Private equity and venture capital interest in healthtech has surged and activity shows no sign of abating this year.
But some investors are learning the hard way that a glossy pitch deck and polished paperwork are not enough to secure funding, especially when a company’s value hinges on access to sensitive health data, such as biometric scans, genetic profiles, mental health logs and daily activity tracking.
In the wake of high-profile failures, investors and acquirers are taking a more forensic approach to technical due diligence. A promising founder with a bold vision is no longer enough. What matters now is whether the product works, whether it can scale and, crucially, whether underlying data practices stand up to scrutiny.
In high-growth, fast-moving sectors like healthtech, compliance can become a tick-box exercise: present on paper, but poorly embedded in practice. A company might present all the right documents, clear consent terms, GDPR-compliant policies and ISO certifications, but if those are not reflected in day-to-day operations, they won’t withstand scrutiny.
Sophisticated investors are waking up to the fact that legal documentation alone doesn’t guarantee a secure or compliant data environment. What is needed are advisors with both legal and technical expertise, lawyers who understand operational data use, or consultants who can interrogate whether consent policies are embedded in product workflows.
It is not enough to have the right policies on paper; investors need to know how personal data is collected, stored and used in practice, especially when it comes to sensitive health information.
What happens to sensitive data in an exit or wind-down? Can it be legally and practically transferred to a buyer? And has consent been obtained in a way that supports future product development?
For companies seeking funding, these questions are becoming deal-breakers. If an investor cannot see how your business will navigate a compliant exit, or if your data rights don’t support future use cases, they may walk away.
That is why being “investment ready” today means far more than having a slick pitch deck. Founders need a clear, jurisdiction-specific regulatory map. They need to understand how security standards (such as ISO 27001 and SOC 2) interact with legal consent management. They also need a data strategy that holds up, not just at Series A, but all the way through to exit.
For investors, it means widening the scope of your due diligence lens. Ask how data use will impact valuation down the line. Check whether consent terms allow for future scaling or sale. And dig into the operational side, not just the legal one.
Founders who build data strategies with exits in mind and investors who ask the right operational questions will be the ones who succeed and create real, defensible value.
Craig Fagan is a partner at Perkins Coie
The post Calling all healthtech founders: Your data strategy can make or break a deal appeared first on UKTN.
