The European Paradox
Europe should own healthcare innovation. It has world-class clinical science, the strongest
evidence culture in medicine, structured health data at population scale, and technical
founders pouring out of the deepest public-research base anywhere. And its universal
coverage systems should make adoption easier, not harder.
However, outcomes say otherwise. In 2025 the United States attracted more than three
times Europe's digital health funding, and the cumulative gap since 2020 stands at roughly
five times. America recorded 33 mega-rounds of $100 million or more; Europe recorded 7.
And that was Europe's best year on record: the fastest-growing region globally, with funding
up 15% to $6.2 billion. Even the record barely moved the gap, and much of it was written
with American ink.
The comfortable explanation is that Europe can't build companies. The truth is that it builds them in abundance. What it does not yet do is scale them well.
Europe does not have an innovation problem. It has a distribution problem.
Europe is home to a third of the world's digital health ventures. 42% of them demonstrate strong clinical evidence, higher than any other region, and an increasingly valuable one as payers everywhere stop buying promises. Europe's data endowment is unmatched: national health records, biobanks, Nordic registries and, next door, Israel's decades-deep HMO datasets. That data is longitudinal, structured and built at population scale.
Providers were involved in nearly four in ten European digital health partnerships in 2025, against one in five globally. That closeness to the clinic comes from the same evidence culture, and it cuts both ways: the discipline is a clear positive, but it lengthens the road to revenue and deepens the capital requirement. The real problem emerges at scale. But, by then, Europe's best healthtech businesses are scaling under an American flag.
Distribution is two problems, not one
"Fragmentation" obscures more than it reveals. We believe distribution in Europe is two distinct problems, routinely conflated.
The first is access. Regulatory approval travels; payer validation does not. A CE mark opens the whole single market on paper, but a product proven inside the NHS has demonstrated almost nothing to Germany's statutory insurers or France's reimbursement authorities. Each demands evidence built around its own care pathways, comparators, and definitions of value. Even as the EU pools clinical assessment through the new HTA Regulation, pricing and reimbursement remain
stubbornly national: every market is still a separate commercial undertaking.
Regulation compounds it. Industry surveys put notified body MDR reviews at thirteen to eighteen months, with queues of six to twelve months before work even begins, and AI-enabled clinical software must currently clear the EU AI Act's high-risk obligations by August 2028 on top of MDR conformity. The pending MDR revision may yet fold AI oversight back into the device framework. But that is precisely the problem. Relief arrives on regulatory time, not venture time.
The second problem is more decisive: value capture. Reaching the buyer is not the same as being paid well. A single-payer system is a monopsony: one budget-constrained buyer with a structural ceiling on price and no urgency to adopt. Germany's DiGA, the pathway most celebrated as Europe's breakthrough, makes the point. It works: fifty-eight reimbursable digital therapeutics and 700,000 prescriptions in 2025. But once manufacturers reach negotiation, prices fall by nearly 60% on average. You can execute a flawless entry into a market that decided, in advance, what your product is worth.
None of this means conquering twenty-seven markets. Nobody who wins starts there. The fix is three or four beachheads, sequenced well, into a buyer landscape that is consolidating. Distribution in Europe is entirely tractable. It's just never free; it's the product.
The capital objection
It’s long been observed that Europe has a late-stage financing gap. But capital is downstream of distribution.
The scale-up cliff is precise: 163 European Series B digital health rounds across 2020–25, then 63 at Series C, 18 at Series D, 8 at Series E. Companies don't fall off that cliff for lack of ambition. They fall because they cannot show cross-border traction, and no disciplined investor underwrites a nine-figure round against excellence in a single national market.
And when traction arrives, look who funds it. By 2025, US investors made up 62% of participants in European late-stage digital health deals, triple their 2023 share, and drove average deal sizes up more than fourfold in a year. American capital is not the villain; for a founder with a strong position, a competitive US-led round is a choice, and often the right one. What kills companies isn't the crossing. It's crossing late or crossing underfunded. By the time domestic growth stalls, the negotiating leverage is gone, and the terms reflect it. Founders end up owning the least of the company at precisely the point it becomes worth owning, or they fail to raise enough to make the move at all.
This is also why the mispricing survives. Late-stage capital can see traction, and competition for it has mostly closed that gap. What it can't see at seed and Series A is distribution capability, because nothing in the metrics reveals it yet. AI is closing the technology gap between companies, but it cannot replicate distribution, so the thing the market cannot see matters more every year. The scale of the mispricing is measurable: median US seed valuations run at more than double Europe's, the discount is still roughly 40% at Series A, and yet once a European company raises a seed round, its probability of reaching a billion-dollar valuation is the same as an American competitor. Same odds, half the price. The market prices the measurable and misses the decisive. The arbitrage is real.
Europe builds the winners and loses them at scale.
The answer is American
If every European market is structurally capped, the route to venture scale runs through the one market without a ceiling. In 2025 the United States deployed $19.2 billion into digital health. America is not the only route, as Europe's own winners show, but it is the default one.
