This week, I had the opportunity to attend HiMSS ’23, the largest healthcare IT conference in the world, held in Chicago. As a venture capitalist (VC) focused on healthcare startups, I was eager to learn about the latest innovations and technologies shaping the industry. And, as expected, the conference didn’t fail to impress! From exploring emerging trends to meeting industry leaders, I had an incredible experience that has left me with some invaluable insights. In this blog post, I’ll share my key takeaways from HiMSS ’23 and what they mean for both founders and VCs.

Generative AI is the new buzzword: As expected, artificial intelligence (AI) was a hot topic at HiMSS ’23. However, what caught my attention was the emphasis on ‘generative AI’ – the AI that creates its own content. The idea behind generative AI is to train models to understand patterns, so they can generate outputs that are indistinguishable from human-made products, such as music or text. While the application of generative AI in healthcare is still in its infancy, its potential is immense. However, for startups, the challenge would be to build proprietary generative models, given the high costs and technical expertise required. A close second to generative AI is NLP (natural language processing) for unstructured data.

Large software enterprises are making big plays in healthcare: It’s no secret that healthcare is a lucrative market, and it seems large software enterprises such as SalesForce, ServiceNow, and UIPatth, have taken notice. These companies are now entering the healthcare space, leveraging their vast resources and expertise to create services that compete with existing startups. As a result, startups will face fierce competition from well-funded tech giants that already have distribution and the availability to bundle their offerings.

Not all founders were eager to talk to VCs: As a VC, I had the opportunity to meet many founders and learn about their exciting startups. However, I also noticed a trend where some founders were hesitant to speak to me once they learned I was a VC. Many founders didn’t want to give away too much information or position themselves for a potential investment, I found this odd given that capital deployment into the healthcare space has decreased. Maybe I am also not that likable which is also a likely scenario.

So much money in healthcare, yet building with capital efficiency is hard: The healthcare industry is unique in that there is a lot of capital available. However, despite the abundance of funding, building a healthcare startup with capital efficiency remains challenging. One reason is the lack of incentives and the cost of navigating sales cycles. Additionally, healthcare is a complex ecosystem with multiple stakeholders, making it difficult to create a product that satisfies everyone. Therefore, building a successful healthcare startup requires not only significant capital but also a deep understanding of the market and a willingness to navigate the complexities.

Horizontal plays dominate startup exhibitors: Finally, I noticed a trend where many startup exhibitors at HiMSS ’23 were focused on horizontal products, rather than niche solutions. These companies aimed to provide broad solutions to specific problems, rather than solutions to a particular need. While horizontal plays can be effective, they tend to have higher levels of competition and face barriers to differentiation. Niche players, on the other hand, can create a more targeted product, tailored to a specific market need, potentially leading to less competition and a more significant market share. I found this particularly disappointing in my hunt for deals.

Attending HiMSS ’23 has been an invaluable experience, providing me with a deeper understanding of the healthcare industry and the challenges that come with building healthcare startups. While the conference has seen the introduction of new buzzwords such as generative AI, it has also highlighted the increasing presence of tech giants and the difficulties of building with capital efficiency. Despite these challenges, there remains a wealth of innovation and opportunity in healthcare, and I’m excited to be a part of the industry’s transformation. As a VC, my big takeaway is that building strong relationships with founders is more critical than ever, as startups will need all the help they can get to navigate the complexities of the healthcare industry.