If you’re building in digital health and you haven’t thought about regulation… you’re already behind.
The moment your product touches patient data, makes health claims, or interfaces with clinicians, you’re in regulated territory. And while regulation might sound like the enemy of innovation, savvy founders know it’s actually leverage. It’s what separates credible companies from vaporware. It’s what investors look for before they write the check.
This guide breaks down the key regulatory frameworks digital health startups must understand—and how to navigate them without drowning in legalese.
1. HIPAA: Not Just for Hospitals
The Health Insurance Portability and Accountability Act (HIPAA) sets the baseline for protecting patient health information (PHI) in the U.S.
Applies if you:
- Handle patient data (even indirectly)
- Integrate with EHRs or work with healthcare providers
Key roles:
- Covered Entities: Providers, health plans
- Business Associates: You (probably)
What to show investors:
- You’ve mapped your data flows
- You’ve signed BAAs where needed
- You’re encrypting PHI in transit and at rest
Founders who say “we’re not under HIPAA” usually don’t understand HIPAA.
2. GDPR: Your Global Gatekeeper
If any user in the EU touches your platform, GDPR is in play. It gives users rights over their data and sets serious expectations around consent, storage, and processing.
Key terms:
- Right to be forgotten
- Explicit consent
- Data minimization
What startups must show:
- Clear consent flows
- Privacy policy tailored to actual practices
- Ability to delete and export user data
Ignore GDPR, and your EU expansion dreams die early.
3. FDA: Are You a Medical Device?
The U.S. Food and Drug Administration regulates software that functions as a medical device (SaMD = Software as a Medical Device).
Ask yourself:
- Does your app diagnose, treat, or prevent?
- Are you making clinical claims?
If yes, welcome to FDAland.
Pathways:
- Class I: Low risk, often exempt
- Class II: Moderate risk, requires 510(k)
- Class III: High risk, requires full PMA
Early founder tips:
- Classify your product as soon as possible
- Document everything
- Start the regulatory conversation early—don’t leave it until launch
4. MDR & CE Mark: Europe’s Answer to FDA
If you’re targeting the EU, you’ll deal with the Medical Device Regulation (MDR) and the CE Mark process.
Similarities to FDA:
- Risk-based classes
- Clinical evaluation required
Differences:
- Often more documentation heavy
- Language/local representation requirements
If you want to sell in both the U.S. and EU, plan for double the work—or hire someone who’s done it.
5. Common Founder Excuses (That Don’t Work)
- “We’re just a wellness app.”
- “It’s user-generated content.”
- “It’s not medical advice, it’s just a suggestion.”
If you’re in a gray area, assume the stricter interpretation. And document why.
Investors don’t expect perfection, but they do expect awareness.
6. Lean Compliance for Startups
You don’t need a 200-page policy binder. You need:
- A privacy policy that matches reality
- A basic data protection and breach protocol
- Documentation of design decisions that factor in regulation
- A compliance roadmap that scales with funding
Outsource the legal where needed, but know enough to not get blindsided.
7. What Investors Want to See
- You’ve thought about this early
- You know which frameworks apply and why
- You have advisors or vendors supporting compliance
- You’re not waiting for Series B to start acting legit
Put this in your data room. Better yet, bake it into your pitch.
Final Thoughts: Regulation Is a Competitive Edge
Yes, it’s hard. But regulation is what keeps dilettantes out of digital health.
If you build with it in mind—without letting it paralyze you—you’ll not only survive… you’ll be fundable, partner-friendly, and primed to scale.
Need more context? See our breakdown in What VCs Look For in Startups and the Top Pitch Mistakes Founders Make.
He has invested in startups including American Well, Neuronation, Mimi, and most notably mySugr – which was recently acquired by Roche. Min-Sung is also a contributing writer for mediums including TechCrunch and Tech.EU and studied Business Economics at Witten/Herdecke, Harvard, St.Gallen, and in Seoul.