Why Investors Invest in the Healthcare Sector
The healthcare sector is a large part of the U.S. economy, representing nearly 13% of the S&P 500. It has a history of remaining a relatively steady investment during periods of economic uncertainty, even when other sectors have underperformed. It is also a field that offers opportunities for innovation, making it an attractive target for investors interested in funding promising startup ventures. To understand how to reach those investors, it helps to understand what draws investors to healthcare in the first place.
Thinking of “healthcare” as one sector is somewhat misleading because it is really many different industries making up individual parts of a larger picture. Healthcare includes hospitals, drug makers, insurance companies, medical device manufacturers, electronic health record software companies, and more. Each of these industries reacts differently to current circumstances, trends, and market conditions.
The diversity of the sector offers many attractive options for investors, depending on their focus. For example, the COVID-19 pandemic has been a boon for vaccine developers and diagnostic test makers, as well as for companies providing telemedicine services. For healthcare startups looking for investors, clearly communicating the need their product meets and how it fits in is key to making a persuasive case for funding.
Healthcare is considered a defensive sector, meaning that it tends to have consistent returns that are largely unaffected by the volatility of the overall market. After all, whether individuals need healthcare is not tied to economic trends, and the demand can be anticipated to be steady if not growing. In fact, healthcare tends to outperform other sectors when the general market is weak. Profit in the S&P 1500 healthcare sector rose at a compounded rate of 8.1% in the five years through the end of March 2021, much better than the 2.4% of the full S&P 1500 for the same period.
With people over age 65 representing an increasing proportion of the U.S. population, and needing more medical care to maintain their health, it is likely the sector will continue to reliably grow. Thus, investors looking to diversify their portfolios with investments in safer market sectors are likely to consider healthcare as a noteworthy option. New companies that can show their potential for growth and longevity will attract this sort of investor.
As our knowledge of how to achieve and maintain good health improves, the healthcare field constantly innovates to implement that knowledge. One of the most important trends influenced by this change in understanding is the shift to a more preventative mindset in medicine. Instead of the focus being largely on therapeutics and treatment, which address problems after they have occurred, the effort to emphasize preventative care to avoid those problems in the first place is offering new opportunities for companies and their investors.
Wearable medical devices are good examples of products that are meeting demand in this area. Fitness trackers, smart health watches, wearable ECG and blood pressure monitors, and even more sophisticated biosensors give individuals greater insight into their day-to-day health and can even allow them to share health information with their medical provider remotely. Investors who enjoy being on the cutting edge of technology and science can find much to like in the possibilities offered by this sort of development.
Telling Your Story
To successfully inspire investors to fund your healthcare venture, you need a succinct, convincing pitch. Healthcare concepts and products can be complex and hard to understand, making it easy to lose the thread of your compelling story in the weeds of data and explanation. To give your presentation the emotionally compelling big picture view it needs to grab and hold your audience’s attention, you need a way to condense a lot of information into a fast, engaging, comprehensible format. High-quality custom animations from Squash & Stretch Productions do just that, showing your potential investors why what you do is important. To find out how our storytelling and animation services can make your pitch stand out in a crowd, contact us here to schedule a free initial consultation.