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Welcome to the 62nd edition of Deep Tech Catalyst, the channel by The Scenarionist where science meets venture!
Today, we’re joined by Kesar Varma, Principal at Upfront Ventures, to explore the evolving landscape of consumer healthcare, AI, and IoT. With a decade of innovation shaping biomedical devices, wearables, and AI-driven diagnostics, how can Deep Tech founders navigate market adoption, funding strategies, and business model scalability?
Whether you're a startup founder, investor, or operator in the Deep Tech ecosystem, this episode is packed with practical insights on:
✅ How AI and IoT are transforming healthcare—beyond fitness tracking into chronic disease management and remote patient monitoring.
✅ Funding strategies for startups—balancing venture capital with regulatory considerations.
✅ The B2B, B2C, and B2B2C dilemma—which model works best for consumer healthcare innovations?
✅ How to navigate manufacturing, supply chain challenges, and product validation in a rapidly evolving industry.
This conversation is a must-listen for anyone looking to build, invest in, or scale a hardware-based consumer healthcare solution.
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🏥 AI, IoT, and Consumer Healthcare: Framing the Market
For those working in R&D-focused labs, the intersection of AI, IoT, and healthcare hardware represents an exciting frontier. While the deep technical research behind biomedical devices, wearables, and smart monitoring systems is advancing rapidly, many scientists and engineers may not have a clear view of how these innovations translate into real-world market opportunities.
Over the past decade, we’ve seen a first wave of consumer healthcare technology, with companies like Whoop, Oura Ring, and Apple Watch leading the charge in fitness tracking, sleep monitoring, and heart rate analysis. However, the next generation of AI-driven, IoT-integrated healthcare solutions is poised to go far beyond fitness, tackling major challenges in chronic disease management, remote patient monitoring, and preventive health.
4 Key Areas of Innovation to Watch Today
While early consumer healthcare devices focused primarily on fitness tracking, the next wave of innovation is driven by AI-powered analytics and IoT-enabled monitoring that provide real-time, actionable insights.
1. Chronic Disease Management & Remote Patient Monitoring
One of the biggest market opportunities lies in chronic disease management, where AI and connected devices can significantly reduce hospitalizations and improve patient outcomes.
📌 Example: Continuous Glucose Monitoring (CGM)
AI-powered glucose monitors help diabetes patients track blood sugar levels in real time, reducing the need for frequent in-person visits.
These systems can send alerts to patients and doctors, identifying trends that require immediate intervention.
Why It Matters: By enabling real-time monitoring, AI-driven devices lower healthcare costs and improve patient outcomes by preventing complications before they escalate.
2. Expanding Access to Care for Underserved Communities
Healthcare inequity remains a major challenge, but AI-powered devices are helping bridge the gap by providing at-home monitoring and diagnostics for individuals who may not have regular access to doctors.
📌 Example: AI-Powered Virtual Health Assistants
In areas with limited healthcare access, IoT-enabled devices allow patients to self-monitor their health, with AI interpreting results and recommending actions.
These systems can detect early signs of health deterioration and notify caregivers or doctors when intervention is needed.
Why It Matters: This technology reduces preventable hospitalizations and ensures patients receive timely care, even in rural or low-income communities.
3. AI-Driven Preventive Health & Lifestyle Coaching
Preventive healthcare is another major area where AI and IoT are driving innovation, particularly by helping users make better lifestyle choices to avoid chronic diseases.
📌 Example: Personalized AI Health Coaches
AI-powered systems track diet, sleep, and exercise patterns and offer personalized recommendations.
Devices can monitor how specific foods impact blood glucose levels and suggest adjustments to prevent diabetes or heart disease.
Why It Matters: By providing real-time feedback, AI-driven solutions help users adopt healthier habits and prevent chronic illnesses before they develop.
4. Smart Solutions for Elderly Care
The aging population is another area where AI and IoT-enabled devices are transforming healthcare.
📌 Example: AI-Powered Fall Detection & Cognitive Monitoring
Devices can monitor elderly patients' movement patterns, detecting falls, cognitive decline, or changes in behavior that indicate potential health issues.
These systems provide families and caregivers with valuable insights into their loved one’s well-being.
Why It Matters: Aging-in-place solutions reduce nursing home admissions and allow seniors to live independently for longer.
💡Customer Discovery in Consumer Healthcare
Traditionally, healthcare innovation has been centered around B2B models, where medtech and therapeutic solutions are designed for hospitals, clinics, and healthcare providers. This space is well-defined but highly regulated, requiring FDA approvals, clinical trials, and long sales cycles before reaching adoption.
However, for researchers working in R&D labs, there is growing opportunity in the B2C and hybrid healthcare models.
Consumer healthcare products—ranging from wearables to AI-powered diagnostics—are gaining traction, offering faster go-to-market paths and direct engagement with patients.
