Buckle up: It’s time to talk about tariffs…again.
While tariffs are paused for many countries and pharmaceuticals are exempt (for now), the healthcare industry is certainly not immune to the up to 145% tax on Chinese goods. For health tech startups specifically, there are two challenges: ensuring they have enough devices companies need and securing capital to grow amid a volatile market.
In Q1 2018 and 2019, venture funding for digital health companies hit $1.9 billion and $1.3 billion, respectively, according to data provided to Healthcare Brew by digital health strategy group Rock Health.
Those numbers quickly shot up during the pandemic to $3.3 billion in 2020 and peaked at $6.6 billion in 2021, the data showed for each year’s Q1 analysis. But investment fell again in recent years to a low of $2.9 billion in Q1 2024, then slightly recovered to $3 billion in Q1 2025.
Health tech founders told Healthcare Brew that while investors tightened the purse strings more than they had hoped coming into this year, they have plans to get through the challenges—and they want to offer solutions.
Finding funds
Before tariffs were announced by President Donald Trump, financial experts predicted 2025 was going to be a big year for healthcare investment, Healthcare Brew previously reported, especially for mergers and acquisitions.
For example, at the beginning of the year, there were a few big moves in biotech (a $14.6 billion acquisition at Johnson & Johnson, $2.5 billion at Eli Lilly, and $1 billion at GSK). But BioPharma Dive reported in April there have been fewer $1+ billion deals so far this year compared to previous years.
Instead, companies have been hit with tariffs (and threats of tariffs) that may raise the cost of goods and financially strain their businesses.
Travis Rush, co-founder and CEO of Reperio Health, which provides at-home preventive care, said his company relies on wellness kits that include blood testing supplies, a scale, a blood pressure cuff, and other small medical devices. Patients use these kits to test themselves, and the company helps patients lower their chances of needing care.
The company works with some international manufacturers, and Rush said he’s concerned about future scaling capabilities if the supply chain is disrupted.
Reperio “fortunately” stocked up on kits before the tariffs were announced, he said, and since they’re not products customers buy for each transaction, the company can safely reuse elements of the kits for different patients.
The company is also actively fundraising right now, Rush said. After weathering a difficult 2022 and 2023, he was initially hopeful for this year. Reperio is a seed-stage company and has raised $28 million.
“Some of the VC funds finally had some deployable capital. But I think what’s going on right now [with tariffs] is definitely making everybody just slow down again,” he said, noting that conversations are still happening nonetheless.
CFO Brew reported tariffs may cost US businesses nearly $990 billion per year. Independent investor M.G. Siegler told Wired last month “tariffs are undoubtedly the main thing that was discussed in every partner meeting the past couple weeks” and “the key question is how real this ends up being, how long will it last, versus just some sort of weird temporary blip.”
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Part of the reason for the slowdown, Rush said, is so investors can make sure they have enough funds to support their portfolio companies that may be affected by tariffs.
“It’s causing a little bit of a break, if you will, in the processes that we were already starting to finally gain some acceleration on,” he said.
‘Recession-proof sectors’
On the other hand, Ryan Johnson, co-founder and CEO of Float Health, which works to expand patient access to specialty pharmacies, said the volatility of the public markets may prompt investors to turn to health tech startups.
“We’ve seen throughout the course of our business that any times of uncertainty actually drive investors toward more recession-proof sectors,” he said. “Healthcare is one of them, so [health startups] actually will, commonly, be more interesting to those types of investors as uncertainty rises.”
Between 2008 and 2009 during the Great Recession, unemployment reached 10% across the US, but the healthcare industry added jobs. Fierce Healthcare reported that investment in the digital health sector had recovered faster than in others. Specifically, while digital health investment dropped 17% from $1.77 billion to $1.5 billion during the recession, Fierce said, it got back up to $1.76 billion by 2010. Overall investment in the US, though, fell 30% from 2008 to 2009 and took an extra year to bounce back.
‘Buckle down’
Both Rush and Johnson built their companies amid the Covid-19 pandemic (Reperio in 2020 and Float in 2021), and neither are backing down from this latest challenge.
Developing the most efficient ways to deliver the kits is one way to alleviate the supply chain burden, Rush said. For example, the company’s deal with rideshare company Uber in April 2024 made kit deliveries faster (three kit deliveries per month with UPS vs. 10 deliveries per month with Uber, according to Rush), which helped expand patient access.
Johnson said he hopes Float can be part of the solution and help keep costs down if tariffs raise care costs, as higher prices for care “force more people to get the type of treatments that [Float offers] at a lower-cost site, which is the home.” (Johns Hopkins reported at-home services are about 30% cheaper than treatments at hospitals.)
“I’ve been building companies for 30+ years, and if there’s one thing that I’ve learned, it’s you can’t let all of these outside forces control your decision-making every day,” Rush said. “There are always going to be things that are out of your control interfering, and you just have to buckle down and do the best you can to work around all those different hurdles.”