During the internet boom, it seemed like every company added ".com" to its name. Today, it feels like half of healthcare startups have AI in their pitch decks.
Whether the company is developing a drug discovery platform, a diagnostic tool, or a clinical workflow solution, AI is often presented as a key differentiator. However, AI itself does not automatically make a company more attractive. Instead, it raises a series of questions that need to be addressed to demonstrate the technology's real value to investors.
Is this an old technology with an AI label?
If the company has been developing the same technology for the last 7 years with an "algorithm," what actually makes it an AI? Sometimes, it's not AI at all, but rather a sophisticated rule-based algorithm.
It doesn't have to be AI to offer real value to patients. If it's not an AI product, or not yet, overselling it only brings down your credibility. Just be honest about what you have.
What benefits does AI really provide?
AI by itself does not guarantee a better solution. Founders need to clearly explain what the AI can accomplish that was previously impossible, impractical, or prohibitively expensive.
Does the AI speed up drug discovery and development, reduce safety risk, streamline patient recruitment, increase operational efficiency, or deliver better results at a lower cost?
Good AI pitches do not just say "we use AI." They explain how AI translates into healthcare impact and how it offers a better solution than the traditional approach in terms of quality, timeline, and cost.
When will we know it actually works?
There are many AI platforms for applications ranging from molecule discovery to formulation screening. It all sounds great in principle, but can you demonstrate that the AI produces results?
Do you have hit compounds that have been tested in the lab? Can you show better diagnostic performance than the standard of care? Do you have a simplified healthcare workflow that can be demonstrated with measurable outcomes?
The bottom line: Is this just a concept, or do you have something tangible to show investors?
Is there a moat?
If you can build an AI company in the basement with public information, many other smart people can do the same thing, and they have probably already pitched the exact same idea to the investors you are pitching.
If the technology works, does it have a durable moat, or can it be easily copied? Is it patentable, or is the only protection a trade secret?
Do you have large proprietary patient data that no one else can easily collect? Is your technology based on years of research that gives you a head start over competitors?
What's going through investors' minds is whether you have a strong moat to actually benefit from having a successful technology.
Does the AI technology create tangible value?
AI introduces an additional layer of technical and commercial uncertainty. As a result, the burden of proof is often higher than for traditional healthcare startups.
The key question is whether that uncertainty is justified by a meaningful improvement in outcomes, efficiency, or economics.
Does the technology create enough value for customers to adopt it? Can it lead to a sustainable business? Will it attract interest from strategic or industry partners?
Moreover, does it offer a return profile that compensates investors for the additional risk?
What am I really looking for?
The strongest AI healthcare companies do not lead with AI. They lead with a healthcare problem worth solving.
Founders should clearly explain why AI is necessary, demonstrate that it works, show evidence that customers or stakeholders will care, and build a defensible advantage that competitors cannot easily replicate.
AI may be the core technology, but it doesn't represent the entire investment thesis.
Each AI healthcare startup needs to be carefully evaluated to identify the real winners.