The increasing digitalization in the wellness and health sector represents a vast fertile ground for innovators capable of creating solutions that meet the needs of increasingly sophisticated consumers who are attentive to the latest digital innovations for monitoring their health and well-being.
The awareness of the importance of the links between nutrition, sleep, physical activity, health and longevity is combined with an increasing autonomy of consumers in managing their well-being in a context in which public and private health systems remain mainly oriented towards the treatment of diseases rather than prevention.
Wearables are now an integral part of our daily lives; They have transformed our clothes and accessories into tools to improve sports performance, guide our food choices and our lifestyle through the monitoring of our body and our actions. The management and interpretation of data through AI is also creating exciting new perspectives by enabling greater personalization of products in the nutrition, sports, medicine and wellness sectors in general.
In 2022, McKinsey estimated spending on wellness products and services at $450 billion with an annual increase of 5%, a forecast that is proving to be more than real.
In the U.S., there is a real boom in startups related to the wellness market, with double-digit growth estimates in the segments of personalized diagnostics and the so-called connected wellness sector. A market that is certainly crowded and competitive, but with large areas of opportunity.
Tiziana Marcuccio has been involved in investments and business development for many years, first as head of investment for the British government and now, having relocated to the USA, as a consultant she tells Startupbusiness: “Recently I became passionate, partly out of personal interest, partly because living in this culture, it is inevitable, to the wellness sector, metabolic health, and longevity. Living here you are immersed in the culture of marketing and entrepreneurship that pervades all areas of life. The numbers of the wellness and health market, in a system where public health is a real emergency, are impressive and consequently the business opportunities. My interest in everything related to health and well-being led me to meet Giovanni Battistini, founder of Phenotap, a very young startup based in New York and with an international team of the highest competence and experience with whom I have the pleasure of collaborating”.
The Phenotap Experience
Battistini, after a long corporate career in the field of innovation and nutrition, has decided to leave his role as senior vice president of open innovation at Ferrero and launch his startup, identifying, in advance of market trends, the enormous opportunities in the wearables sector in the field of prevention and metabolic health.
Phenotap is partnering with the University of San Diego’s Wearable Sensors Center to develop and bring to market the first non-invasive wearable for continuous measurement of the body’s ketosis state. The measurement of ketosis today takes place with invasive, uncomfortable, often expensive and never continuous systems.
More and more people in the U.S. are following ketogenic diets, which are designed for their benefits in preventing chronic diseases such as type 2 diabetes and Alzheimer’s as well as for weight loss and effects on physical health and mental and sports performance.
To understand the opportunities that this growing market can offer to Italian entrepreneurs and startups, Startupbusiness interviewed Giovanni Battistini.
Giovanni, you have moved from the corporate world to the startup world. What are the opportunities and challenges that a startup faces in the US in the digital health market?
The biggest challenge, but also the most interesting opportunity, is to identify business models that are compatible with the technology/innovation that you intend to bring to the market and with the resources, by definition limited, that a startup must manage in a targeted way and without waste. Too often I have seen, especially in the wearables sector, very interesting innovations and technologies that tend to chase unsuitable business models and with unreasonable expectations that then inevitably lead to failure. This is a shame, because the field of bio-measurement, in which we work, has the potential to trigger an exponential impact on the various complex systems of nutrition, the food industry, and public health. We believe we have identified a strategic application and we are managing our growth wisely, in order to maintain control over strategies according to the progress of our research and development programs and avoid being distracted by short-sighted investors who often seek seemingly obvious approaches but are flawed by what is called here “FOMO” or Fear Of Missing Out. It is therefore also crucial to choose initial investors who are aligned with the startup’s strategy. In our case, we were fortunate to meet Cornucopian Capital, a venture capital investment group that is completely in sync with Phenotap’s vision.
The United States is known for being a leader in innovation and investment. U.S. investors have traditionally been more risk-averse than those in other countries. In Italy, although there have been significant steps forward in recent years, it is still difficult to obtain financing in the pre-seed and seed phases from professional investors. How was your experience in this regard?
