Challenges and Strategic Choices in Business Model Evolution of European Digital Health Startups: A Qualitative Study

Startups are crucial in driving digital transformation in healthcare, with business modeling being essential for their success. However, these digital health startups face challenges in the healthcare sector, including stringent regulations and multiple stakeholders. As a result, they must make unique business model choices. This study investigates the challenges of digital health startups and systematically maps the resulting business model choices in the European Union. Through 32 expert interviews with founders and leaders, the study identifies key challenges and develops a catalog of business model choices across critical dimensions: value proposition and customer segments, medical device and regulatory compliance, evidence generation and clinical studies, revenue model and cost structure, key resources and funding, and key partnerships and customer engagement. Medical device regulations were identified as the major barrier for many startups, followed by related challenges regarding revenue models and funding. The findings emphasize the importance of addressing medical device regulatory requirements early in the business model design process and adapting related components such as funding or revenue models. The study further generalizes these insights into a conceptual model of the temporal evolution of digital health startup business models. This work contributes to the ongoing discussion on sustainable business models in digital health and provides a catalog of business model choices for digital health startups.