Digital health founders are building in a uniquely tough environment: where regulation, clinical evidence, behaviour change and fragmented health systems all collide.
Grace Lethlean, COO at ANDHealth has seen first-hand what it takes to not just generate evidence, but to turn that evidence into a product that health systems, patients, and payers will actually adopt.
We sat down with her to talk about the gaps that sparked the ANDHealth+ program, the patterns she sees in companies that succeed, and what health systems and investors truly want from digital health.
- What unmet need in the health ecosystem inspired ANDHealth+, and where were founders falling through the cracks in existing support systems?
One of the reasons I’m so passionate about what ANDHealth does is that I started out as a co-inventor of a digital health product myself.
Before ANDHealth started, there was essentially nothing in Australia that was truly digital health specific. Digital health companies would find themselves applying for medical research funding alongside drugs, with assessments heavily weighted to patent portfolios and known clinical development milestones. Alternatively, they would find themselves trying to generate revenues before focusing on clinical evidence to secure investment from more “tech” aligned investors and accelerators. Digital health companies just weren’t getting cut through.
ANDHealth’s Founder, Bronwyn Le Grice, came from a venture capital background and wanted to unlock the investment potential inherent in the nascent digital health sector. The challenge was that the companies just weren’t investable yet. They hadn’t answered some of the key “killer questions” you need to be able to answer before going to market. ANDHealth+ was designed to fill that gap, creating companies able to survive and thrive, attract institutional-grade investment and deliver products and services attractive to enterprise customers in the healthcare sector.
- What are the biggest challenges you see health founders consistently underestimating?
The toughest question in digital health is almost always the business model.
Who’s going to pay? How will this be commercialised? Whether you’re selling to insurers, government, health systems, physicians, practices or consumers, or a combination of all of those, each path comes with a long list of follow-on questions.
Founders also tend to come in with a really strong bias towards their own background. We see companies led by patients, clinicians, caregivers, technologists and medical researchers. Each group has different strengths, challenges and blind spots.
If they come from a tech and product background, the UX and UI often look fantastic, but the clinical evidence requirements are not fully thought through or they believe avoiding regulation to get to revenue early is critical, rather than fully embracing regulation as a competitive defence and customer attraction mechanism.
Alternatively, if they come from a clinical research background, it’s usually the opposite. The medical data is excellent; the intervention works. But they may not have fully thought through how it fits into the clinical workflow outside their own lab or practice, or they are unaware of the regulatory thresholds, cyber and data security considerations or how to “plug in” to the bigger pieces of health infrastructure.
Pricing is another universal challenge. Innovators need to figure out how to determine and articulate the value they’re offering, and then price appropriately in a market that’s still emerging. They need to clearly identify who will pay, why they will pay and how they will pay, making health economics critical to the go-to-market plan. Is the product or service more like a device? A software subscription? A service? A hybrid of service and product? Something in between? The diversity of possible outcomes there is huge, and the external market is shifting rapidly, making support by people with super targeted domain expertise absolutely critical.
- What differentiates the companies that succeed in digital health commercialisation from those that struggle?
One big differentiator is whether a company really understands how its product will be used in context, and by whom.
The best teams can clearly articulate three things: their users, their beneficiaries, and their payers. In digital health, those three are rarely the same. It’s often a chain of people and organisations, and mapping that chain correctly is critical.
The second differentiator is how open the Founders and CEOs are to having their assumptions challenged. For companies in the ANDHealth+ program, we curate a panel of experts across many disciplines from clinical practice, commercialisation, regulation, to product development, market access, and health economics. That panel meets monthly to have exactly those robust conversations.
We ask: what are the key assumptions? How can we derisk them? When new information comes in, how does it change the strategy?
We also deliberately bring in consumer, patient and community voices through the process. It’s one thing to have an elegant solution on paper; it’s another to have something that a patient actually wants to use, or that fits seamlessly into a nurse’s workflow.
That diversity of perspective can introduce constructive conflict, and I’m a big believer that conflict breeds creativity.
- What do health systems want from digital health companies right now, and what do founders often misunderstand?
