E-health vs. tech financing: 5 blind spots

L’Éclaireur e-Santé #002

Financing e-health start-ups vs. tech start-ups: why the cycles are different

From local compliance to funding cycles, e-health startup financing follows radically different rules from pure tech. Why do e-health startups die in indifference while tech thrives? Not for lack of innovation. Not for lack of available money. But because of a structural mismatch between regulations, investors and official classification.

Over the past three years, we have analyzed 40+ e-health fundraising projects. The conclusion is implacable: e-health funding in France navigates between three worlds without completely belonging to any one of them. Tech investors refuse. Healthcare investors wait. Banks don’t know which way to turn. The result: capital blocked, talent gone, startups liquidated.

Here are the five blind spots nobody names, and how to get around them.

The problem nobody names

Let’s imagine a startup developing an artificial intelligence diagnostic tool. Real-life path observed.

First comes clinical validation: 18 months minimum. Multi-centric trials, peer-reviewed publications, documented evidence. No income during this phase.

Next comes medical CE marking: a further 12 months. MDR file (Medical Device Regulation), notified assessment, harmonized conformity. Still zero revenue.

End result: first revenues in month 36. 2.3 million euros burnt in the meantime.

This is where the dilemma begins. The bank refuses credit: “You’re not real tech, you’re healthcare. The health fund refuses: “You have no published clinical validation.” The tech fund refuses: “Your cycles are too long, we don’t understand MDR regulation.”

Result: receivership in month 28. This company will not appear in any e-health failure statistics. It will be classified as a tech failure. It will disappear from every radar.

This is the first blind spot in French e-health funding.

Three sectors, three radically different realities

The 2023-2024 figures reveal glaring structural inequalities.

For e-health and healthtech :

• 1.8 billion euros raised in France
• 2,700 active companies
• 67% experiencing cash flow difficulties (source: Option Finance, 2024)
• Valley of death: 3 to 7 years (extended)

For general tech :

• 5.7 billion euros raised (source: France Digitale, 2023)
• Short, predictable financing cycles
• Valley of death: 2 to 3 years focused on Series A/B
• Capital 3 times more available for 2 times shorter cycles

For traditional SMEs :

• 61% difficulty accessing bank financing (source: Senate Report n°70, 2024)
• Clearly defined warranty issues
• No prolonged valley of death, but high mortality years 1-3
• A recognizable, structured sector

The ratio is brutal: general tech raises 3 times more with 2 times shorter cycles. But that’s not the real problem. The real problem: e-health doesn’t exist in official classifications. She floats between health and tech without a stable regulatory home.

The five blind spots that are killing e-health startups

Blind spot 1: The classification dilemma

An e-health startup navigates simultaneously between several worlds. Firstly, it may be coded NAF 86 according to INSEE (Activities for human health). Secondly, it may be classified under NAF 62.02A (IT systems consulting). Thirdly, it must comply with health regulations (MDR/IVDR). Fourth, it is evaluated by investors according to tech criteria.

This discrepancy creates systemic confusion. Tech investors apply unsuitable analytical grids: 12-18 month time-to-market, rapid pivot, aggressive burn rate. These criteria don’t work in healthcare. Secondly, healthcare investors expect clinical validations that seed companies cannot finance (costs: 500K-1.5M€). Finally, banks apply both healthcare criteria (requiring hospital guarantees) and tech criteria (refusing for lack of tangible assets).

Result: 34% of e-health SMEs cite bank guarantees as the No. 1 obstacle, compared with 24% for pure tech (source: Banque de France, 2024).

Blind spot 2: The extended valley of death (not one, two)

Classic tech crosses valley of death concentrated years 2-3. Product-market fit validation. Then Series A for scaling. It’s fast, intense, defined.

E-health is going through two successive and incompressible valleys of death.

VALLEY 1 (years 1-3) : Technical AND regulatory validation

During these years, the startup has carried out: multi-center clinical trials, CE marking, HAS certification where applicable, interoperability validation. No revenues. All costs.

VALLEY 2 (years 4-7) : Market adoption

Then comes the equally costly phase: hospital referencing (typically 18-36 months), CNAM/ARS negotiations, inter-institution deployment, user training, field support. Revenue slow to emerge.

In between: financial no-man’s-land.

Seed funds are out. Series A funds are waiting for proof of traction. Revenues do not cover structural costs. This gray zone lasts 12-18 months with no available capital. This is where 43% of MedTech companies die, according to the France Biotech 2024 report.

Blind spot 3: Invisible self-censorship

28% of SMEs refuse to apply for credit due to early repayment (source: Senate Report n°70, 2024). This figure rises to 41% for e-health companies, according to a Technopole Amiens 2023 study (not officially published).

Why is this? Banks have tightened up their collateral requirements without any official communication. By word of mouth, e-health entrepreneurs learn that “there’s no point in trying”. Worse still: companies that never ask are not counted as “refused”. They simply disappear from Banque de France or INSEE statistics.

This blind spot does not appear in any report. It is invisible by design.