Before diving into product development/manufacturing, it’s critical to understand which business models are working and how startups can validate market demand before investing in costly R&D.
Step 1: Problem-Solution Fit
When designing a healthcare product, the biggest mistake founders make is assuming that a technical breakthrough automatically translates into market demand. Before committing to development, startups must first validate that a real problem exists, a defined customer base is willing to pay for a solution, and existing alternatives aren't already solving the issue.
Learning from Established Products
One of the best ways to de-risk an idea is by analyzing existing solutions in the space.
📌 Example: Fall Detection Technology
Life Alert has been around since the 1990s, proving there is demand for fall detection solutions.
The consumer healthcare space has already validated that elderly users (or their caregivers) are willing to adopt such technology.
A startup entering this space must differentiate—whether by using AI-driven detection, wearable integration, or a new pricing model.
Identifying Real User Needs
To build a scalable and commercially viable healthcare product, founders need direct consumer insights.
📌 3 Tips to Validate Unmet Needs:
Engage with patients & caregivers – Interview those already using alternative solutions and identify their pain points.
Leverage online communities – Facebook groups, Reddit forums, and patient advocacy networks offer firsthand insights into consumer needs.
Analyze makeshift solutions – If consumers are using Amazon Alexa, text messaging, or manual tracking to manage health conditions, there’s an opportunity to build a dedicated solution.
This approach helps refine product design, messaging, and feature sets before major development costs are incurred.
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🔄 Business Model Essentials
Once market demand is validated, the next challenge is choosing the right business model. For deep tech founders entering the consumer healthcare space, understanding the right business model is just as important as the technology itself.
Traditional MedTech solutions typically follow a B2B approach by selling to hospitals, insurers, or clinics. Consumer healthcare startups often navigate Business-to-Consumer (B2C) or hybrid models like B2B2C.
The challenge is not just in building a great product but in designing a business model that ensures the sustainability and growth of the company. Whether it’s through direct sales, partnerships with healthcare providers, or subscription-based revenue, choosing the right model significantly impacts scalability and long-term success.
Let’s briefly overview these 3 models.
1. B2B (Business-to-Business), Traditional MedTech
Target Customer: Hospitals, clinics, insurance companies.
Regulatory Challenges: Requires FDA approvals, clinical trials, and long sales cycles.
Examples: Imaging technology, diagnostics, and surgical robotics.
📌 Best For: High-cost, high-complexity medical technologies that require institutional adoption.
2. B2C (Business-to-Consumer); D2C (Direct-to-Consumer)
The B2C model allows startups to sell directly to consumers through e-commerce, subscriptions, or retail partnerships. This approach works well for products that do not necessarily require clinical validation and can be marketed as lifestyle and wellness solutions.
Target Customer: Patients, caregivers, fitness & wellness consumers.
Sales Strategy: E-commerce, subscription models, or retail partnerships.
Examples: Whoop, Oura Ring, Apple Watch, and at-home diagnostic kits.
📌 Best For: Lifestyle & wellness products, chronic disease management tools, and early-detection solutions that consumers can adopt without physician approval.
Key Considerations for B2C: Selling directly to consumers offers full control over branding and pricing, but it comes with challenges. Customer acquisition costs (CAC) can be high, requiring significant investment in digital marketing and brand positioning. Founders must ensure a strong product-market fit and a compelling value proposition to justify ongoing subscriptions or premium pricing.
3. B2B2C (Hybrid: Selling to Businesses While Serving Consumers)
The B2B2C model bridges the gap between business-to-business and business-to-consumer strategies. Instead of selling directly to individual users, startups partner with insurers, employer wellness programs, or healthcare networks, which then distribute the product to their members.
How the B2B2C Model Works
Startups work with organizations that already have an engaged customer base. For example, a company may collaborate with an insurance provider or telehealth platform, allowing them to distribute the product to thousands of patients or employees at once.
Target Customer: Employers, insurers, digital health platforms.
Sales Strategy: Startups partner with corporate wellness programs, insurance providers, or telehealth services to offer consumer-focused solutions at scale.
Examples: Companies providing at-home diagnostics, employer-backed health monitoring, or AI-driven coaching apps.
📌 Best For: Companies looking to scale quickly through partnerships while still benefiting from consumer adoption.
Challenges of the B2B2C Model: While this model reduces marketing costs, negotiating partnerships with insurers or corporate wellness programs can be time-consuming. Additionally, integrating into existing healthcare workflows may require compliance with regulatory frameworks or additional software development.
Why Investors Love Subscription-Based Monetization
In the last decade, consumer healthcare has shifted from one-time device sales to subscription-driven business models, allowing startups to generate continuous revenue. Basically, the opportunity here is that startups incorporating subscriptions often provide additional value beyond the hardware itself, this means:
Predictable revenue streams, reducing dependency on new device sales.
