Apr 18, 2023

| Membership (fee-based) getty When starting Xealth in 2017, we needed to consider our investors. Startups traditionally look to venture capital since VCs are experts in lending money to promising companies and can lend valuable insights that guide their growth. Instead, we focused on strategic investors, believing organizations that could also be our clients and partners are better aligned with our long-term vision than anyone who may be more focused on an exit strategy. This has led us to welcome 15 health systems and additional technology partners as investors. For my team, strategic investors made the most sense with recent events affirming that decision. In addition to 2023 shaping up to be a tight year for VC funding, especially in the digital health industry, we recently witnessed the collapse of Silicon Valley Bank , the nation’s 16th largest bank. More than 2,500 VCs banked with SVB, along with tens of thousands of companies, including Xealth. SVB’s downfall happened so fast that many people were left uncertain when they would access their accounts for business basics, including supplies and payroll. The FDIC covers deposits but only up to $250,000. This led to urgent board calls about short-term concerns. That said, what could have been a scary moment for the company turned into an uplifting show of support as investors, partners and clients came together with offers of assistance—should we need it. Here are three reasons why strategic investors should be considered when seeking funding for your tech startup: 1. They Hold A Unique Understanding Of Your Business MORE FOR YOU These organizations are in your industry. More than advising and seeing pitch decks, they live the challenges and opportunities you outline every day and will know if your value proposition is pie in the sky or legitimate. Strategic investors want you to succeed with your tech startup for business reasons and because they want your vision to come true since it is in line with their own. 2. Diversified Financial Resources Similar to certain social clubs, people with shared interests do business with the same resources, including accountants and banks. VCs are no different. Many of our hospital investors, on the other hand, do not use the same banks as VCs and other startups. This means that we are not all tied to the outcomes of an SVB or another bank. 3. Gaining An Ally Since strategic investors believe in your company and are tied to its success for more than a financial return upon exit through an IPO or acquisition, these organizations are more likely to roll up their sleeves and help when needed. They are able to prepay contracts and settle up invoicing and receivables. Xealth is my sixth startup. Seeing the struggles that some have faced with SVB’s failure—and the outpouring of camaraderie that followed—I am more convinced than ever that strategic investors were the correct path for us at this stage. It has been refreshing to not need the assistance, although comforting to see the support should it be necessary.