of background in health, mostly from previous work experience. And investors not yet invested in the space indicated that they would start investing in the field if they could gain some knowledge or experience. Furthermore, both generalist and specialist investors prefer to co-invest with investors with certain knowledge or expertise in health, and most investors indicated the lack of specialized co-investors in health to be one of the main risks associated with investing in Nordic Health Tech. In this sense, it is clear that more efforts could be made in the Nordic Health Tech investor ecosystem to increase the number of health-specialized investors. Some of the investor’s suggestions include:
  1. Supporting more health professionals to become angel investors. 70% of the investors currently investing in Nordic Health Tech gained their expertise from previous work in health corporations, startups and as health investors. More initiatives that attracted and trained health corporate managers, startup founders and employees, researchers, and clinical experts into startup investing would increase overtime capital and health expertise in the Nordic Health Tech ecosystem.
  2. Attracting more STEM graduates and PhDs into the venture industry. Particularly with medicine, biology, or chemistry backgrounds. As the Nordic Venture industry becomes more specialized and as scientific research and innovation improves in the Nordic Health Tech ecosystem, there will be an increased need for more STEM PhDs working in the Nordic venture as industry experts, advisors, angels, or venture partners, among many roles. This could be achieved by providing more venture training and education to STEM professionals and by engaging further universities and academia in the Nordic Health Tech ecosystem.
  3. Supporting more generalist investors to learn to invest in health tech and co-invest with health specialists. Last but not least, it is also possible to educate and train more generalist investors in health tech investing and to facilitate more co-investments between new investors and experienced health tech investors. A third of investors who are not currently investing in Nordic Health Tech indicated they would start investing if they could increase their knowledge and expertise in the field, and over half indicated they would start investing if they could co-invest with experts in the field. Learning by doing startup investing programs or co-investor networks focused on health tech are some of the initiatives that could support more generalist investors to start investing in health tech.
  4. Support more active investors in Nordic Health Tech become thematic investors. Health focused investors invest more often compared to generalist investors. And most active investors in Nordic Health Tech have gained their Health experience by investing in the space. As indicated above, as the Nordic Venture ecosystem evolves and new players come in, investors would be pressured to narrow their focus and limit the number of sectors they want to be active in. More thematic investors in health tech would mean more investments in Nordic Health Tech and more specialised health investors in the Nordics. This could be achieved by working closely with active LPs investing in Nordic funds and by supporting emerging managers in the Nordics develop more focused thesis and investment strategies.
The best Nordic health tech investment opportunities are hard to access. Most investors that have not yet made an investment in Nordic Health Tech indicate the lack of access to good companies in the space as the main barrier. Most of the investments into Nordic health tech are done at a local level, attracting mostly local investors into the deal. Most active investors in the field are mainly sourcing health tech opportunities from proprietary entrepreneurs and investor networks, which are not always visible or easy to access if you are an outsider in Nordic Health Tech. Furthermore, health tech specialists tend to co-invest with other health tech specialists and other professional investors, making these circles even more exclusive and inaccessible for outsiders in the space. In that sense, many generalist investors, angels, or non-Nordic investors find it difficult to access good health tech companies to invest in and are missing out on the best Nordic Health Tech opportunities. The Nordic Health Tech ecosystem could attract more investors in the field by facilitating more co-investment opportunities between different investors and by creating more health tech arenas for outsiders to enter the Nordic Health Tech ecosystem. Some ideas include:
  1. To foster better connections between universities and TTOs with the broader Nordic investor community, as mainly specialist investors are looking into these sources for health tech dealflow, and many generalist investors could be missing out on the health innovation produced in these hubs.
  2. In line with the previous section, other suggestion would be to support the development of health tech angel investors and angel networks on a Nordic level that could co-invest with generalist investors, as the survey revealed that generalist investors are more likely to co-invest with angels, and they would invest more if they could co-invest with health experts.
  3. Finally, to create more investor arenas for non-Nordic investors and non-Health Tech investors to connect with active investors and good companies in the Nordic Health Tech ecosystem, and for Nordic health tech investors to increase their investments beyond their local ecosystems.      
Nordic Health Tech investment opportunities lack follow-on capital, present unclear exit strategies and some companies exit too early. A third of the investors interviewed that currently are not investing in Nordic Health Tech, and even some of the active investors in the field, indicated that the Nordic Health Tech ecosystem lacks enough successful exit stories and that the current exit landscape for Nordic Health Tech is still very unclear and underdeveloped. This is a problem mainly for venture funds, which in order to return the fund and provide returns to their LPs need to invest in companies that can provide large exit scenarios. The Nordic Health Tech ecosystem has seen some significant exits with Kerecis, an Icelandic company being bought at a valuation of 1.3 billion USD, or Envirotainer, a Swedish company being bought at a valuation of 3 billion USD. However, in spite of these outliers, most Nordic Health Tech companies are going public too fast or being bought too early, providing small exit outcomes for their investors, and reducing their attractiveness. We believe exiting too early is not a problem in itself but the consequence of the lack of available capital for Nordic Health tech especially for later-stage rounds. The lack of growth capital is not however a Nordic only or a Health Tech only problem. It is a European-wide problem that affects all companies alike. In spite of this, the Nordic region should take this problem seriously and work together to close the funding gap for Nordic companies and foster a better exit landscape for health tech investments.
  1. To improve the exit landscape in Nordic Health tech the main suggestion would be to increase the engagement of Nordic health corporates with the Nordic Health ecosystem. Corporate engagement is perceived as below average by specialist investors, and as explained in point 6.3, corporates are not only prospective customers for health tech startups but are also prospective buyers of these companies. The Nordics should promote better corporate-startup collaboration in the health tech industry that could incentivize more health corporations to choose to partner with startups for their main challenges rather than trying to develop all their solutions in-house.
To improve access to capital for Nordic Health tech companies at later stages, the main suggestions include:
  1. To support Nordic Health Tech companies in their capital raising and in attracting more European and International Health tech investors to invest in the region. Corti, a Danish company, successfully raised 60 MEUR in a Series B round from two international European funds,
     providing a relevant success story that could be used for further learning and inspiration to other companies.
  2. Engage Pension Funds, Family Offices and Corporate Venture funds in the Nordic region to allocate more capital into Nordic Venture asset class in general and more later stage Nordic companies in particular. These types of investors are risk-averse and prefer to invest in later stages of companies, where the investment risks are lower, making them suitable later stage investors for the most promising Nordic companies. 
  3. To equip Nordic State investors with direct and indirect investment mandates to close the funding gap in Nordic Health Tech. Nordic state investors could increase the capital available for Nordic health tech companies at a later stage by increasing their allocations and presence in later-stage rounds and therefore co-investing with other local and international investors, or by supporting the development of more later-stage funds with a focus on health acting as cornerstone investors in these funds. Successful examples in the Nordics include Tesi’s support to Innovestor Life Science fund
     or EIFO's active co-investment with other health tech investors in Danish growth companies.
We cannot wait to see what the future of Nordic Health Tech will bring to the Nordic population, to the entrepreneurs and startups employees working in the field, and to the present and future investors betting on the most promising products and technologies in the sector. The opportunity for Nordic Health Tech is now and we encourage everyone interested in the topic to become an active contributor to its development and success.
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