Higher customer lifetime value (LTV) compared to one-time purchases.
Opportunities for continuous upselling, such as AI-driven health coaching, integrations with other devices, or advanced data analytics.
Challenges of Subscription Models: One of the biggest hurdles in subscription-based healthcare is proving ongoing value to consumers. Unlike entertainment or software subscriptions, health data insights must be compelling and actionable for users to stay engaged and continue paying.
3 important takeaways to consider:
Market Validation is Critical: Engage with real consumers early to confirm pain points, existing solutions, and unmet needs.
Business Models Shape Product Design: Whether B2B, B2C, or hybrid, understanding how the product will be sold impacts everything from development to pricing.
Leverage Existing Platforms for Insights: Facebook groups, forums, and patient networks can help founders identify demand before investing heavily in R&D.
🤖 Does Your Hardware Product Fit Your Business Model? 4 Essential Questions to Consider.
Given rising hardware costs and global supply chain issues, founders must balance manufacturing expenses, pricing models, and long-term monetization strategies.
Now, let’s apply the lessons learned about business models to the challenges of producing and delivering a hardware product.
1. How Will You Cover Your Manufacturing Costs?
If manufacturing costs are high, a premium pricing model may be required.
Some companies offset costs by offering subscription-based access to features instead of a one-time device sale.
2. Should You Own Manufacturing or Work with a Strategic Partner?
In-house manufacturing offers full control but requires a capital-intensive setup.
Outsourcing to third-party manufacturers allows for faster scaling but may introduce supply chain vulnerabilities.
3. How Will You Monetize Beyond the Initial Hardware Sale?
Recurring revenue models provide investors with long-term growth potential.
Hybrid models (e.g., freemium services) let users pay for upgrades or premium analytics after purchasing a device.
4. How Will You Manage Supply Chain Risks?
Geopolitical factors are impacting chip shortages and raw material costs.
Founders should consider alternative supply chains and manufacturing redundancy strategies to mitigate risks.
🏭 Scaling: 3 Tips to Navigate Manufacturing and Supply Chains
One of the biggest challenges for healthtech and consumer healthcare startups is not just building a working prototype, but ensuring that the product is ready for large-scale manufacturing.
Many founders make the mistake of jumping into mass production too soon, only to realize that the device needs multiple iterations before it truly meets user needs.
To avoid this, the key is to first focus on rapid iteration—building and refining the first versions of the product with agility—before transitioning to long-term manufacturing and supply chain planning.
1. Rapid Iteration in Early Prototyping
When developing a new healthcare device, the goal should be to iterate quickly, testing different versions of the product to validate usability and effectiveness. A common mistake is committing to large-scale production too early—producing 1,000 units, distributing them to patients, and then discovering a critical flaw.
📌 Best Approach for Early Prototyping:
Work with agile design partners who can refine prototypes fast.
Test devices in small batches to get real-world feedback from users.
Ensure you are addressing a real, unmet need before scaling production.
Many companies partner with R&D and prototyping teams in Singapore, the U.S., and Europe to rapidly develop and refine early devices before moving into mass production.
2. Choose the Right Manufacturing Partner for Scale
Once a prototype is validated, the next challenge is finding a manufacturing partner that can support cost-effective, large-scale production.
📌 Key Considerations for Scaling Manufacturing:
Capacity – Can the manufacturer handle high-volume production efficiently?
Regulatory Compliance – Do they meet FDA, CE, or other industry standards?
Cost Efficiency – Is the cost per unit scalable to ensure profitability?
Many startups struggle because they try to figure out supply chain logistics before the device is fully validated. Without a clear understanding of target users and market positioning, they risk producing a device that fails to meet consumer expectations.
3. Understand Market Fit Before Scaling Production
Another common pitfall is scaling a product without deeply understanding the target market. Founders often focus on building but neglect the critical step of ensuring that patients and consumers truly want the product.
📌 How to Avoid This Mistake:
Engage with real users early – Test your device with patients before committing to mass production.
Refine based on feedback – Iterate based on real-world usage, not just assumptions.
Ensure differentiation – If competitors already exist, make sure your device has a unique value proposition.
Startups that rush into manufacturing before validating market demand often face costly redesigns and delayed go-to-market timelines.
🧐 FDA or Non-FDA? Here’s What You Need to Know ASAP
For founders, understanding how to position their startup for investment depends on whether their product falls into the FDA-regulated category or can enter the market without these regulatory hurdles. Those developing non-FDA-regulated devices can typically move faster, focusing on early user traction and demonstrating market demand through Business-to-Consumer (B2C) sales or strategic partnerships.
On the other hand, FDA-regulated devices require a well-defined regulatory roadmap, potential pilot programs with hospitals or research institutions, and a realistic funding strategy to support the longer development timeline.
