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Using intellectual property (IP) as collateral for loans is a growing trend, and it's particularly relevant for the healthtech and life sciences sectors in 2025. Here's a breakdown of this trend:The Value of IP in HealthTechHealthtech companies, especially startups, often have a wealth of intangible assets, such as patents, copyrights, and trade secrets, that are far more valuable than their physical assets. These IP portfolios are the core of their business, containing groundbreaking technologies like AI algorithms for diagnostics, novel medical devices, digital therapeutics, and personalised medicine platforms.Why IP-Backed Loans are Gaining TractionNon-Dilutive Financing: For a startup, securing a loan by pledging IP as collateral allows them to raise capital without giving up equity. This is a crucial advantage for founders who want to maintain ownership and control of their company.Access to Capital: Healthtech is a capital-intensive industry, and developing high-precision medical technologies requires substantial investment. A strong IP portfolio can be a powerful tool for attracting investors and securing the necessary funding for development, clinical trials, and market entry.Risk Mitigation for Lenders: Lenders are increasingly recognizing the value of IP as a form of collateral. To mitigate the risk associated with intangible assets, they often rely on independent valuation of the IP and may require the borrower to have intellectual property insurance. This insurance protects against legal challenges and infringement, ensuring the asset's value is preserved.Driving Business Value: A well-crafted IP strategy, which includes patents and trademarks, is correlated with higher chances of securing venture capital funding and successful exits (eg. M&amp;A or IPO).Key Elements of IP-Backed FinancingWhen a company seeks a loan using its IP as collateral, several steps are involved:Valuation: The IP's market value, enforceability, and potential are assessed by independent appraisers.Negotiation: The borrower and lender agree on loan terms, including interest rates, repayment schedules, and collateral requirements.Securing Rights: The lender registers a legal claim to the IP, which can be seized in the event of a loan default.Ongoing Compliance: The borrower must adhere to loan conditions, such as maintaining IP registrations and avoiding legal disputes.Challenges and ConsiderationsWhile IP-backed loans offer significant opportunities, there are also challenges to navigate. The legal landscape for IP, particularly with the rapid rise of AI-generated inventions, is still evolving. This creates complexities around ownership and infringement, which can lead to uncertainty for both creators and investors. Organisations like the World Intellectual Property Organization (WIPO) are actively working on dialogues to mainstream IP-backed financing and create a more robust legal framework.

