One of the big splashes in the world of start-up companies is the proliferation of new venture accelerators (the other big splash is the selling of private equity on-line but that splash has yet to hit the fan). These accelerators are the hipster version of the old-school business incubators that are a staple of economic development agencies. They are typically sponsored by a mix venture capital firms, corporations, and service providers (e.g., law firms), require start-ups to pass an entry process, and provide money on the order of $20K in exchange for equity (5-7%), mentors, and office space with amenities like foosball and coffee. Their focus is exclusively on information technology (IT) and their aim is to generate something that looks like a business in a short time (like three to five months), get it funded and generating revenue (or at least a lot of users), and pass it to professional investors looking to flip it at a premium to a corporation desperate for innovation. According to Seed-DB, a database of accelerators, there are almost 150 programs across the globe (Seed-DB), and two of the big daddies of accelerators, Y Combinator and Tech Stars, are now national brands.
Recently the accelerator splash has been driven by a boom in accelerators for health care (for a humorous take on this point, read Lisa Suenen’s post at Venture Valkyrie). There has also been a flood of VC money into IT health care start-ups. A report last year by Rock Health, a health care IT accelerator, put total 2011 VC funding of digital health companies at about $1 billion and the mid-2012 level at $675 million (RH Report). By comparison, VC funding of biotech companies was about $4 billion in 2012 (FierceBiotech article). Of course, it is too early to know if these accelerated IT start-ups will yield products that have an impact on health care, or even if they will offer a return on investment, given the herd mentality of the VC industry. With all this booming and flooding, I wondered if the accelerators offered opportunities for start-ups with global health product ambitions.
While IT is not my forte, I have tried to keep up with the enthusiasm for IT solutions in global health (e.g., my post “mmmmmHealth”) and recognize the attraction for starting an IT global health company: the fast pace of software development and minimal regulatory barriers, the huge need to make health care affordable by lowering costs, and interest and belief in IT solutions by governments and providers. Using my limited knowledge, I reviewed several accelerators for their friendliness to global health. There were:
- New York Digital Health Accelerator, relatively new and in NYC;
- Blueprint Health, also in NYC;
- Rock Health, founded in San Francisco with a new branch in Boston (Xconomy article 1); and
- Healthbox, started in Chicago also recently launched in Boston (Xconomy article 2).
Not surprisingly, I found these accelerators and their acceleratees are solely focused on the US health care market and typically on solutions that require extensive and extensive internet capability, so not global-health friendly.
That being said, what are options for a Boston-based global health IT venture looking for the seed funding and the other amenities of an accelerator? One is to apply to Rock Health and Healthbox and see if they will step out of their US focus. The application process seems relatively easy, similar to that for a business plan contest, and, for what it’s worth, I’m happy to help with any team’s application pro bono. Fortunately, there are programs that offer some of the most important features of the accelerators: access to advisers and service providers, visibility with sources of potential funding, and community. The programs that have no initial costs are university-based programs (but require an institutional affiliation) like Harvard iLab, Boston University’s Kindle, and MIT’s Venture Mentoring Service Venture Mentoring Service, and MassChallenge, an accelerator program that offers post-program funding but is definitely social-benefit venture friendly. For start-ups with some funding, the best environment is the Cambridge Innovation Center (CIC). It is pricey (a desk costs about $400 per month), but it may soon host an international accelerator for “mission-driven,” i.e., social benefit, start-ups called The Hub (see Hub Boston and a Boston Globe article). I could not find information on participation costs, but I am guessing that there will be some subsidization. Finally, a colleague brought to my attention a new program, StartUp Health, which is billed as an “academy” in which participants get a “structured curriculum” on entrepreneurship and an “advisory board on steroids.” It has an ambitious goal of helping 1000 startups in 10 years and is backed by large number of sponsors, including GE Healthcare, but appears US-centric.
While the decks are stacked against a global health IT venture finding an accelerator-type home, at least there are several tables to try one’s hand.