How can a startup gain momentum? What does a successful business look like? And what will attract investors to a budding digital health organization?
A series of talks at the Digital Health Summer Summit, with the University of California, San Francisco (UCSF) Center for Digital Health Innovation (CDHI), touched on how start-ups can gain momentum and find funding. The conference, held the last week in June 2015, kicked off with numerous speakers, investors, physicians, and informaticists on the overall trends in the digital health landscape.
And the main message: you can’t just have an app.
“You have to address a big problem,” advised Jack Young, General Partner of dRx Capital AG, a $100M joint venture investment company launched by Novartis and Qualcomm for early stage digital health companies.
“One mistake I often see with tech entrepreneurs working in health is solving a problem from a pure technology perspective. Healthcare is behind the adoption curve. If you and I go into the hospital, we can come away with a checklist of 30 items that you and I can improve with technology. But [technology is] not necessarily the priority for the healthcare system today…Technology won’t necessarily get adopted because it’s the best and the fastest.”
What defines a successful company?
Young pointed to one of his group’s recent investments, the Fitbit wearable activity tracker, and highlighted the company’s successful steps.
“There’s obviously lots of companies getting ready to go public. What set Fitbit apart from the others was… it’s a category leader. FitBit defines fitness trackers. And, as a venture investor, we invest in company momentum, but when you go public, it’s all about the bottom line. FitBit demonstrated solid growth for the last couple of years. It’s a solid company here to stay.”
Wainwright Fishburn, Partner, Cooley LLP, also underscored the importance of finding new, big problems to solve, akin to the blue ocean strategy that can be advantageous for first-mover firms.
“I think there will be continued focus on looking for white space in the digital landscape and looking for new arenas. dRx [Capital AG, for instance,] will look for places that cross over into pharmaceutical industry. There are not many startups in [the pharmaceutical] arena historically, versus monitors, wearables, and so forth, so areas like clinical trials, taking old drugs and how to enable them into new commercial opportunities with the use of digital tools, those are the white spaces I see.
“I am concerned whenever I see the next me-too app surrounding wellness, fitness, and a better dashboard.”
It’s also about the people
Another general recurring theme that makes a start-up successful is the team. The right teams must have the right talent, the right personalities, and the right balance to make it big.
“One of the things we like to see is a strong team,” said Lynne Chou, Partner at Silicon Valley-based venture capital firm Kleiner Perkins Caufield & Byers (KPCB). KPCB is known for their early investments in Amazon, Electronic Arts, Google, and Intuit.
“In the health sense, the founder is from the digital world…or the founder is coming from the healthcare world. But smart teams balance both of these areas because [digital health] is a sector that’s early and there’s not a lot of seasoned digital health entrepreneurs that have been through three companies.”
Chou adds more advice for start-ups to consider: “Create these teams that work, be thoughtful of what your bigger vision is, … [envision] what tomorrow looks like, and how that will enable you to be a big company. Really think about the business model.”
Fishburn’s final advice on what makes a successful start-up: “It’s team, team, team, and commercial acceleration.”