Here’s What Digital Health Startups That Successfully Exited Have in Common
What does it take to build a digital health company that IPOs or sells for $100 million+? We wanted to unearth patterns behind our sector’s biggest “success” stories, so we analyzed data from 61 companies that exited. How did we pick these companies? They either:
Went public and have a current market capitalization of over $1 billion
Or sold for more than $100 million
The TL;DR: these companies are overwhelmingly led by experienced business leaders (98% had prior business experience), mostly men (only three female CEOs in the entire group), and they take about a decade to reach an exit. Most surprising? Two-thirds of these companies still had a founder at the exit.
Let’s dive in…
It takes about a decade to exit
We found that those that went public took an average of 11.9 years to do so (with a median of 9 years), while acquired companies reached their exit in an average of 9.5 years (median of 8 years). The most common exit year was 2021, reflecting that year's surge in digital health deals.
Some of the fastest times to exit included Hims & Hers and Evolent Health, which went public just four years after being founded. Matrix Care took the longest time to exit at 36 years, followed by Eliza Corporation at 19 years.
The majority of companies had a founder at the helm
At the time of exit, 67% of the companies were still led by the founder, while 33% had brought in outside CEOs. We also noticed an interesting detail: three companies operated with co-CEO structures at the time of exit:
Guardant Health: Helmy Eltoukhy and AmirAli Talasaz
Good Rx: Doug Hirsch and Trevor Bezdek
Astrana Health: Warren Hosseinion MD and Thomas Lam MD
MBAs lead the pack
When we looked at the educational backgrounds of the CEOs, we found that all but one have at least a college degree (one dropped out of engineering school). And 61% have a graduate degree of some sort, including:
31% hold MBAs
14% have PhDs
5% have MDs
5% have law degrees
Economics, business, and engineering were the most common fields of study among these digital health leaders.
For most of these CEOs, it wasn’t their first rodeo
Previous business experience is nearly universal for this cohort of companies. Our analysis found:
98% of CEOs had prior business experience
94% had previous leadership or management roles
63% had run other startups before
The only CEO who did not have prior business experience was David Van Sickle, who was a researcher, academic, and disease detective at the CDC (how cool!) before founding, running, and selling Propeller Health.
Experience comes with age
We all know ageism is alive and well in Silicon Valley (Y Combinator co-founder Paul Graham once told the New York Times, “The cutoff in investors’ heads is 32… After 32, they start to be a little skeptical.”), but healthcare may be different. Healthcare investors with the most money and power have decades of experience, and they tend to back leaders with similar depth.
In this cohort of successful digital health startups, the median age of CEOs at exit was 48 (the range was 25-68). And the average of the CEOs who exited via IPO was 4.3 years older than those who sold their companies.
In an industry where deep expertise and professional connections often take years to cultivate, being over 40 is a feature, not a bug.
Women are visibly missing from leadership
Our data highlights a significant gender gap in digital health leadership, which is disappointing but unsurprising. Only three companies (5%) had female CEOs at the time of exit, and none of the companies that went public were led by women. Unfortunately, this is a problem across all of business:
Women-only-founded startups receive only 2% of all venture capital (VC) dollars
Only 10.4% of Fortune 500 companies are run by women
Less than 1% of businesses that get acquired are female-founded, and these businesses are valued 30% lower compared to their male-founded counterparts
Coastal cities dominate
California continues to dominate, with nearly a third of companies on this list from California. Over a quarter of all companies originated in San Francisco alone, making it by far the most common starting point.
When it comes to geography:
38% were based on the West Coast
36% in the Northeast
10% in the Midwest
4% in the Rocky Mountains
3% in the Southeast
The formula is clear but needs updating
Our analysis shows a consistent pattern in digital health leadership: experienced business leaders, often founders, who spend nearly a decade building their companies in coastal tech hubs. The recipe for success appears straightforward – but it's also troublingly narrow.
The near-total absence of women CEOs (just three out of 61 companies) points to systemic barriers in who gets to build and scale these companies. While we couldn't reliably assess racial and ethnic diversity from headshots and names, the lack of gender diversity alone suggests we're missing out on a huge pool of talent. (We did find that at least 14% of these CEOs were born abroad, about par with the U.S. population).
The geographic concentration in just a few coastal areas raises another question: are we limiting innovation by focusing mainly on traditional tech hubs? While San Francisco and Boston have clear advantages in talent and capital, the pandemic showed us that successful companies can be built anywhere. In fact, investors are increasingly backing companies based in non-hub cities across the US as deal-making is becoming more decentralized. Before 2019, the median distance between a seed startup and its lead investor was less than 100 miles. By 2022, this median distance lengthened nearly sixfold to 591.3 miles.
As digital health matures and healthcare's challenges become more pressing, we need to expand this formula. The next wave of successful companies might benefit from more diverse leadership perspectives, broader geographic representation, and perhaps even different backgrounds than the current business and economics focus. The core ingredients of experience and business acumen clearly matter – but there's room to reimagine who brings these qualities to the table.
Thanks to medical resident Dr. Olivia Reszczynski who helped me collect and crunch these numbers!