Is startup funding actually going to startups? Where are all of them, anyway?

Markus Pohl of Research2Guidance, in two successive blog postings, asks provocative questions on Whither Startup Funding. This Editor will attempt to summarize his key points but read both articles to get the real impact–and surprise.

  • There is $4 bn annually managed by accelerators and incubators that invest in health–over $1 bn in 1st Quarter–but only a portion of this funding goes to startups. (The $4 bn / $1 bn are not footnoted, but they are the Rock Health investment numbers [see TTA 10 Jan and 11 Apr])
  • After subtracting for ongoing investments in portfolio companies, operational costs, and ex-healthcare investments, this funding for startups is realistically closer to $300 million
  • This money will only be spent if there are startups that qualify for the 340+ accelerator and incubator programs
  •  According to the last year’s R2G survey, mHealth App Developer Economics, there are 58,000 mobile health app developers. 15,000 are considered to be in the startup phase (eligible for an accelerator or incubator program). But “The majority of mobile app developers in healthcare tend to struggle on the finance and business side.”
  • The surprise: there are not enough quality startups for the available programs, even though most startups apply to more than one.
  • “Accelerators struggle to build up a high-quality selection funnel.” They suffer from lack of awareness, especially regional accelerators.
  • Accelerators and incubators will be adapting to startup candidate scarcity–or fail–within the next two years. Narrowing their focus to certain healthcare niches and focusing on their target may help. (But there may be a bubble here–Ed.)

More than US$4bn funds raised by accelerators & incubators investing in health. Why is only a small portion landing in the hands of start-ups? and Most digital health accelerator and corporate start-up programs must refocus to survive

For TTA readers, the R2G sponsored 7th Annual mHealth App Developers survey is here. It takes about 10-15 minutes to complete, so grab a cup of coffee or tea, and go! The survey is still open for about two weeks more. It is most applicable to mobile health app developers, project managers, publishers, co-founders, digital health experts, influencers, opinion makers, and investors–in other words, our Readers! Anyone who completes the survey will receive a copy near the end of 2017.

The R2G App Developer Economics Survey is supported by a stellar roster of distribution partners, accelerators, and media partners including Bayer, PCHAlliance, Health 2.0, dhaca…and TTA.

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Comments

  1. I think you hit the nail on the head on this one… $with 4bn available (on paper) and $300 mil allocated it would appear that start up are not the objective but a secondary benificiary…if you qualify that is.

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