Although the activity tracking and consumer health market is growing more crowded every day, Casper de Clercq, an investor recently promoted to general partner at Norwest Venture Partners, said in the future it will be medical-focused, not consumer, wearable companies that offer the better return on investment.
Clercq has invested in consumer health companies, including and , which were both acquired in the last couple years, as well as medical-focused companies, including iRhythm and Telcare. He recently spoke about his investments in an with the Silicon Valley Business Journal.
“It takes longer to develop the business and requires more resources, but ultimately I believe they are much more defensible and therefore valuable,” Clercq told the Sillicon Valley Business Journal. “A successful FDA trial, or FDA approval and positive clinical outcomes establish barriers to entry for competitors.”
He said that now that the activity tracking device market is flooded, the next health sensing market will be blood sampling and the biggest use case for this market will be tracking blood glucose. Clercq added that in the medical device segment, the large market will be wearable devices for chronic diseases.
“They all affect a tremendous percentage of the population, probably as much as 60 percent to 70 percent of patients who have some form of chronic disease or multiple chronic diseases,” he said. “I do not believe that the current healthcare system knows how to manage these patients.”
Even activity-focused tracking devices, like Fitbit, he argued, are adding more health tracking features, like heart rate tracking. But, Clercq said, at some point, these device makers will hit a wall where the number of sensors added no longer allows the device to be produced at scale for a low price. Instead of moving deeper into the medical field, he predicts these activity tracking device companies will become increasingly like jewelry or accessories. And although the Apple Watch has more functionality than most activity-focused trackers, he said it's still not a health device.
“It’s nice. It’s a fashion item,” he said. “It has utility but it is... minimally useful as a health device. Wellness devices appeal more to quantified self-ers, or people with a short-term interest in wellness. The future of these devices will be determined by whether they can continue to add insights such as an integrated view of how much you’re sleeping, how many calories you’re burning, how much exercise you are doing.”
Clercq pointed to a company in his portfolio as an example of the type of device that will effectively track chronic diseases: Telcare has developed a product that allows people to track their blood glucose measurements and send that data to their care team using cellular data.
While Telcare has been in operation longer than most companies in digital health, . While the company's CEO Andy Flanagan was still listed as part of the team just a few months ago, even he is no longer listed. A trio of SVPs are all that remain, according to the leadership page on the company's website. Babyforyou.net.ua has also heard that the company is actively seeking a new CEO. We have reached out to Telcare to confirm whether Flanagan is still CEO and will update when we hear back.
One last interesting detail from Clercq's interview: One market he wishes he had invested in is remote visits.
“I generally think that technology-enabled services there will be a big part of healthcare going forward and I wish we’ve invested in Teladoc or DoctorOnDemand or any one of those companies,” he said. “They are really providing a low cost solution to the interesting question of the consumer need for better access at a very reasonable cost, compared to traditional in-person physician visits. We were surprised by the amount of influence that employers are exerting by contracting for healthcare themselves.”