Earlier this year, I met a friend for lunch in London. He had recently exited a leadership role at a successful digital health startup, one that had built a loyal user base, secured NHS contracting, and by all European measures, succeeded. But the company had plateaued. It wasn’t going to expand beyond its domestic market, and for a venture-backed startup, that was a problem.
Over fancy fish and chips, we exchanged notes. I was curious about his perspective; I wanted to understand the European founder experience, particularly when it came to evaluating U.S. market entry. He shared his reflections on building in Europe; I offered some (admittedly unsolicited) armchair analysis of how his former company might have approached the U.S. market differently.
Two important things from that conversation have stayed with me:
First: The US is on every market expansion roadmap – but most maps lack a key or legend.
For EU and UK digital health founders, U.S. market entry isn’t just an option; it’s baked into the funding trajectory and expectations from the start. It might not be explicitly stated in pre-seed rounds, but it’s absolutely part of an investor’s calculus. To reach the scale and returns that venture funders expect, the U.S. remains the holy grail: a massive market with one centralized regulatory system and a robust appetite for technical solutions to address systemic inefficiencies.
Nothing surprising there. Here’s the kicker: while U.S. market entry is an expected milestone, the actual mechanics of that market aren’t well understood, even by the most sophisticated and experienced founders.
My lunch companion perfectly illustrates this phenomenon. During our conversation, he reflected on his one lingering regret: they should have pursued the U.S. market. They hesitated, he explained, because the regulatory pathway was too demanding and uncertain. They weren’t eligible for 510(k) clearance, and the full FDA De Novo process meant indeterminate cost and timeline risk. So, they deferred, missing the momentum from their last funding round. They should have entered the U.S., he said, and the mistake was one of timing.
I wasn’t convinced. I was familiar with his application, a digital therapeutic for mental health management. It had clear potential as a patient engagement and self-management tool, which meant natural appeal to U.S. payers and providers managing risk-based or capitated populations. I asked whether they had considered piloting the intervention in the U.S. as a supportive tool, positioning it (at least initially) outside the clinical intervention framework. This approach, often overlooked by European founders, would have enabled his team to build an evidence base (not clinical trial evidence, but ROI evidence), develop relationships with payers and providers, and establish U.S. market traction without waiting for FDA clearance.
He didn’t hesitate: “No. Ours is a clinical intervention. We needed FDA clearance, and that would have taken two years.”
His forceful and unequivocal response was a bit of a conversation stopper: it also, however reflected a crucial misunderstanding of the US healthcare market. He assumed that how his product worked in the EU and its business model would be the same in the US.
Specifically, in Europe, his product’s background as a clinically validated intervention to treat a given condition was the company’s greatest asset. Its designation as a clinical intervention was core to the company’s identity and its business model. But that rigid adherence to a clinical-only identity became a limitation in the U.S. market. It blinded his team to a critical opportunity: the ability to pivot and adapt the application to serve the pain points of their (actual) US clients- healthcare payers. By framing their solution so rigidly, they locked themselves into requiring FDA clearance, which meant they never entered the market at all.
Why Are European Founders so disposed to make this mistake?
This isn’t an isolated case, but a pattern I see among European founders. Not because they lack sophistication, but because their experience and success in home systems have trained them to think in ways that don’t translate to the U.S. context.
When European founders look at the U.S. market, they assume it works like their home markets, just faster and more expensive. They apply a European lens to an American ecosystem, and that lens fundamentally distorts what they see.
Let me explain: In Europe, the go-to-market sequence is orderly, hierarchical, and technocratic:
Basically, it works like this:
Regulation → Reimbursement → Adoption
Certification by a Health Technology Assessment (HTA) body or notified body (which grants CE marking, the European equivalent of FDA clearance) unlocks the pathway to reimbursement. Clinical evidence and comparative effectiveness analyses drive evaluation. National contracting and scale follow. The process is long, but it’s predictable, repeatable, and institutional.
This model creates rational assumptions that founders internalize and carry forward:
- Regulatory approval (and reimbursement approval) is the primary barrier to market entry and adoption
- Clinical evidence and rigorous academic validation are the currency of legitimacy and market success
These assumptions make perfect sense in Europe. They are, in fact, correct for European markets. But when founders apply this same framework to the U.S. market, they fundamentally misread the landscape.