Intellectual Property Backed Financing: New HealthTech Trend in 2025

Digital neurotherapeutics represent a cutting-edge field within digital health, leveraging software-driven interventions to prevent, manage, or treat neurological disorders and improve brain health. These therapies are evidence-based, often regulated, and designed to deliver specific clinical outcomes, distinguishing them from general wellness apps. How They Work:Digital neurotherapeutics primarily work by delivering therapeutic interventions through software, often incorporating elements of cognitive behavioural therapy (CBT), gamification, and personalised exercises. They aim to stimulate neuroplasticity – the brain's ability to form new connections – and promote recovery or manage symptoms. Key features include:· &nbsp; &nbsp; &nbsp; Software-driven interventions: Utilizing mobile apps, virtual reality (VR), tablet computers, and other digital platforms to deliver therapeutic content. · &nbsp; &nbsp; &nbsp; Personalization and real-time feedback: Adapting interventions to individual needs based on user data and providing immediate feedback on progress. · &nbsp; &nbsp; &nbsp; Engagement and motivation: Employing gamification, progress tracking, and reminders to enhance patient adherence and motivation. · &nbsp; &nbsp; &nbsp; Data-driven insights: Collecting and analysing data on patient progress, adherence, and response to therapy, which can inform clinicians and further personalize treatment. · &nbsp; &nbsp; &nbsp; Accessibility and convenience: Allowing patients to access therapy anytime, anywhere, often from home, reducing the need for frequent clinic visits. · &nbsp; &nbsp; &nbsp; Remote monitoring and intervention: Enabling healthcare providers to remotely track patient progress and intervene as needed. Applications:Digital neurotherapeutics are being developed and used for a wide range of neurological conditions and brain health challenges, including:· &nbsp; &nbsp; &nbsp; Stroke rehabilitation: Assisting with motor and cognitive recovery, promoting neuroplasticity, and improving fine motor skills, gait, and balance. · &nbsp; &nbsp; &nbsp; Parkinson's disease: Helping to improve gait, cognition, attention, and reduce fall risks. · &nbsp; &nbsp; &nbsp; Multiple sclerosis: Supporting cognitive training and motor function. · &nbsp; &nbsp; &nbsp; Traumatic brain injury (TBI): Aiding in cognitive rehabilitation. · &nbsp; &nbsp; &nbsp; ADHD: Offering cognitive training and behavioural interventions. · &nbsp; &nbsp; &nbsp; Insomnia: Providing behavioural interventions. · &nbsp; &nbsp; &nbsp; Early-stage Alzheimer's disease/Dementia: Offering cognitive training and assessments. · &nbsp; &nbsp; &nbsp; Mental health conditions: Widely used for depression, anxiety disorders, PTSD, and substance use disorders, often delivering digital CBT. · &nbsp; &nbsp; &nbsp; Cognitive function improvement: Through repeated practice and targeted exercises to restore or compensate for cognitive impairments. Advantages:Compared to conventional rehabilitation, digital neurotherapeutics offer several advantages:· &nbsp; &nbsp; &nbsp; Increased accessibility: Overcoming geographical barriers and reducing the need for in-person appointments. · &nbsp; &nbsp; &nbsp; Enhanced engagement: Gamification and interactive elements can boost patient motivation. · &nbsp; &nbsp; &nbsp; Personalized treatment: Data-driven adjustments allow for tailored interventions. · &nbsp; &nbsp; &nbsp; Consistent delivery: Ensuring standardized care according to established protocols. · &nbsp; &nbsp; &nbsp; Scalability: Ability to reach larger populations without significant additional infrastructure. · &nbsp; &nbsp; &nbsp; Integration into daily life: Offering ongoing support that fits a patient's routine. Challenges:Despite their promise, digital neurotherapeutics face challenges: · &nbsp; &nbsp; &nbsp; Data security and privacy: Ensuring the protection of sensitive healthcare data. · &nbsp; &nbsp; &nbsp; Cost and reimbursement: High implementation costs and limited insurance coverage in some regions can hinder adoption. · &nbsp; &nbsp; &nbsp; Digital divide: Older generations or individuals in rural areas may have limited access to technology or digital literacy. · &nbsp; &nbsp; &nbsp; Regulatory landscape: Navigating the evolving regulatory environment for software as a medical device. · &nbsp; &nbsp; &nbsp; Integration with traditional care: Ensuring seamless integration into existing healthcare systems. Companies and Clinical Trials:Several companies are active in the digital neurotherapeutics space, including:· &nbsp; &nbsp; &nbsp; Akili: Known for its prescription digital therapeutic for ADHD. · &nbsp; &nbsp; &nbsp; MindMaze: Developing digital neurotherapeutics for motor and cognitive recovery in stroke, Parkinson's disease, and at-risk aging. · &nbsp; &nbsp; &nbsp; MedRhythms: Pioneering next generation neurotherapeutics to improve walking and mobility, often incorporating music therapy. · &nbsp; &nbsp; &nbsp; AppliedVR: Specializing in therapeutic virtual reality. · &nbsp; &nbsp; &nbsp; BigHealth: Focusing on digital therapeutics for mental health conditions. Clinical trials are crucial for validating the efficacy and safety of digital neurotherapeutics, similar to traditional drug development. These trials are increasingly incorporating decentralized and remote elements, leveraging digital platforms and wearable devices for data collection and monitoring. The goal is to accelerate development, improve precision, and expand access to evidence-based interventions for neurological and mental health conditions.