The U.S. has a culture of innovation that comes from its history, a history of pioneers who have re-invented everything, from the nation, to the system of government, to the infrastructure, often undone and radically remade, to the many scientific and technological innovations frequently originated by immigrants who found themselves in an ideal environment to succeed. What is usually considered abroad as a weak and sometimes somewhat ridiculous side of the typical American culture, that is, the naivety and sometimes even the impudence of certain actions considered socially unacceptable, is actually the result of a culture of tolerance and encouragement to mistakes that ends up leaving room for the creativity and risk necessary to seek new solutions to existing and sometimes even latent problems.
It is therefore no coincidence that venture capital was born here before being exported all over the world. Italy has made great strides in this field in the last ten years and I often see very promising realities, both in terms of ecosystem and entrepreneurs. The numbers are still low, unfortunately, compared to other European companies, but the quality is beginning to emerge and it would be nice to be able to attract more attention from foreign venture capital. The ideal conditions are there: great talent at relatively low costs, very favourable terms on intellectual property from formidable research institutes, enormous cultural creativity and an enviable lifestyle. The culture of risk and tolerance to mistakes, unfortunately, are aspects on which the Italian entrepreneurial system can still improve, both on the investor and entrepreneur fronts.
The wearables and digital health market is expanding. What are the areas of opportunity for Italian startups?
Wellness and prevention-oriented wearables are a sector in which the American market is ahead of many consumer trends that are naturally oriented to explore and adopt new technologies, often ahead of the rest of the world. Many initiatives at the clinical/hospital level are then destined to be born in the private sector, whereat this moment in the United States we are experiencing a moment of great transformation and exploration because the current system is clearly on its knees, under the weight of the expense of managing chronic diseases, a burden that can only be reduced thanks to prevention. However, there are many opportunities in the healthcare sector, where entrepreneurial innovation can focus on generating the efficiencies needed to cope with spending and staffing cuts. In my opinion, a promising strategy could be to focus on the most critical and specific problems of our country and then export the solution. For example, let’s not forget that in Italy the average population has aged considerably compared to many other countries and wearables aimed at remote monitoring of the elderly can guarantee a lot of added value.
What steps should an Italian startup interested in the US market consider?
The U.S. market is very competitive and requires clear investments and strategies, aligned with execution. Thinking that you can approach this market like any other is a mistake. A particularly differentiated and unique product can certainly find a market here and also investors ready to finance its expansion, at valuations that are often more attractive than those normally obtainable in Italy, but at conditions that often require the transfer of part of the management team and the integration with executives with experience in the American market. In many other cases, a winning strategy, which I have seen in action and helped to implement, is that of a strategic partnership with a complementary American company, and often the acquisition of the same.
What are the challenges for an Italian startup in finding funding in the US?
Early-stage investment is usually based on the in-depth knowledge of the management team and this often requires geographical proximity. Unfortunately, American venture capital is paying more attention to other markets, and that doesn’t make things any easier. The creation of a vibrant ecosystem of entrepreneurial innovation would inevitably attract investors, who would be attracted by the possibility of investing in a portfolio of startups and thus spreading the risk across multiple entities. In today’s reality, therefore, it seems to me that the strategy I described above is preferable.
How do you see the future of the wearable market?
This is still an emerging sector, but one that is set to play a central role in public health. It is now clear to everyone that chronic diseases, whose management now accounts for 86% of American health spending, cannot often be treated effectively after they have already manifested themselves, but require a proactive approach based on the collection and analysis of individual data that can be obtained from a new generation of wearables. But for this market to explode, we need to develop new technologies that allow for non-invasive and cost-effective monitoring of biomarkers that are relevant both for short, medium and long-term medical monitoring and for the individual who can make lifestyle changes based on this feedback. I have been interacting for some time now with researchers and innovators all over the world who are developing really interesting technologies and I think that we are only at the beginning of a great adventure, which will destabilize many systems in a positive way. I’m optimistic. (image from Phenotap.com’s website)
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