Sponsored by MIT’s Enterprise Forum and held on 8 May 2013, this event reviewed the efforts of entrepreneurs, investors, public entities and accelerators in changing the New York area from a ‘dead zone’ for health tech to a new hub of innovation–in what this Editor considers a record (two-three year) time. (Was it only July 2011 that 90% of local investment went to internet shopping and mobile?)
Panel: Jahan Ali, PhD, Senior Vice President, Partnership Fund for New York City; Serge Loncar, Founding President and CEO, CareSpeak Communications; Philippe Chambon, Managing Director, New Leaf Venture Partners
Steve Krein set the tone with predicting that NYC will be the hub of health IT. It is heading towards its tipping point; that healthcare is not only overdue for its time in investment but also where key factors are converging to make this possible–money, universities and companies within reach. Key factors are investors such as the Partnership Fund for NYC, which helped to fund the NY Digital Health Accelerator with the New York eHealth Collaborative (NYeC), which on the day of the meeting graduated eight startups (see ‘Related’ and video) with $300,000 of funding plus three provider pilots; and VC funds such as New Leaf Venture Partners. Updated 14 May
The challenges to this rosy forecast for early stage companies are many, especially for those locating and seeking business in a competitive market such as New York .
- Serge Loncar, who has spent the past seven years building his startup, CareSpeak, identified a group around data: generating data that demonstrate clinical efficacy; accumulating the data over a long time and the gap between business people and clinicians around obtaining data, which clinicians are good at–but not at business ideas.
- Jahan Ali pointed out that customers are interested most in their unmet needs, and can it model? It also has to be real in the sense of tangibles–a website, a prototype and pilots.
- Philippe Chambon, speaking for investors, looked at resources: where will the staff come from (payers, technology, healthcare, public health) and the economic benefit achieved (lowering cost).
- Mr. Loncar also elaborated that the idea must be balanced with the economics–and that this balance is difficult to achieve.
In funding startup ideas, the bar is now higher, Mr. Krein noted that professionally done video presentations and even 3D printing are becoming the norm in presentations/pitches. Healthcare is typically harder than other types of tech to be funded–and has the paradox of needing to be funded enough to be ramped up enough to gain…more funding. Mr. Chambon noted that health tech historically hasn’t done all that well, and that limits the funding available. Also IT venture funds are not picking up the slack because they fundamentally do not understand healthcare or the very different timeline.
On timelines, the long business development cycle is yet another barrier to companies. Mr. Loncar outlined the long curve to implementation that characterizes health tech. It takes 4-6 weeks just to get in touch with a targeted healthcare executive…4-8 weeks to a meeting…4-8 weeks to a proposal and more time for a decision….legal review can be 6 months…and then there’s implementation. This can mean, as your Editor queried, that other companies innovate around you while you are still getting business (the Zeo to FitBit/Jawbone UP upending), but as Mr. Loncar noted, you can ‘moat’ your product by innovating while this is all happening. The fast pace is hard; Mr. Krein noted the number of companies that are ‘pivoting’ (a polite term for retrenching) because their data, once generated, does not back their idea.
Other matters needing resolution, and added by Mr. Loncar, are regulatory (FDA, FCC) and privacy standards. “HIPAA must be tackled sooner rather than later”–and it is not as difficult as many say. When queried by this Editor about the danger of patent trolls, it was felt by the panel that at this point, with companies of small size, they were unattractive since there was little in assets to go after. (However, after the conclusion of the presentation, an attorney in the audience who is defending a large company on a challenge by a company often regarded as a ‘troll’, agreed privately that the danger to small companies is often downplayed.)
The concluding round of questions regarded what would be the perfect composition of a business team, one most attractive to funders. To Mr. Chambon, there is no ‘perfect’ grouping but what matters is execution–and outsiders may do better because they bring in a ‘cleaner’ view. To Mr. Loncar, you need both inside healthcare and outside people, but beware of too many advisors and ‘mentor whiplash’. Founders need a partner to help them on their long, lonely road–one of the seven characteristics of successful, growing companies in the book ‘Blueprint to a Billion‘. In short, what is needed is ‘persistence’ and ‘grit’ –as well as being around ‘batteries included’ optimists.
Editor Donna thanks the MIT Enterprise Forum’s Allyson Rinderle, Eddie A. Quiroz, Andrew Pfluger, Eric Vieira and Colette Thompson for all arrangements.
Related: The eight graduates of NY Digital Health Accelerator’s class are: ActualMeds, Aidin, Avado [TTA 13 Apr 12 and after], CipherHealth, Cureatr, MedCPU, Remedy Systems and SpectraMD. This video (03:00) presents leaders from each company as well as Partnership Fund. NYDHA’s press release. Congratulations all![This video is no longer available on this site but may be findable via an internet search]