Digital Neurotherapeutics Is a HealthTech Sub-Sector to Watch in 2026

NHS England's Digitising Social Care programme has recently released new guidance on the use of AI in care work. This initiative, funded by the Department of Health and Social Care, aims to transform adult social care through digital innovation.The new guidance outlines how AI tools can be utilised to streamline processes and reduce administrative time within the care sector. Technologies highlighted include:&gt; Sensor-based systems &gt; Chatbots &gt; Facial recognition &gt; Data analytics tools Generative AI tools are specifically recommended for tasks such as drafting care plans, carrying out audits, monitoring daily care, and simplifying communication.Key takeaways from the guidance emphasize:&gt; Ethical and transparent use of AI. &gt; Starting with small pilots for quick wins. &gt; Staff training going hand-in-hand with AI integration. &gt; Monitoring the impact of AI implementation. The guidance also addresses important considerations like data protection (ensuring compliance with UK GDPR), and the need to mitigate bias in AI systems that could lead to discriminatory outcomes. The Digital Care Hub, commissioned by the Digitising Social Care programme, played a role in developing this guidance, convening meetings with care providers to discuss AI.Full details on the guidance can be found here - <a data-mce-href="https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery" href="https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery" title="https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery" target="_blank" rel="noopener">https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery</a>Digitising Social Care ProgrammeThe Digitising Social Care programme, which is funded by the Department of Health and Social Care and delivered by a joint team of DHSC and NHS England colleagues, commissioned the Digital Care Hub to develop guidance for adult social care providers on Artificial Intelligence (AI).The Digital Care Hub, an independent consortium led by care providers, acts as a subject matter expert to the Digitising Social Care programme. They have been actively involved in gathering insights and co-producing this guidance. For instance, throughout 2024, the Digital Care Hub convened several virtual meetings with interested care providers to discuss AI, and the findings from these discussions contributed to the development of the guidance and "top tips" for using AI in adult social care.This collaboration aims to ensure that the guidance is practical, relevant, and addresses the real-world needs and concerns of adult social care providers as they explore and implement AI technologies.Department of Health and Social Care (DHSC)&nbsp;The "DHSC Digitising Social Care" refers to the comprehensive program funded by the Department of Health and Social Care (DHSC) and delivered by a joint team of DHSC and NHS England staff. Its core mission is to digitally transform the adult social care sector in England.Here's a breakdown of what it entails:Origins and Goals:White Paper "People at the Heart of Care" (2021): The program stems from the government's commitments outlined in this white paper, which allocated significant investment (at least £150 million) to accelerate digital adoption in adult social care.&gt; Transforming Care: The overarching goal is to improve the quality, safety, and efficiency of care delivery by embracing digital technologies. This includes making care more person-centred, reducing administrative burden on staff, and improving communication across the health and social care system. Key Focus Areas:&gt; Digital Social Care Records (DSCRs): A major priority is to move care planning and information from paper to digital systems. The aim was for 80% of CQC-registered providers to have DSCRs by March 2024 (though some ICBs may have taken longer). DSCRs allow for real-time, secure sharing of information, enabling better coordination of care. &gt; Care Technologies: Promoting the use of various technologies like sensor-based falls prevention and detection, remote monitoring, and other innovative tools that can enhance care and support independence. &gt; Digital Skills and Literacy: Equipping the social care workforce with the necessary digital skills and confidence to utilize new technologies effectively. This includes providing training and resources. &gt; Cyber Security and Data Protection: Ensuring that digital systems are secure and that personal data is protected in compliance with regulations like UK GDPR. The "Better Security Better Care" program is a key part of this.&gt; Integration: Facilitating the seamless flow of information between social care and health systems (e.g., GP Connect) to provide a more holistic view of an individual's care needs.Full details on the guidance can be found here - <a data-mce-href="https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery" href="https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery" title="https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery" target="_blank" rel="noopener" data-mce-selected="inline-boundary">https://beta.digitisingsocialcare.co.uk/get-help-set-choose-and-use-technology/ai-care-delivery</a>

NHS England’s digitising Social Care Programme releases new guidance on the use of AI in care work