The core misunderstanding is this: the U.S. does not have a healthcare system; it’s a healthcare ecosystem. It’s a fragmented, overlapping network of stakeholders, payers, providers, and value chains—each with different incentives, priorities, risk tolerances, and decision-making processes. There is no central gatekeeper. There is no single payer and that means there is no single pathway to adoption. The difference between a centralized system (with all its challenges and deficits) and an ecosystem built around private market principles is the difference between We Bought a Zoo and Jurassic Park. (Welcome to Jurassic Park, indeed) There is no unified “market entry” in the way European founders conceptualize and experience it, in their home-European markets.
The complexity of the US healthcare landscape and complexity deserves its own deep dive, which we’ll cover in a future article. For now, suffice it to say: it’s a lot.
Regulation matters enormously in the U.S., but it is not what drives adoption; that intangible “traction” that founders and funders obsess over. This is surprising to most Europeans, because, unlike in European systems, regulators in the U.S. are not the payers or clients. The FDA’s role is to ensure the safety, integrity, and effectiveness of products; but it has no role in reimbursement, utilization, or market success.
This presents a necessary, fundamental shift in the “go-to-market” mind map for European founders. European founders tend to prioritize regulatory approval as the critical milestone, investing enormous resources and time into achieving it, only to discover that FDA clearance doesn’t open doors the way CE marking (certification that a medical device conforms to EU safety and performance requirements) does in Europe. By the time founders realize adoption requires an entirely different playbook (one focused on demonstrating ROI, building payer partnerships, integrating into provider workflows, and navigating a byzantine reimbursement landscape) they’ve burned resources and momentum.
The challenge, and the mistake my friend and his team likely made when evaluating whether to enter the US market, is recognizing these blind spots upfront. Instead of doubling down on strategies tailored to the European model, successful entrants identify where U.S. market dynamics differ and adapt their approach early. This means rethinking not just when to pursue regulatory approval, but whether it’s necessary at all for initial market entry.
Inverting the Sequence: How the US Market Actually Works
For many non-medical devices (specifically solutions that support clinical decision-making or workflows, facilitate patient management and engagement), the sequencing in the US often looks like this:
Adoption → Evidence → Reimbursement → (Maybe) Regulation
Here’s a critical distinction that European founders often miss: not all digital health tools require FDA authorization. Indeed the U.S. regulatory framework was never designed to treat every digital health tool as a medical device. The FDA regulates “Software as a Medical Device” (SaMD), when the software performs a clinical function: diagnosing, treating, or making autonomous clinical decisions. Many tools that support clinicians, help patients manage chronic conditions, facilitate workflow, or promote general wellness either fall outside the device definition entirely or sit within the FDA’s doctrine of enforcement discretion polices. In practice, this means a wide range of adjunctive tools can be deployed without FDA authorization under the agency’s policy of “enforcement discretion”, because clinical judgment, not the software, remains the locus of control.
This discretionary space is not an accident; it reflects a broader U.S. tradition of light-touch professional regulation, where physicians retain autonomy and are expected to interpret and contextualize supportive tools. The result is a large market of solutions that augment care rather than replace it. European founders, coming from systems where regulatory designation tightly maps to reimbursement and adoption, often misinterpret this as a loophole. It isn’t. It is a feature of the U.S. system: a system that relies more heavily on clinician judgment, tort liability, and market forces than on centralized gate-keeping.
Of course, as software becomes more central to care delivery and AI systems assume more determinative roles, the line between supportive workflows and the autonomous provider will continue to blur. The scope of FDA regulated products will continue to expand, but it is important to keep in mind that, even with expanded regulatory reach, not all regulatory process and pathways are the same or will involve the same rigor as the archetype De Novo review (tailored to pharmaceuticals and traditional medical devices). The agency is developing a more structured, software-specific regulatory framework. This evolving framework reflects intentional, risk-based philosophy that allows low-risk and adjunctive tools to evolve quickly without unnecessary burden. This more nuanced regulatory architecture seeks to adapt to modern care workflows while preserving core free-market principles: promoting speed, innovation, and real-world use. This evolving but still flexible space remains a viable and often faster pathway into the U.S. market.
Why this is consistently missed by EU Founders:
This is a hard concept for EU founders to grasp, let alone spend capital pursuing. You send your product to market… without regulatory approval. Develop partnerships, generate evidence of impact (whether on operational processes, patient outcomes, or cost savings), develop and execute business plans and generate revenue without any sign-off from an administrative body. This is the inverse of the European system(s). It feels risky, unstructured, and perhaps even illegitimate (it’s not). Instead it reflects the diversity of the US ecosystem – a market characterized by decentralization, free-market principles, and where money (and evidence of ROI) talks.
