Andreessen Horowitz March 27, 2023
By Jay Rughani, Mehul Mehta, Julie Yoo, and Scott Kupor

The public market situation for healthtech can seem pretty depressing. Recently IPOed healthtech stocks are underperforming the broader market, with some falling 95%+ from their IPO—meanwhile, more traditional companies like UnitedHealth and Eli Lilly are near all-time highs.

Unsurprisingly, some in the healthcare community have begun to extrapolate these disappointing results to the broader landscape of venture-backed healthtech companies and the thesis behind it: can real, high-growth, high-margin, highly defensible businesses be built in healthtech?

Our answer: yes, absolutely.

The most important companies in healthtech—and those that make the most enduring impact on the greatest number of patients—will take advantage of the opportunities in healthcare (namely: enormous spend, disproportionate labor-to-capital ratios, and high switching costs) by deploying the strategic advantages...

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