Anyone who has sold into American healthcare knows it isn't one buyer but thousands, and the providers now decide what scales. Each of those buyers brings its own sales cycle, its own pilot, its own procurement committee; contracts are won one at a time, and twelve months from first meeting to signature is considered fast. American digital health companies themselves rank slow provider sales cycles among their biggest barriers to growth. Yet for all that grind, the US offers one big, unified prize: one language, one regulator to satisfy, one deep pool of growth capital, and payers who actually pay full price for something that demonstrably works. America is expensive to get into but enormous once you're in.
So the question is not whether to engage the US, but when, how and with whom. The graveyard of mistimed crossings is well documented, and it is full of European companies that tried to buy growth in America rather than build distribution there.
Done well, entry compounds. Payer relationships produce reference customers. Reference customers unlock growth capital. Growth capital funds the scale that brings acquirers to the table. And there is an irony worth naming: Europe's evidence-first culture, the same discipline that slows its companies down at home, becomes a real advantage in America, because US health systems no longer buy clinical claims on trust or pure hype. They want proof, and European companies often arrive with it. Strong clinical validation is a passport: it lets you into the country. It doesn't tell you where to go once you're inside. And American healthcare is a country with thousands of doors behind the first one.
Breaking the barrier
Havilland was built around solving this problem, by a partnership that has spent its careers building, backing and scaling healthtech companies on both sides of the Atlantic. We invest from seed to Series B because that is where the trajectory of US entry is set. The work that follows is operational: the beachhead, the clinical reference points, the payer conversations, the regulatory sequencing, the capital on the other side. The crossing itself.
There are tailwinds. AI is collapsing the marginal cost of regulatory documentation, localisation and workflow adaptation. DiGA functions; France's PECAN exists; equivalents are multiplying. But these pathways are maps of difficult terrain, not shortcuts through it, and evidence that satisfies one rarely transfers to the next. Tailwinds don't break the barrier. Experienced hands do, deliberately, alongside the founder.
We watched this pattern for years before we named it: strong European companies, different products, different markets, stalling at the same wall. The fund exists because of this pattern. The thesis came first, and Havilland Active Ventures is our answer to it.
The moat that remains
Technology will keep commoditising. B2B SaaS and fintech have already run this experiment. Slack built the better product; Microsoft owned the channel and won. Payments rails became a commodity; value accrued to whoever owned the checkout. Healthcare is next, and its version of the distribution moat is harder-won and stickier than either: embedded clinical workflow, payer and procurement contracts, regulatory clearances, switching costs, proprietary data. Combined with Europe's data endowment, cross-border distribution is the one advantage an American-born competitor cannot easily replicate.
Europe's scaled successes prove it. Doctolib never went near reimbursement it sold software to doctors' practices, made itself indispensable, then repeated the play in Germany and Italy: past €400 million in recurring revenue without needing America. Alan decided selling software to insurers was the wrong prize and became one the first new independent health insurer licensed in France since 1986, now past €500 million in revenue. Oura skipped the payer entirely and sold straight to consumers; its $900 million US-led round reflects where those consumers live: America. Sword Health kept its team in Porto and sold to American employers from day one - the fastest-moving buyer in healthcare - and is valued in the billions for it. Four companies, four different buyers, one discipline: each chose who would pay before it built.
Israel teaches the same lesson at ecosystem scale. A domestic market too small to scale forces global-first, distribution-first design from day one. Israeli healthtech now routinely routes past Europe altogether, citing regulatory unpredictability, fragmented reimbursement and slow commercialisation. When the most distribution-disciplined founders in the world route around a continent, that is evidence.
And for the companies that win America, the map continues. The Gulf pays premium prices and buys through sovereign procurement under programmes such as Vision 2030. India is laying digital public health infrastructure at a scale no other democracy has attempted. Reaching them credibly is beyond most European investors. It is within reach of some.
What travelling well looks like
The companies that cross well share a particular shape. Their evidence is designed to travel: the first protocol is built against the destination market's standards, not only the home one. They hold a payer thesis for every market they intend to enter, who pays; from which budget; against which alternative; at what price. Those questions are answered before the deck promises the geography. They treat the timing of US entry as an explicit board decision, made early and revisited honestly and often. And they size the team and the balance sheet for the crossing itself, because a US entry funded on fumes is how good companies join the graveyard. How each company assembles those pieces is the work we do with founders. The shape is worth knowing, because the market still prices it at a discount.
The paradox is not a judgement on Europe. It is a mispricing. The market keeps funding good technology and mistaking it for good companies, while the variable that separates the two, the ability to translate clinical value into commercial distribution across borders, goes systematically under-priced at seed and Series A.
That is where the next decade of healthcare value will be built: by founders who treat distribution as the product, and by hands-on, active investors willing to back them before the numbers make it obvious.
Because in the end, distribution is the gap between a technology that works and a patient who never got it.
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Shamik Parekh is one of four Partners at Havilland Active Ventures, which invests in UK, US, European and Middle Eastern healthtech from seed to Series B. This article is a companion to “The Great Rewiring of Healthcare.”
This article is provided for general information only. It does not constitute investment advice, nor an offer or solicitation to invest in any fund or security. References to third-party companies are drawn from public reporting and do not imply any relationship with Havilland Active Ventures.