This brings us to a universal truth in business: know your customer. You won’t get far whether selling donuts or digital health unless you tailor your offering to your actual clients and their context and priorities. In the U.S., the State is often not the client (even though they’re often the ones picking up the check in the end). If you don’t prioritize developing traction and credibility with the actual prospective clients and payers, FDA approval by itself gets you nowhere commercially.
My friend’s company had a solution that could have provided immediate value to U.S. payers managing chronic disease populations. By piloting it as a patient engagement tool (as support to a patient’s care team, outside the direct clinical intervention framework) they could have:
- Built relationships with U.S. payers (who are desperate for tools that improve outcomes and reduce costs)
- Generated evidence of impact in the U.S. healthcare context
- Established a revenue base to fund the regulatory approval process (if needed)
- Learned what U.S. stakeholders actually need and prioritize (which might have been different from initial assumptions) and adapted their offering to meet these needs
- Positioned the company for acquisition or partnership
Instead, by defining their solution as exclusively clinical, they made FDA clearance a prerequisite, which meant they never entered the market at all. To return to the Jurassic Park analogy, when you are navigating an ecosystem predicated on free market principles, sometimes your best move is to think different and come from the side.
Addressing Blind Spots and the Genesis of the Series
Our conversation also raised another challenge, one that compounds these blind spots: the pressure on founders to always appear certain.
Founders are conditioned to project confidence, expertise, and conviction. Admitting uncertainty, especially about something as fundamental as “how does this market actually work?” feels like a weakness. In pitch meetings, investor updates, and competitive conversations, there’s enormous pressure to have all the answers.
This creates a trap.
Founders can’t admit when they’re operating from flawed assumptions because doing so would undermine confidence in their ability to execute. So, there is a tendency to double down on the mental models they know, even when those models don’t fit the new context. And even when founders hire experts (regulatory attorneys, market consultants) those professionals tend to focus on specific technical questions rather than challenging foundational assumptions at the risk of stepping on toes.
This is particularly acute when it comes to the U.S. healthcare market because it’s so genuinely confusing. Even Americans who work in healthcare struggle to explain it coherently. How do you ask “stupid” foundational questions, like “Why doesn’t the U.S. have universal healthcare? How does the absence of a national health system translate to different market priorities? Who actually decides what gets reimbursed? Why do payers and providers seem to have conflicting incentives?” when you’re supposed to be the expert positioning your company for U.S. expansion?
The answer to identifying and resolving cultural blind spots is to ask these questions, to be vulnerable, to admit what you don’t understand. But the founder experience rarely creates space for that kind of vulnerability. That’s why I’m writing this series.
After my lunch with my friend, I realized that what European founders need isn’t just a guide to U.S. regulatory pathways or reimbursement codes or an explanation on how to approach hospitals and health systems. Those resources exist.
What’s missing is an accessible explainer of the foundational mental models and cultural assumptions that shape the U.S. healthcare market – and how it applies to (and sometimes directly challenges) the EU founder. This series is designed to be that resource: a space to understand not just what the U.S. market requires, but why it works the way it does. Consider this series a safe space for “stupid questions;” or, to continue the Jurassic Park theme, your pocket Jeff Goldblum, a companion who can interpret the tremors, identify the pivots and when, frankly you “must go faster.”
We’ll cover:
- Why the U.S. isn’t “one market” and what that means for your strategy
- How U.S. stakeholders define and measure “value” (and a glossary to translate industrial jargon)
- Understanding US value-based care and other transformation models (and the role of digital solutions).
- Why European traction and clinical evidence don’t automatically translate to U.S. regulatory approval or market success
- An overview of the FDA approval process, and the evolving approach to regulating Software as a Medical Device.
The goal is not to overwhelm you with complexity (as always, our objective is to studiously untangle complexity), but to help you see the U.S. market clearly, and therefore to move forward confidently, hopefully bridging the best of two worlds.
In the next installment of our series, we’ll dig into what “the U.S. is not one market” actually means and how this impacts your market strategy.
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About the Author Tina Simpson is a healthcare strategist and co-founder of Line Axia, a consultancy that helps European digital health companies navigate U.S. market entry. Having worked on both sides of the Atlantic, she specializes in translating across healthcare ecosystems, 90s adventure films, and regulatory jargon.
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If this article resonated with you—or if you found yourself thinking “wait, that’s exactly the conversation we need to have internally”—let’s talk. Line Axia works with European digital health companies navigating U.S. market entry, helping founders recognize blind spots before they become expensive mistakes.
As always, this post was written by a human being! Not AI. ChatGPT was used for final grammar edits and spellcheck.