The UK healthtech investment landscape is dynamic and continues to show strong growth, with several key trends shaping its future. Here's a breakdown of what to expect:1. Dominance of AI and Data-Driven Solutions:Continued Surge in AI Investment: AI is the undeniable leader in healthtech investment. Nearly half of all VC investment in UK health in Q1 2025 went to AI-powered startups. This trend is expected to accelerate as AI promises greater precision, accuracy, and autonomy in healthcare, impacting areas like drug discovery, precision medicine, diagnostics (e.g., image analysis for cancer detection), and workflow optimisation.Focus on Health Data Infrastructure: The UK government is investing significantly (up to £600 million) in building a world-leading health data research service. This will unlock vast datasets, enabling scientists to develop better treatments faster and fuel AI-driven innovation. Personalised Medicine and Digital Twins: Advancements in processing multiomic data combined with AI are bringing personalized care closer. "Patient digital twins" offer powerful predictive capabilities and are a promising area for future investment. 2. Increased Investment in Biopharmaceuticals:Within healthtech, biopharmaceuticals remain a highly valuable and populous sub-sector, attracting substantial funding. This includes development of new drugs and therapies, often leveraging AI for accelerated discovery. 3. NHS as a Catalyst and Customer:Digital Transformation of the NHS: The NHS is undergoing a significant digital transformation, with a committed £10 billion investment to bring it into the "digital age" and £2 billion for digital transformation and £520 million for a life sciences innovative manufacturing fund. This creates a huge market and opportunity for healthtech companies that can provide scalable and interoperable solutions.Shift to Value-Based Procurement: There's a growing emphasis on value-based procurement within the NHS, prioritising patient outcomes and long-term value over immediate cost savings. This encourages healthtech companies to develop solutions that demonstrate clear clinical and economic benefits.Streamlined Adoption: Initiatives like the "NHS passport" for proven tools (e.g., AI cancer scanners, wearable devices) aim to speed up the adoption of cutting-edge tech. The NHS Innovation Service also helps facilitate the adoption of new innovations. Challenges Remain: Despite positive initiatives, challenges persist with NHS procurement processes often being slow, fragmented, and lacking transparency. This can still be a significant hurdle for SMEs.4. Addressing Key Healthcare Challenges:Workforce Support and Efficiency: Investment will continue in solutions that alleviate pressure on the healthcare workforce, improve efficiency, and free up staff time. This includes AI-powered tools for administrative tasks, virtual care platforms, and technologies that streamline clinical workflows.Remote Monitoring and Virtual Wards: The success of virtual wards and remote monitoring during and after the pandemic is driving continued investment in technologies that enable patients to receive care at home, reducing hospital stays and easing pressures. Early Diagnosis and Prevention: Healthtech solutions that enable earlier diagnosis (e.g., AI diagnostics) and focus on prevention and managing long-term conditions will see strong investment.5. Evolution of Funding and Ecosystem:Stabilisation of Early-Stage Funding: Early-stage funding (seed and Series A) has stabilized, while most UK venture capital in Q1 2025 went into breakout stage (Series B and C) companies, indicating a maturing ecosystem.Diversification of Funding Sources: UK startups are increasingly looking beyond equity to alternative sources of funding, with debt funding surging.Strong Research Base and Global Attractiveness: The UK's strong research-friendly environment and ability to evaluate technologies for clinical and cost-effectiveness (through institutions like NIHR and NICE) make it an attractive global hub for healthtech.Government Support and Policy: The UK government has a strong commitment to growing the life sciences sector, including healthtech, through various initiatives outlined in its Life Sciences Sector Plan. This includes funding for R&amp;D, manufacturing, and speeding up regulatory processes.6. Regulatory Landscape and Market Access:Ongoing Regulatory Challenges: While there is optimism around proposed international recognition frameworks and efforts to streamline regulation, the complex regulatory landscape remains a significant barrier for many healthtech companies, especially SMEs. Delays in approvals and high compliance costs can extend time to market. Importance of Real-World Evidence: The upcoming NHS Innovation and Adoption Strategy is expected to provide clarity on real-world evidence development, which is crucial for healthtech companies to demonstrate the effectiveness and value of their solutions in real-world settings.In summary, the future of UK healthtech investment will be heavily shaped by the ongoing AI revolution, strong NHS demand for digital transformation, and a continued focus on solving critical healthcare challenges through innovative technologies. While regulatory and procurement hurdles remain, government commitment and a robust research ecosystem position the UK as a key player in the global healthtech landscape.

