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B2B or B2C? That is the question for digital health entrepreneursFrom MedCityNews

Posted Jun 05 2012 12:00am

Before digital health entrepreneurs start a company, they have to decide two important things: who will be using their product, device, or app and who will pay for it? To help weigh the merits and challenges of these business models, a report from Rock Health provides some common sense and some surprising realities about investment trends for each. So before you decide whether you want to build the next ZocDoc or Practice Fusion , have a look at some of the findings of Rock Health’s report .

B2B 77 percent of digital health venture funding went to business to business models. The average amounts of venture funding b2b companies received was $11 million compared with $9 million business to consumer companies received. The downside of business to business models is there is usually a longer sales cycle and it requires “gatekeeper approval” or systems integration.

B2C Although business-to-consumer models tend to generate less venture money, they have a faster sales cycle and get speedier feedback from the customer base. Maybe a bigger downside is there is greater competition.

B2B Some of the needs for business-to-business models as opined by physicians are greater access to information, wireless access to electronic medical records and increasing patient compliance.

B2C Designing for an end user consumer is easier than for a vice president in a company whose needs will likely be dictated to a certain extent by the company culture.

B2B “It’s less about monetization early on and more about downloads, engagement and retention to prove the utility of the product,” according to Rebecca Lynn and Missy Krasner of Morganthaler Ventures .

B2C Tools rating hospitals and physicians will attract more consumer investment Analysts say consumers are willing to spend $14 billion on digital health products. They are willing to spend more than half, a whopping $8.9 billion, on tools rating physicians and hospitals. The next biggest moneymaker looks like health related video games at $4 billion followed by $700 million for mobile health applications.

B2B What’s the secret sauce guiding B2B investment decisions?  The ability for a company to reduce costs, get sustained engagement and demonstrate improved outcomes, according to Abhas Gupta, an associate with Mohr Davidow Ventures .

via MedCity News

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