The Mass Extinction of Digital Health Startups

These 70 PowerPoint slides will blow your mind. I explain exactly how VC bros and healthcare incumbents manufactured today's digital health crisis, where mediocrity triumphs over innovation.

Welcome to AI Health Uncut, a brutally honest newsletter on AI, innovation, and the state of the healthcare market. If you’d like to sign up to receive issues over email, you can do so here.

It was an honor to speak at Health2Tech in NYC last Wednesday, March 19. I’m encouraged and inspired by the interest my research sparked. It shows me that people genuinely want effective ways to solve the digital health crisis in America—ways that truly benefit core stakeholders: patients, nurses, and doctors.

As promised, I shared my slides with all 120 event attendees. Today, I’m making them available exclusively to my paid Substack subscribers through this post. I’m placing the slides behind a paywall, hoping to keep them out of reach from LLMs and search engines, given how AI companies have shamelessly been stealing copyrighted material.

These 70 slides represent two years of meticulous research. Enjoy!

As a reminder, if you cannot afford this article—perhaps you’re a student or currently between jobs—please reach out. That’s precisely why I created the AI Health Uncut Founding Member Club. Thanks to generous donations and support from these wonderful individuals, I’m able to provide access to anyone who needs it.

If you’d like to become a Founding Member of the AI Health Uncut community, you can join through this link. You’ll be making a real impact, helping me continue to challenge the system and push for better outcomes in healthcare through AI, technology, policy, and beyond.

Anyway, here’s the TL;DR:

1. Title Slide: The Mass Extinction of Digital Health Startups

2. Disclaimer: Cite My Work, Please!

3. Reach Out to Me on Social Media

4. WellAI, My Startup

5. AI Health Uncut, My Substack Newsletter

6. My Dataset of 132 Digital Health Companies

7. I Critique Flawed AI Models in Healthcare…

8. …Especially Those Embarrassingly Hyped by Mass Media

9. I Investigate Healthcare Fraud

10. And of Course, I Expose Bad Actors in Digital Health

11. Selected List of Companies I’ve Investigated

12. Most Startups Fail

13. We All Know About High Startup Failure Rates

14. Not Failing Means You’re Not Working Hard Enough

15. You Miss 100% of the Shots You Don’t Take

16. Non-VC-Backed Startups Either Die Quickly or Eventually Beat VC-Backed Ones

17. VCs Have Caused Billions in Losses for U.S.-Listed Digital Health Companies Over the Past 5 Years

18. The Story Remains Consistent Over Time: VCs Continue to Pick Sh*tty Digital Health Companies Year After Year

19. Out of the Top 10 Most Successful Publicly Traded Digital Health Companies, Only Two Are VC-Backed

20. Bankrupt Digital Health Companies Have Overwhelmingly Been Backed by VC and PE Firms

21. The Magic of Venture Capital in Digital Health: The Great Disappearance Act

22. VCs Are Playing Straight Into the Hands of Healthcare Monopolies by Eliminating Competition

23. Averages Don’t Tell Sh*t: While VCs Often Murder Digital Health Startups, Even Most Non-VC-Backed Startups Are Doomed to Die

24. VCs Can’t Pick Winners Anymore. Instead, They’re Picking Mediocre Startups They Plan to Unload Onto the Next Sucker.

25. VC and PE Returns Have Been Disastrous. And Nobody’s Even Mentioning Risk-Adjusted Returns—Unlike Stocks, You Can’t Just Hit a Button and Pull Your VC Money Out.

26. VC Distributions Are Hovering Near Their Lowest Levels in Decades

27. Morgan Stanley: VC Returns Plummet to 28-Year Low

28. If You’re an LP, You Now Have to Wait Over 10 Years Just to Get Your Money Back!

29. “Traditional” VC Playbook: The Infinite Loop of Fundraising

30. VC Funding Is Killing the Startup Ecosystem

31. Increasing Allocations to VC and PE at the Expense of Public Markets Has Been a Disastrous Move for Pension Funds

32. “You Can’t Be Fired by Investing in General Catalyst”

33. Since 1997, VC Investors Have Invested More Money Than They Received Back From VC Funds

34. CalPERS Lost 24.8% on Their VC Positions in 2022. What Did They Do Next? They Didn’t Just Double Down. They Sextupled Down!