Future Trends for UK HealthTech Investment

Nelson Advisors HealthTech Macro Trends in 2025

HealthTech founders, while navigating the complex healthcare landscape, often find themselves facing unique challenges related to their venture capital-backed cap tables. A cap table, or capitalization table, details the equity ownership of a company. When VCs enter the picture, it introduces a new dynamic that can lead to significant problems if not managed carefully.Here are 10 common problems for HealthTech founders with VC-backed cap tables:1) Excessive Founder Dilution, Especially Early OnProblem: Founders, particularly in early rounds (pre-seed, seed), sometimes give away too much equity for modest investments, often due to inexperience or a lack of alternative offers. This leaves them with too little ownership by Series A or B, diminishing their motivation and making it less attractive for future VCs who want founders to remain significantly incentivised.HealthTech Nuance: HealthTech often has longer development and regulatory cycles, requiring more funding rounds. If founders dilute too much early, their ownership can dwindle to unsustainable levels over these extended periods. 2) Unplanned Employee Stock Option Pools (ESOPs) and Their DilutionProblem: Not setting aside a sufficient ESOP early enough means that when the time comes to grant options to key hires, this pool often dilutes only the founders and existing shareholders. VCs typically insist that the ESOP is funded before their investment, effectively shifting the dilution burden to pre-existing equity holders.HealthTech Nuance: HealthTech requires highly specialized talent (clinical, regulatory, deep tech). Attracting and retaining these individuals often necessitates competitive equity packages, making a well-planned and sufficiently sized ESOP even more critical. 3) Complicated or "Messy" Cap TablesProblem: Disorganized, error-filled, or overly complex cap tables with too many small shareholders (e.g., numerous angel investors from crowdfunding or early rounds without SPVs) deter future investors. VCs want a clear, manageable ownership structure.HealthTech Nuance: Given the potentially longer timelines and multiple funding rounds, the cap table can become convoluted quickly. Managing numerous small investors, especially if they have disparate interests or are spread across different jurisdictions, adds complexity. 4) Misaligned Investor Expectations and Short-Term FocusProblem: VCs typically seek significant returns within a 5-7 year timeframe. This can create pressure on founders to prioritize rapid growth and a quick exit (IPO or acquisition) over a longer-term vision, sustainable profitability, or deep clinical validation, which is often crucial for HealthTech.HealthTech Nuance: The inherent slowness of healthcare adoption, regulatory hurdles, and the need for rigorous clinical evidence can clash with VC demands for fast returns. This misalignment can lead to strategic disagreements and undue pressure on founders to make decisions that might not be best for the long-term health of the company or its mission. 5) Loss of Control and Undue Investor InfluenceProblem: As VCs invest, they acquire board seats and often demand consent rights over key decisions (e.g., future fundraising, executive hires, M&amp;A). Founders can find themselves with limited operational autonomy.HealthTech Nuance: In a sector requiring deep domain expertise and a nuanced understanding of patient care and clinical workflows, VCs who lack this specific background can push for strategies that are financially driven but clinically or operationally unsound. This can lead to tension and potentially suboptimal outcomes for the product or patient. 6) Punitive Anti-Dilution Provisions for Early InvestorsProblem: While standard, some anti-dilution clauses (especially "full ratchet") can severely penalize founders and later investors in a down-round (a funding round at a lower valuation than the previous one). This can disproportionately increase early investors' ownership at the expense of others.HealthTech Nuance: Down-rounds are more common in a tightening economic climate, and HealthTech, with its longer time-to-revenue, can be more susceptible. Such clauses can make it extremely difficult to raise subsequent rounds or maintain founder equity. 