Lessons Learned by Medical & Healthcare Startups

Tagged:  

Lessons Learned by Medical & Healthcare Startups

Healthcare startups are booming with no signs of slowing down. StartUp Health’s research found that venture funding, deal sizes, investor trends, and companies in the global digital health innovation space toppling $14.6 billion in 2018 alone. This figure accounts for a 14 times increase in funding since 2010. However, that level of funding doesn’t mean healthcare startups are necessarily successful. According to reporting by Forbes, a staggering 98 percent of health startups fail. The combination of healthy funding and a poor success rate is actually an opportunity for healthcare entrepreneurs. Learn lessons from medical and healthcare startups to identify what they did right, and where they went wrong.

Focus on real-world problems

Merely hearing the name “Theranos” stirs a visceral reaction in healthcare entrepreneurs and the general public alike. But the lesson isn’t just Elizabeth Holmes’ epic fraud and fall from grace. In reality, broad testing of blood samples just wasn't a real problem that needed to addressing. Without the ability to accurately and precisely screen for diseases like cancer through a small blood draw, Theranos simply wasn’t providing that much value to the world.

Theranos started as a way to make testing easier for a handful of issues. But soon the company claimed they could scan for hundreds of diseases, and even service the battlefield with a portable version of their device. Of course, the world knows now the technology was flawed from the start and wouldn’t work the way Theranos promised. Instead of focusing on significant, fantastical needs that no one really asked for in the first place; healthcare startups should focus on real-world problems that people and healthcare pros need, like a more efficient way to diagnose a heart murmur.

Get creative by lowering overhead

Companies that scale too fast are at risk of slipping into bankruptcy without the proper funding in place or too much overhead crippling their revenue. In 2008, synthetic biology company Verdezyne, Inc. shuttered its doors in the middle of building a facility. The company suddenly lost funding from one of its major backers and couldn't keep up with the costs.
Scaling slowly and deliberately can help keep an eye on costs and under control. Healthcare startups are probably already looking to office space and medical equipment rental, but they can also make use of tech equipment rentals. For example, companies can outfit their entire healthcare team with iPads, laptops, data entry software, and more with a supplier like Axelerist.

Consider the unique regulatory challenges

Unlike other startups in industries like retail or software, healthcare startups face regulatory challenges that are difficult to overcome. Even startups with healthy funding can falter after encountering insurmountable regulatory issues. In 2015, Laguna Pharmaceuticals shuttered their doors even after obtaining $30 million VC funding. The company couldn't overcome clinical trial and regulatory issues during Phase 3 when they discovered the drug had unexpected side effects. Unfortunately, this isn't an uncommon story with drug companies and medical devices facing similar challenges.

Turn failure into success

Not all healthcare failures were the end of the story. Lantern used their failure in selling to enough consumers as an opportunity to sell their software. Lantern's tools that once helped people deal with stress and anxiety sold to digital health startup Omada Health. The sale proved to be a good fit for company and consumer, as Omada Health uses Lantern's software to help offer cognitive behavioral therapy to those with depression or anxiety.

It's an exhilarating time to be involved in the medical and healthcare field with startups securing more funding than ever. But it also proves challenging with plenty of lessons to be learned. Instead of reinventing the wheel, embrace those lessons as a way to seed success in your own startup.

Share this with your friends
AttachmentSize
article image--Lessons learned by medical and healthcare startups.png345.9 KB