Navigating healthtech’s toughest terrain: Capital, regulation, and AI

This content originally appeared on Startup Grind.

Founding a healthcare company today means navigating intense regulatory complexity, evolving technologies like AI, and a capital environment that demands clarity, speed, and resilience. But for many founders, these very constraints are part of the opportunity.

At Insight Partners, we’ve seen that the hard path doesn’t deter the most ambitious leaders — they’re energized by it. In conversation with Managing Director Scott Barclay, Loyal Founder and CEO Celine Halioua, insitro CFO and CBO Mary Rozenman, and Calm CEO David Ko made the throughline was clear: Building something meaningful in healthcare has never been more difficult — or more critical.

“There’s a lot to be said for taking challenging moments and using them as an opportunity”

Healthcare founders today are navigating an investment landscape marked by macro volatility and tighter capital standards. For companies like Loyal, the shift has been especially pronounced.

“For context, Loyal is about five years old. We’re Series B stage, which raised about $150 million to date, and we’ve never made a drop of revenue,” said Halioua. “We are developing FDA-approved drugs. It takes a long time.”

Halioua described the impact of market uncertainty on investor behavior. “When the markets are uncertain, people get nervous. They tend to pull away from innovation… and they tend to go towards what they understand, what they know,” she said. “They don’t want to go to their LPs and be like, ‘Yeah, I lost this money on this company and also I invested in a dog longevity company.’”

That has made positioning more important than ever. “You have to really think about how you position the timing, the organization, the company so when you go out there, it’s blazingly obvious that it’s a good deal and… it’s going to make you and your fund look really, really good.”

Rozenman, who joined insitro after a PhD in molecular biology and a stint at McKinsey, sees this environment as an opportunity for operational excellence.

“There’s a lot to be said for taking challenging moments and using them as an opportunity to recommit and to embrace operational discipline that maybe is hard to access in moments where things are really, really effusive in the outside world,” she said.

Barclay added that founders must now do two seemingly contradictory things: “We ask… in the very best founders a speed and an impatience, and yet we also ask that they really plan with first principles against the true long-term because they’re doing something very hard.”

“Our guidance is unchanged — engage agencies like that early and often”

The panel then turned to regulatory dynamics, particularly ongoing workforce changes at the FDA.

“I think the latest numbers I saw were something along the lines of a 10,000 employee reduction…which is about 20% of the workforce,” Rozenman noted. “The dominant note is probably uncertainty.”

Halioua described how much her company’s timelines depend on the FDA. “One of the interesting things about when you’re developing something that’s regulated by any of the three-letter agencies is you are extrinsically dependent on that agency,” she said. “All of our timelines are driven by the explicit date that the FDA’s committed to get back to us.”

Until now, that date was predictable. “There was literally written in law 100% certainty — I think it might be actually 90% that they’re committed to — they’re basically 100% certainty that on this explicit date we’re going to get our efficacy package back or our safety package,” she explained. “And now we have to actually have a confidence interval around it… The uncertainty adds a lot of variance.”

Barclay shared Insight’s view: “Our guidance is unchanged — engage agencies like that early and often, and… build a very clear two-sided sheet of the paper of all the things you can control… while being open and honest about the things you can’t.”

AI across healthcare: strategy, skepticism, and practical gains

The panel also explored how AI is reshaping operations and product development. At Calm, Ko said the company has moved from skepticism to structured adoption.

“When we first brought up the conversations about how we should start to use [AI] as a company, it definitely caused a lot more stress than it did in terms of productivity,” he said. “Eventually… the conversations got easier… and then really started for us to think about how we create products externally.”

Calm is now exploring consumer-facing and enterprise solutions. “Each of those types of products… require different levels of potential compliance… to how we think about it around direct-to-consumer and internationally,” Ko said.

Insitro, which applies machine learning to drug discovery and development, built its own internal large language model instance. “It’s called IGPT — you can guess where it came from,” said Rozenman. “We’ve done companywide hackathons to make sure that people were well trained up… on all sorts of things, including within my procurement and finance organizations as well as for colleagues in the lab.”

Still, Rozenman clarified that LLMs are just one part of the AI story in biotech. “There’s an entirely different conversation to be had around how we apply these technologies… to transform the process of drug discovery and development,” she said. “Those are different models… what they use is fit-for-purpose data… on molecules and their structure and function or objective measurements of human state.”

By contrast, Loyal has held off. “I would like to apologize if any of our investors are in the audience because we don’t use AI at all,” Halioua said. “I use ChatGPT sometimes… but I’m not playing a game of trying to shave off time — I’m playing a game of getting the end-state approval.”

She added, “Keeping the team focused on where we’re excellent and just continuing to execute where we’re excellent has been my strategy so far.”

“Just give me a founder who gets his or her teeth into a hard problem”

The conversation closed on a more personal note — what makes founding and leading healthcare companies hard today?

Ko reflected on his experience leading Calm after a career that included taking Zynga public and selling a company to UnitedHealthcare. “The pace at which the expectation is to grow has greatly changed,” he said.

He also acknowledged the challenge of evolving work styles. “I’ve wanted everyone personally to be in the office every day, but it’s just counter to how the company can work efficiently,” he said. “So I’ve had to work around that… and really work on those communication skills.”

Perhaps the biggest shift, he said, has been embracing conversations around well-being for users and the team. “[We’ve been] a lot more open to conversations around mental health… it’s been awesome.”

Halioua emphasized the counterintuitive advantage of building in healthcare: “It’s paradoxically easier to build something difficult,” she said, “because people want you to succeed when you’re working on something that’s important.”

Rozenman built on that idea: “There is sort of a collision of a whole slew of… transformative technologies… It’s exactly the right moment to build a company that harnesses the energy of that and really drives impact.”

Barclay agreed. “Just give me a founder who gets his or her teeth into a hard problem,” he said. “You have to have speed and energy against these big problems, otherwise the oligopoly will just keep making a lot of money and… being a tax on society.”

He closed the session with a personal reflection. “When I call my mom in a couple of days, I’ll tell her about the three companies on the stage,” he said. “These things did not exist a few years ago… and it’s a privilege to see what’s possible.”

Note: Insight has invested in Calm.