7) Valuation Traps and Unrealistic ExpectationsProblem: Raising at an inflated valuation in a hot market can lead to a "down-round" in subsequent, more conservative funding environments, triggering anti-dilution clauses and significantly diluting founders and earlier non-protected investors.HealthTech Nuance: The "hype cycles" around certain technologies (e.g., AI, digital therapeutics) can lead to overinflated valuations. When the reality of long sales cycles, regulatory burdens, and slow adoption sets in, these valuations can become unsustainable, leading to painful adjustments. 8) Vesting Schedule IssuesProblem: Lack of proper vesting schedules (e.g., 4-year vesting with a 1-year cliff) for founders and key employees means that if someone leaves early, they still walk away with unearned equity, unnecessarily fragmenting the cap table.HealthTech Nuance: Given the interdisciplinary teams and the critical role each early team member plays, clear vesting schedules are essential to ensure long-term commitment and prevent valuable equity from being tied up by inactive parties. 9) Difficulty Attracting Future Investors Due to a "Broken" Cap TableProblem: A cap table where founders are too diluted, too many small investors exist, or there are problematic investor rights can scare off future institutional investors who seek a clear, well-structured ownership.HealthTech Nuance: The "deep tech" nature of many HealthTech solutions means they often require significant, sustained investment. If the cap table isn't appealing, it can impede critical follow-on funding, risking the company's ability to reach commercialization. 10) Lack of Liquidity Planning and Secondary SalesProblem: Founders often focus solely on the next funding round or exit, neglecting the importance of potential secondary sales of their shares. Without a clear strategy or clauses in investor agreements, it can be difficult for founders to achieve any personal liquidity before a full company exit, even after years of work. HealthTech Nuance: Given the longer timelines to IPO or large M&amp;A exits, HealthTech founders might need options for partial liquidity earlier in the journey to manage personal finances or motivate continued commitment. Without proper planning in the cap table, this can be challenging to facilitate. Managing a VC-backed cap table in HealthTech requires a sophisticated understanding of equity dynamics, legal terms, and investor relations. Founders need to be proactive, seek expert advice early, and carefully balance fundraising needs with long-term control and value creation.Nelson Advisors &gt; Healthcare Technology M&amp;ANelson Advisors specialise in mergers, acquisitions and partnerships for Digital Health, HealthTech, Health IT, Consumer HealthTech, Healthcare Cybersecurity, Healthcare AI companies based in the UK, Europe and North America. <a href="http://www.nelsonadvisors.co.uk">www.nelsonadvisors.co.uk</a>Founders for Founders &gt; We pride ourselves on our DNA as ‘HealthTech entrepreneurs advising HealthTech entrepreneurs.’ Nelson Advisors partner with entrepreneurs, boards and investors to maximise shareholder value and investment returns. <a href="http://www.nelsonadvisors.co.uk">www.nelsonadvisors.co.uk</a>Nelson Advisors LLPHale House, 76-78 Portland Place, Marylebone, London, W1B 1NT<a data-mce-href="mailto:lloyd@nelsonadvisors.co.uk" href="mailto:lloyd@nelsonadvisors.co.uk" title="lloyd@nelsonadvisors.co.uk" target="_blank" rel="noopener" data-mce-selected="inline-boundary">lloyd@nelsonadvisors.co.uk﻿</a><a data-mce-href="mailto:paul@nelsonadvisors.co.uk" href="mailto:paul@nelsonadvisors.co.uk" title="paul@nelsonadvisors.co.uk" target="_blank" rel="noopener">paul@nelsonadvisors.co.uk</a>

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Intellectual Property Backed Financing: New HealthTech Tr...

Digital Neurotherapeutics Is a HealthTech Sub-Sector to W...

NHS England’s digitising Social Care Programme releases n...

Future Trends for UK HealthTech Investment

Nelson Advisors HealthTech Macro Trends in 2025

Capped Out: 10 Common Problems for HealthTech Founders wi...