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.

Startupbootcamp Digital Health Berlin–applications close 31 August (DE)

[grow_thumb image=”Über_den_Dächern_von_Berlin.jpg” thumb_width=”150″ /]This Berlin digital health accelerator has space for ten early-stage companies in its upcoming ‘bootcamp’ that starts 7 November, but is closing for applications next Wednesday. They boast major support from Philips, arvato CRM Solutions, apoBank, Sanofi and Munich Health to “shape your startup, get on stage on Demo Day (16 Feb 17), pitch and win the hearts (sic) of your investor audience.” There are seven digital health foci listed, six months of co-working space, €15,000 in cash per team, a wide variety of international mentors, etc. Details and application on their website.

We note there is also a digital health program from the same organizers in Miami which is starting 6 September with its Demo Day on 1 December.

Bucharest–the next hot European digital city? 170 startups say ‘da’. (RU)

It certainly came as a surprise that the second fastest growing economy in the EU is–Romania. Identified in your Editor’s mind with the monstrous dictator Nicolae Ceaușescu, grinding poverty and the lost orphans (who are now lost and underground–see this horrific Daily Mail article), it has a burgeoning tech startup scene and a superior digital infrastructure including the fastest internet in Europe, achieved through a combination of post-Ceaușescu entrepreneurship and state avoidance. The Communist emphasis on what we call STEM also has paid off for both young men and especially for women as techies and developers. There are even accelerators: Innovation Labs and MVP Academy. Where Romania lags versus similarly situated Estonia and Bulgaria is native investment–angel investors are almost unknown. Being also an EU member, most of the best are lured away to attractive opportunities in other countries (including the US) at least for some time. But the low cost of development versus other digital cities like London and Berlin, educated workforce and a robust infrastructure are factors favoring Romania. Hat tip to reader Jerry Kolosky. One of the poorest countries in the EU could be its next tech-startup hub (Quartz) and the Digital City Index. (We note the photo at the top of the Quartz article is Google Chicago, not Bucharest)

Healthcare Innovation Breakfast Series (Dallas, Texas)

Having met and been impressed at mHealth Summit by Health Wildcatters [TTA 26 Apr 13], a Dallas Texas-based healthcare accelerator, they are doing some smart marketing in sponsoring a series of local networking breakfasts called The Pulse to connect entrepreneurs, medical professionals, and other innovators from the thriving Dallas healthcare and business communities with healthcare startups. Their launch is Thursday 26 February from 7:30-9am. Coffee and continental breakfast is provided and the cost is an affordable $15. Reserve hereHat tip to Hubert Zajicek of Health Wildcatters via Twitter

NY-based accelerator, pilot programs up

Pilot Health Tech NYC 2014 is again providing $1 million in funding from a variety of partners for 10 or more pilot projects centered in New York City. Its purpose is to match early-stage health technology companies with healthcare organizations such as hospitals, employers, payers and pharma companies. Supported by NYC Economic Development Corporation (NYCEDC) and Health 2.0, the application deadline is past but for those which have applied, the matchmaking sessions are on 11-12 March with a deadline for joint applications 23 May and Pilot Day 25 June.  Website.

Still open is the New York Digital Health Accelerator (NYDHA) program sponsored by the New York eHealth Collaborative (NYeC) and the Partnership Fund for New York City. Applications are due 11 April which will fund up to 10 early and ‘growth-stage’ companies with $100,000 plus entry into a mentorship program with thirteen New York metro healthcare providers. Funding is being provided by several investors, Genentech, Merck, Pfizer and Infor. Website, release.