The Australian health system is better than most in the world, but it’s still incredibly fragmented. That fragmentation is at the heart of what founders need to understand.
When you pitch into a hospital or health service, you’re not just selling to a single buyer. You’re dealing with end users, clinical champions, procurement, IT, finance, executives - all with different priorities, budgets and constraints. You need a clear value proposition not just for the direct user, but for the broader system around them.
One common misconception is that because something is “just an app”, adoption will be straightforward. In reality, that app has to be picked up, used regularly, integrated into existing architecture and fit around a person’s life. Any time you’re asking for significant behaviour change, you’re taking on a big adoption risk.
Ultimately, technology itself doesn’t create productivity or profoundly change patient outcomes. Adoption does.
So, we encourage founders to start with the adoption question: what are the barriers and how can you design around them? There’s a lot of work being done at a system level to digitise and train the health workforce, but companies still need to own their piece of that adoption journey.
- How should founders think about timing for global expansion?
The reality is that very few businesses are going to attract the eye of substantive VC cheques without a clear plan to access major international markets.
The single biggest challenge we see here is “US market or nothing” attitudes, with the vast majority of companies stating that their goal is to enter the US without any real experience or understanding of the US healthcare market in all its complexity.
When considering international markets from a go-to-market perspective, companies really should be spending a lot of time exploring the payment mechanisms and business/ revenue models which are most likely to drive adoption in that particular jurisdiction.
Factors such as mutual regulatory recognition, reimbursement structures, national digital health infrastructure, fast-track procurement pathways and understanding government funded pathways vs private pathways are all key drivers of selection of primary target markets for international expansion.
The ANDHealth+ International Investment committee, global leaders with over $6B of exits in digital health, provide clear guidance to our portfolio companies on these types of issues, with the consensus often being that the US is not the best, first international market to attempt to conquer.
- What metrics or proof points are investors prioritising in digital health in 2025?
At ANDHealth+ we try to stay very close to this question. At a midpoint in the program, we pause and put our companies in front of investors and enterprise customers for structured feedback. We use that feedback to decide which projects to prioritise and, in some cases, whether it makes sense to keep going in a particular direction.
In larger jurisdictions such as the US and UK, there are dedicated digital health funds which focus specifically on this space, bringing deep domain expertise and global healthcare networks. In Australia, our dedicated healthcare investors are naturally more comfortable with pre-revenue companies with extended, deep tech, clinical development pathways, but lean in heavily to the traditional biotech and Medtech sectors. More generalist tech investors may look at revenue and forecast revenue growth and be less comfortable in the pre-revenue space.
However, the reality is that this is a fast moving sector, which following the Covid highs, has seen some substantial company failures and investor losses. So it is still a high-risk sector from the investor perspective.
From a startup perspective, the key is to know who the investors are, deeply understand their mandates and individual target company profiles and then to lean in to those investors that are best aligned with their business.
Quick fire
One underrated opportunity in digital health right now?
Everything that is not badged as AI
There is an enormous amount of money flowing into companies which badge themselves as AI driven technology.That leaves a huge number of other companies, with incredibly strong fundamentals, underfunded and undervalued.
One costly mistake founders can avoid early?
Active avoidance of the regulated path
Avoiding “doing the work” early to achieve appropriate regulatory thresholds will ultimately slow you down just as everyone is expecting you to speed up.
One trend founders should be preparing for over the next few years?
That healthcare will always move slower than technology
Healthcare is a risk averse sector that is intensely conscious of its obligation to firstly “do no harm”. Everything moves slower in healthcare and companies rarely adequately adjust their time and capital requirements accordingly.
This perspective makes one thing clear: digital health success isn’t about having the flashiest technology. It’s about understanding who pays, who benefits, who uses the product and being willing to have your assumptions tested along the way.
ANDHealth+ is Australia’s leading digital and connected health accelerator program, supporting evidence-based digital and connected health SMEs with funding, services, and hands-on support.
If you are a digital health founder ready to prove your commercial viability, the ANDHealth+ Program provides non-dilutive funding, expert validation and resources.
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