Blind spot 4: The 20 million euro glass ceiling

In France, funding rounds >20 million euros are structurally rare for e-health. Why this ceiling?

Firstly, French funds specializing in healthcare have a ceiling of 10-15 million euros, limiting the available tickets. Secondly, tech funds refuse to accept the long cycles imposed by e-health regulations (uncertain ROI, unpredictable timelines). Thirdly, international funds require FDA/US presence before investing in Europe. Without access to US markets, valuations plateau.

Consequence: premature takeovers by foreign groups before European scaling. Documented example: Cardiologs (AI cardiology) bought by Philips before Series C (source: La Fabrique de l’Industrie, 2023). French value shifted to multinational before maximum creation.

Blind spot 5: Invisible regulatory costs

MDR (Medical Device Regulation) costs between €150,000 and €800,000, depending on the class of the device. These costs are systematically underestimated in business plans presented to tech investors unfamiliar with healthcare regulations.

The result: an explosion of the burn rate in months 18-24, exactly when the seed money runs out. Startups thought they had 36 months of runway. They have 24. 67% of e-health companies report cash flow difficulties in 2024, compared with 34% in 2021 (source: Option Finance, 2024).

[IMAGE 2: 5 Angles Morts e-santé – circular infographic]

Structural solutions: what needs to change

Solution 1: Create an official “HealthTech” classification

Concrete actions requested: create new NAF code 62.02H “Conseil et développement IA santé”. Adapt BPI France eligibility criteria specifically. Structure banking analysis grids dedicated to e-health (not general tech, not pure health).

Expected impact: 40% reduction in bank refusal rate, based on fintech model 2018-2023.

Solution 2: Specialized public-private hybrid funds

Proposed model: co-investment BPI France (40%) + private healthcare funds (60%). Tickets 3-8 million euros for extended valley of death phase. Regulatory support included in fund (not outsourced).

Inspiration: Heal Capital (UK) with NHS England, £180 million raised 2023.

Solution 3: Reinforced non-dilutive financing

Existing mechanisms are under-utilized: BPI France repayable advances (12% e-health attribution rate vs. 34% in tech), increased research tax credits for clinical trials, European EIC Accelerator grants (e-health success rate: 8%).

Action: double e-health envelopes for these devices.

Solution 4: Investor consortia for towers >20 million euros

For European scaling without foreign takeovers: create a dedicated healthtech sovereign wealth fund (model: Fonds Ambition Biotech created in 2024). Systematize European syndication (minimum 3+ countries per round). Provide tax incentives to avoid premature foreign takeovers.

Objective: increase from 3 rounds >20M€/year (2023) to 15 rounds/year (2027).

Things to remember

Blind spots in e-health startup financing are not inevitable. They result from a structural mismatch between three worlds: regulation, which classifies e-health as “health”; investors, who evaluate it as “tech”; and banks, which don’t know where to put it.

The solution is not to choose sides. The solution: create a hybrid ecosystem that recognizes this dual nature. This can be achieved through four levers: appropriate official classifications, specialized funds that master both tech AND regulation, non-dilutive financing for critical phases, and specific methodological support.

Are you developing an e-health solution and recognize these blind spots? Are you stuck in one of these traps? Free 45-minute diagnosis: together we identify your precise situation and structure a way out.

Conclusion

Are you bootstrapping a healthcare startup? Have you raised seed capital and need to navigate the extended valley of death? Looking for a multi-country financing structure?

E-health financing diagnostic: 45 minutes free of charge, global analysis, JuliaShift methodology.

👉 Book diagnostic financing or explore our services

🎯 Going further

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Sources cited

• [1] Forbes France – “The paradox of financing healthcare start-ups in France” (2024): https: //forbes.fr/startups/
• [2] Option Finance – “The financial situation of French healthtechs is getting tighter” (2024): https: //www.optionfinance.fr/actualites/
• [3] Senate Report n°70 – “SME and ETI financing” (2024): https: //www.senat.fr/rap/r24-070/
• [4] France Biotech – “Panorama 2024”: https: //france-biotech.fr/
• [5] INSEE – “Nomenclature NAF Section 86”: https: //www.insee.fr/fr/metadonnees/nafr2/
• [6] Banque de France – “Survey on access to financing for businesses Q2 2025”: https: //www.banque-france.fr/
• [7] La Fabrique de l’Industrie – “Buyout of start-ups: French roots, foreign wings” (2023): https://www.lafabrique.fr/
• [8] Tresor.economie.gouv.fr – “Venture capital and the development of French start-ups” (2021): https: //www.tresor.economie.gouv.fr/

About the author

Nicolas Schneider is a strategic advisor in digital healthcare transformation and founder of JuliaShift. With 17 years’ experience at the French Army Health Service and 8 years in digital transformation consulting, he assists MedTech startups and healthcare establishments in their financing strategy, structuring pharma partnerships and preparing for fund-raising.

Specialties: healthcare innovation financing, MedTech fund-raising structuring, pharma industrial partnerships, IA regulatory compliance.