Investors are not necessarily deterred by FDA-regulated startups, but they expect founders to fully understand the process, budget accordingly, and be transparent about potential delays.
Many startups underestimate the time and capital required to navigate regulatory approval, which can raise concerns for investors evaluating early-stage opportunities.
Consultants help clarify regulatory steps, timelines, and costs—critical elements when structuring a funding strategy.
✅ 6 Key Elements VCs Look For in Early-Stage Consumer Healthcare Startups
Unlike traditional medtech startups, which often require complex reimbursement strategies, consumer healthcare companies can often bypass insurers and sell directly to end users. This simplifies the business model but introduces new challenges, especially around scalability, regulatory considerations, and unit economics.
So, what makes an early-stage startup fundable in consumer healthcare? And what are the biggest red flags that turn investors away?
1. Strong Problem-Solution Fit
One of the most critical factors for investors is whether the startup is addressing a real and pressing problem. Founders must demonstrate a deep understanding of their target market and validate demand through beta users, key opinion leader endorsements, or real-world trials. Investors want to see that patients or consumers are excited to use the product and that there is an unmet need that the device effectively solves.
Powerful questions:
Do you deeply understand the problem your device solves?
Are patients or consumers excited to use it?
Do you have real-world validation (early trials, beta users)?
2. A Scalable and Cost-Efficient Go-to-Market Strategy
Investors want to know how you will get your device into consumers' hands in the fastest, most cost-efficient way.
A common mistake among early-stage consumer healthcare startups is relying solely on a B2C model with high customer acquisition costs (CAC). Investors prefer startups that leverage existing networks—such as health plans, clinics, employer wellness programs, or digital health platforms—to reach a large customer base more efficiently.
For instance, instead of spending heavily on digital advertising, a startup developing a home health device could partner with senior living facilities to distribute its product to a well-defined and engaged audience. B2B2C models, where physicians, insurers, or employers recommend and distribute the product, tend to be more scalable and attractive to investors.
What Works Better?
Partnering with established organizations—health plans, clinics, wellness programs—that already have thousands of potential customers.
B2B2C models where physicians, insurers, or employers recommend and distribute the device to patients/employees.
Direct marketing to niche, engaged consumer groups (e.g., Facebook communities for specific health conditions).
Example: Instead of spending millions on advertising, a startup creating a home health device could partner with senior living facilities to distribute its product at scale.
3. A Realistic Roadmap (Including Regulatory Considerations)
For startups developing FDA-regulated devices, investors expect a clear regulatory roadmap, outlining key milestones for approval, anticipated funding needs, and potential pilot partnerships with hospitals, research institutions, or insurers. Given the unpredictability of FDA timelines, investors advise startups to plan for longer-than-expected approval processes and secure sufficient funding upfront.
Even for non-FDA-regulated products, investors want to see thoughtful capital planning and a strategy for managing supply chain costs as the company scales. A startup’s ability to secure early partnerships or pilot programs can also help reduce financial risks and accelerate traction.
Focus on:
✔ Key milestones: When do you plan to reach FDA clearance?
✔ Funding needs: How much capital is required at each stage?
✔ Pilot opportunities: Can you partner with hospitals, research labs, or insurers to fund early trials?
4. Start with a Niche, but Have a Clear Path to Scale
One of the biggest mistakes founders make is positioning their product as a universal solution for everyone. Investors are much more interested in startups that start with a specific, highly engaged audience and then expand strategically.
In other words, founders should define their initial audience clearly while ensuring there is a long-term vision for mass adoption.
Startups that fail to articulate a focused go-to-market strategy often struggle to gain investor confidence. A product that tries to appeal to too broad of an audience too soon runs the risk of diluting its messaging and stretching marketing resources too thin.
5. Understanding Unit Economics and Manufacturing Costs
Investors expect founders to demonstrate a path to profitability, particularly in hardware-based consumer healthcare. This includes showing an understanding of manufacturing costs, supply chain dynamics, and how economies of scale will reduce production expenses over time.
Startups should also analyze customer acquisition costs (CAC) versus lifetime value (LTV) to ensure the business is scalable. Without a clear financial model, investors may worry about profitability risks and the ability to maintain margins as the company grows.
6. Choosing the Right Distribution Model
Another key challenge for consumer healthcare startups is ensuring that customer acquisition remains cost-effective. Unlike traditional medtech, which sells through hospitals and insurers, consumer healthcare often relies on direct sales and marketing, which can be expensive if not carefully planned.
Investors favor startups that leverage partnerships with clinics, employer wellness programs, or insurance companies rather than relying solely on direct advertising.
Building a community-driven adoption strategy, using online patient networks or influencer partnerships, can also reduce marketing costs and increase user engagement.
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