Evaulating the Adoption Curve in Healthcare

Introduction

Most startups today know better than to claim their go-to-market strategy is simply, “If we build it, they will come.” Yet, this raises an important question for investors: how should one evaluate a startup’s commercialization plan?

There are countless phases and paths a healthcare startup may take, but focusing on the initial journey to securing early customers can provide a telling glimpse into their likelihood of success. This critical stage often reveals the company’s ability to navigate market nuances, build momentum, and overcome barriers to adoption.

We found Medtech Sales Expert Omar Khateeb’s excellent video on early market adopters with many valuable insights to enlighten investors about the nuances of finding early market traction. Here are some highlights with actionable tips for investors to diligence a startup’s commercialization plan:

Capturing 1% of the market? Why not 15%?

Crossing the chasm from early adopters to the mass market is a crucial milestone for companies and often serves as a litmus test for their venture-backability. The video emphasizes that approximately 15% market share is required to cross this threshold, moving a company from the “early market” to the “mainstream market.” Achieving this level of adoption reflects the company’s ability to overcome significant barriers, including credibility, scalability, and product-market fit.

An example of crossing the "chasm" in healthcare often takes the form of Medicare adoption, which critically unlocks ~66M US Medicare recipients as potential customers whose medical bills are subsidized by the government. Medicare serves as a validation mechanism, demonstrating that the innovation is not only clinically effective but also economically viable under the reimbursement models critical for widespread adoption.

For early stage healthcare investors, the real lesson here is to look critically at pitch decks that often claim that “we’ll reach $100M+ in revenue (or be a billion dollar company) with less than 1% of the market captured!”. These projections lack the strategic depth required to address the complex journey to broader adoption. Venture-backable healthcare companies must articulate how they plan to achieve meaningful adoption milestones, including alignment with payers, regulators, and key opinion leaders (KOLs).

Next time, instead of asking for revenue projection, investors should ask, “how do you plan on capturing 15+% of the market?”

Innovators and Founder-Led Sales

Among the customer archetypes, innovators are the trailblazers of the healthcare technology adoption curve. They thrive on novelty, are willing to embrace risk, and are unafraid of failure. These clinicians are often motivated by curiosity rather than peer validation or hard data. As highlighted in the video, their defining trait is the willingness to experiment with emerging technologies, even in the absence of comprehensive evidence or established market credibility.

Identifying innovators requires keen observation and thoughtful questioning during conversations with clinicians. It’s less about the questions asked, and more about tone and enthusiasm. Do the clinicians’ eyes light up as they discuss new possibilities?

Many healthcare companies are founded by clinicians and engineers, and while some investors may be tempted to discount a technical founders’ ability to lead commercial activities, founder-led sales succeed in this early stage because they tap into the emotional and visionary aspects of the adoption process. Innovators resonate with the passion and belief that a founder exudes. Even founders with technical backgrounds can excel in this role by focusing on what they’re good at: convincing people why this technology is going to change how clinicians practice medicine.

For investors, be cautious about interpreting corporate sales leadership hires as a sign of early-stage commercial success. In the initial stages, the startup journey is about going from 0 to 1, not scaling. Emotional appeal, energy, and vision are the dominant factors in converting innovators. A polished sales executive with 20 years of corporate experience may excel later in scaling products with product-market fit (PMF) in established channels but is often mismatched for the messy, high-energy task of activating first movers.

Remember, founders bring unique credibility to these conversations because they are seen as mission-driven changemakers, not just product sellers.

Innovators don’t make the best KOLs

A word of caution on Innovators though, they might not make the best KOLs to lead the company towards the mass market!

While innovators are pivotal for providing early product feedback and building initial momentum, their willingness to embrace unproven technologies often makes them less relatable to the mainstream market.

Here, the distinction between innovators and early adopters becomes key, even though they all are classified as early market adopters. Unlike innovators, early adopters care deeply about their reputation and the credibility of the technologies they endorse. They are often thought leaders within their fields, actively seeking opportunities to establish themselves as pioneers of validated innovation. Key traits of early adopters include:

• A preference for data-driven validation over speculative potential.

• An inclination to lead their peers by advocating for proven technologies.

• A desire to shape the narrative by contributing to best practices, publications, or guidelines.

Their endorsement holds far more weight than that of innovators in persuading risk-averse stakeholders.

So what to do when the company is just starting out with limited access to early adopters? Make your own KOLs with your innovators!

While innovators may not initially have the reputation or visibility to influence the broader market, targeted collaboration such as content creation, hosting webinars, and generating case studies, can help them ascend into more influential roles and create a win-win situation for the startup and clinician innovator.

For investors, the ability of a startup to nurture innovators into early adopters signals a strong understanding of the adoption curve and the dynamics required to achieve scalability. Companies that invest in empowering their early supporters while simultaneously appealing to more data-driven stakeholders demonstrate a balanced approach that bodes well for long-term success.

The Customer Isn’t Always Right

Beware though, no matter innovators or early adopters, early customers can be a double-edged sword for healthcare startups. While they provide invaluable feedback and validation for your product, they can also become a major drain on time and resources if not managed strategically. Two common pitfalls are:

1. Pilot to death: These situations occur when clients are more interested in testing the waters than committing to a long-term partnership. While pilot programs can offer valuable insights and feedback, they often fail to provide meaningful revenue and distract from finding customers willing to make larger, scalable commitments.

2. Customization to death: this occurs when the clients like the service and attention more than the product itself.

For investors, this does require going into the weeds a bit more about the nature of the business between startups and their early customer:

Have they established clear goals and boundaries?

Define measurable objectives for each engagement—whether it’s a pilot or a feature request. For pilots, set a timeline and specific outcomes to determine success.

Do the Early Clients Have Skin in the Game?

Have they secured financial or resource commitment before starting any pilot program or customization? This ensures the client is serious about adopting your product and not just exploring out of curiosity.

Are the customizations applicable towards other early customers and the mass market?

Prioritize requests that serve multiple customers or fit into your long-term vision. Look for patterns in client feedback to identify broadly applicable features and improvements, ensuring that your product evolves in a way that supports scalability.

Conclusion

As investors, we all aspire to back companies that scale to $100M+ in revenue.

However, this growth doesn’t happen by chance—it requires mastering the fundamentals at every stage of commercialization. Particularly, by focusing on getting the basics right in the early stages—building scalable systems, nurturing credible advocates, and avoiding resource-draining pitfalls—startups lay the foundation for sustainable growth. Understanding these dynamics is key to identifying businesses poised to thrive in the healthcare landscape.

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