Accelerator (at last) for older adult supportive tech

Supportive technologies for older adults is perhaps the least buzzy area of health tech. The Aging 2.0 GENerator accelerator is bucking that conventional wisdom. Its initial class of 11 early-stage companies span telecare (Lively, TTA 27 Sep), cognitive assistance (BrainAid), transportation (LiftAid) and product design (Sabi). It also connects companies to an impressive list of 75 mentors including LeadingAge/CAST, Mary Furlong Associates, the OnLok PACE community and Pfizer. Founder Katy Pike of Aging 2.0 has embedded it into San Francisco’s Institute of the Aging, which houses independent living facilities, adult day centers, and a geriatric clinic–ideal places for these startups to field test their approaches directly with their potentially 40 million 65+ market. For this the GENerator takes a not-more-than 2 percent equity stake in these companies; unlike the larger StartUp Health and Blueprint Health, it is right now too small to offer seed capital. MedCityNews

First ‘Lucky Thirteen’ StartUp Health/GE program company sold

Breaking News

One of the ‘Lucky Thirteen’ companies, Arpeggi, which entered the joint StartUp Health/GE Ventures program back in April [TTA 4 Apr], has been sold to another early-stage company in the genetics analytics, data management and diagnostic space, Gene by Gene. It is the first acquisition of one of the joint program companies and according to StartUp Health spokesperson Nicole Kinsey, “this is a strong sign of how well the program is is working to accelerate and scale digital health startups. This new combined company will be a major competitor to companies like 23andme and will really offer the consumer market much greater access and affordability to DNA testing and sequencing services.” The Arpeggi group and tech platform will be incorporated fully into Gene by Gene, and according to Unity Stoakes, President of StartUp Health, the latter will now enter the StartUp Health/GE Ventures program. Release (PDF)

A model for health tech accelerators, made in NY

‘Digital health accelerators’ are popping up like spring flowers, but what is the ‘secret sauce’? New York Digital Health Accelerator’s (NYDHA) program may have found the recipe. Dave Chase, CEO of Avado, takes a go at it from what a program like this means to an early-stage (or startup) company. Key points:

  • 23 leading providers were the selection committee–customers, a/k/a ‘who pays’–and they mentored and met extensively with their assigned company
  • Funding and the equity ‘take’ were the most attractive of any accelerator:  according to Chase, “providing the most funding per company of any accelerator ($300,000 or more[Ed.note: versus a more typical $20,000]) — roughly 5-15x more than other accelerators while taking significantly less equity.”
  • It was actively co-managed by The Partnership Fund for NY and NYeC (NY eHealth Collaborative) whose senior staff sourced conference/exposure opportunities and connections with Federal and state healthcare leaders
  • NY is clearly backing this with a goal of reinventing healthcare

NY Digital Health Accelerator Is a Model to Emulate: Startup’s Perspective (Forbes)

Previously in TTA: Healthcare IT–New York’s Next Big Thing [14 May] highlighting the Partnership Fund for NY and the NYDHA program.

‘Wildcatting’ health tech acceleration in Texas

Instead of oil wildcatting, well gushers out of ‘Giant’ and the travails of the Ewing family in Dallas, think…tech accelerator. Health Wildcatters is introducing the RockHealth-StartUp Health-Blueprint Health model to the Southwest. Executive director/co-founder Hubert Zajicek, MD announced an initial class of 15, with applications accepted in May. The program starts in late August and extends for 12 weeks. On completion, each company will receive $35,000 in seed funding in exchange for 8 percent equity. The Southwest has had some incubator action–in Texas at NTEC (where Dr. Zajicek was previously medical technology director) and Arizona’s SEEDSTART [TTA 5 Feb]–but accelerators have largely stayed glued to the poles of San Francisco/Silicon Valley, San Diego, New York and Boston. However, both Dallas and Houston are major US–and international, mainly Mexico, Central and South America–health delivery, educational and tech hubs. The Wildcatters have raised $1 million from about 30 investors, including physicians and local entrepreneurs, many of whom will also invest time as mentors. According to Mobihealthnews, they include Mike Bartlett, founder of vision test app makers Vital Art and Science and Michael Gorton, founder of telemedicine provider Teladoc; another major investor is Green Park & Golf Ventures. Co-founders and partners are Gabriella Draney (also of related Tech Wildcatters), Clay Heighten, MD and Carl Soderstrom. Dallas Morning News article. More information on their website.