What makes for a successful startup? Or the converse–what are the Elements of Doom for all those Better Mousetraps? Since many of our Readers have Been There, Done That or Considering That, this blog posting by David Skok of VC Matrix Partners (with only minor holdings in healthcare) could be illuminating. Five factors are detailed succinctly and in plain English: market problems (timing, value proposition), business model failure, poor management, running out of cash and product problems. The calculation of CAC (Cost of Acquiring Customer)/ LTV (Lifetime Value of Customer) with a multiple of CAC:LTV at 1:3-5+ essential. To this Editor, these Elements also apply to later stages. For Entrepreneurs, “Why Startups Fail.” Hat tip to MedCityNews via Twitter.
Health IT funding bubble seen by veteran investor
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2012/12/crystal-ball.jpg” thumb_width=”120″ /] How is health tech like the 1990s ‘dot-com’-ers? Veteran Silicon Valley investor (HealthTech Capital) and former entrepreneur Anne DeGheest projects a ‘Series B crunch‘ in funding health tech and IT in an interview with The Wall Street Journal’s Venture Capital Dispatch. The key factors: angels and ‘unsophisticated investors’ are pouring money into all sorts of devices, apps and related services in seed and Series A stages just to get on board in a hot sector. When the founders of these companies get to Series B and present to more demanding investors, the lack of a true value proposition and a detailed business plan that answers basic questions leave them standing on, as aptly put, ‘a pier to nowhere’ or as Joe Hage termed it last month, ‘insolvent with a great idea.’
Ms. DeGheest’s view that we are reprising the elements of the ‘dot-com’ bubble is confirmed by the numbers in Rock Health‘s and PwC‘s funding reports throughout 2013: (more…)
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