35. What Good Is VC Diversification Without Liquidation?

36. When You Can’t Pick Winners if Your Life Depended on It, What Do You Do? You Build an Empire, Because at That Point, 2% Is Bigger Than 20%

37. And of Course, VCs Also Pat Themselves on the Back by Sponsoring Fake Rankings

38. Nobody Says “No” to the Healthcare VC Mafia

39. The Healthcare VC Mafia Rules

40. Over Half of Late-Stage Deals Originate From VC Referrals. These Firms Leverage Their Elite Networks for Superior Deal Flow. And Yet, They Still Consistently Underperform in the Long Run.

41. VC Pump and Dump: Valuation Cycle of a Typical Digital Health Startup

42. How Venture Capital Is Cannibalizing the Economy

43. Digital Health Unicorns Have Disappeared—Because Mediocrity Trumps Innovation

44. The IPO Party Is Over

45. Expect Far More M&As and Far Fewer IPOs

46. AI Hasn’t Solved Healthcare’s Problems Because the System of Incentives Is Broken

47. The VC Culture of Mediocrity and the Incumbents’ Suppression of Innovation Have Created an Industry Dominated by “AI Tourists” and “AI Wrappers”

48. What the Heck, I’ve Built My Own Medical AI Wrapper—Should I Sell It?

49. The Death of the AI Scribe Is Imminent

50. Not a Single AI Scribe Has FDA Approval. It’s the Wild Wild West of Medicine.

51. I Haven’t Seen Any Real Innovations in Digital Health

52. Primary Care Is in the Worst Shape Ever—and the Lack of Digital Health Innovation & Shrinking Reimbursement Rates (Despite Healthcare Inflation!) Ain’t Helping

53. Sexism in Venture Capital: What Future Awaits My Daughters?

54. 21-Factor Quantitative Dashboard for Health AI IPO Valuation

55. 8 Digital Health Failure Patterns

56. Toxic Culture Is Eating Digital Health for Breakfast

57. Livongo: One of the Biggest Snake-Oil Deals in Financial Market History

58. Why Teladoc’s Acquisition of Livongo Was Disastrous

59. Theranos: One Drop of Lies, A Sea of Fraud

60. Better Theranos? People Sure Have Short Memories.

61. Babylon Health: The Madoff of Digital Health

62. Wall Street Analysts Were in Bed With Babylon’s Management

63. “Stock Markets Are Either Too Optimistic or Too Negative, but Eventually, They Settle on the Right Value.” Babylon’s Value Has Settled at $0 Four Months Later…

64. Olive AI: The Poster Child of “Champagne and Cocaine” Spending

65. October 2021 Was Peak Olive: “Frisson by Olive” Fragrance and the Notorious “Olive Bus”

66. Truepill: The Poster Child for VC Extortion

67. Truepill’s Trajectory: From Founders’ Fantasy to VC Nightmare

68. Truepill’s Founders’ Dilution via VC Extortion: An 8-Step Program From 100% Ownership to 0%

69. Suki: Digital Health’s Poster Child for “AI Tourism”

70. Suki: When There’s Zero Innovation, “Borrowing” Someone Else’s Tech Ain’t “Hard at All”

71. 7 Digital Health Success Patterns

72. Veeva Systems: The Secret to Success—Say No to VCs

73. Doximity: Wall Street’s Pariah, Doctors’ Darling

74. Startup Success Formula

75. Two Primary Barriers to Healthcare Innovation

76. My Mission and Exploring Possible Solutions

Here are all the slides. I like to reference my work, so you’ll notice QR codes on almost every slide. Scanning them will take you directly to the original source of the information displayed.