Creating a successful startup is inherently challenging; even those who have launched companies can attest to that fact. Whatever the industry, startups offer something unique regarding products or services, teams, leadership, and network resources. However, one thing remains constant: the need for funding is critical.
For many, diving into the startup ecosystem, particularly within the healthcare sector, represents an appealing career path due to its potential for innovation, impact, and growth.
Home Health Care Startups Make a Tangible Difference
New businesses often need more experience and a network of established firms, and raising capital may take time and effort. Launching in healthcare presents additional regulatory and payer hurdles. Despite these challenges, building a healthcare startup can be particularly rewarding. Entrepreneurs in this field contribute to advancements in medical technology and patient care, paving the way for new industry standards and practices.
The ability to make a tangible difference in people's lives while navigating and overcoming these obstacles is what makes healthcare startups an appealing career path for many visionaries and innovators.
Three experienced panellists answered many funding-related questions at Dallas Startup Week.
McKaye Black of Blue Cross Blue Shield of Texas C1 Innovation Lab offered support to work together and innovate solutions between employers and health plans; Lauren Tyra of Green Park & Golf Ventures provided chief science officer for over 150 healthcare-based businesses managed by them; and Dr Hubert Zajicek of Health Wildcatters was co-founder/CEO of 88 startups that raised $250 million since 2013.
Five pieces of advice to assist healthcare startups in securing funding are listed here.
Early Investment is Vital
Companies must be ready to approach funders early on or risk missing an opportunity. Early investments often bring more value for investors; many firms look for such capital investments when their company is still in its infancy stage. As there are usually more brilliant ideas than funding available, preparing for an investment that could change everything is essential for success.
Form a Competent Team
There needs to be more than a great idea to ensure a company's success; investors also consider management experience when making investment decisions. Have the founders had any successful exits before taking products to market?
Can the team effectively turn a great idea into a profitable business and navigate regulatory environments? Funders care more than a startup's assets when selecting its leaders; thus, startups must remain objective when selecting these individuals for leadership positions in their company.
Implement a Legitimate Communication Strategy
We live in an age where there are too many apps. Businesses should use an established method for communication with their clientele/customers rather than cold calling to reach them out.
Funders often worry about unscrupulous calls from scammers/robocalls/etc. reaching their audience without screening and convincing them that you're working towards their best interests. Communication between company representatives and clients/customers helps build trust as it allows you to share the story of their organisation or product/ service offering!
Think Outside the Box
Tyra highlighted one company Green Park & Golf had invested in: Supergoop!, an award-winning San Antonio-based sunscreen brand that has experienced remarkable success since their investment. Many asked why Green Park decided to invest in such a non-traditional industry.
Still, sunscreen has long been proven as one of the best ways to prevent skin cancer, thus providing preventative healthcare solutions with value-creation potential. Bloomberg estimated its valuation to be between $600M and $700M, their most significant exit portfolio investment. When searching for funders, it pays to look outside their industry norms, as you might find opportunities with companies you hadn't considered previously.
Be Prepared with Data
Startups must provide clinical data when engaging healthcare funders. Startups will have to deal with private payers or government agencies and gain FDA approval, all of whom require results and trials for FDA approval.
While companies might assume funders will see them as brilliant without further testing their ideas, many investment firms dismiss a lack of data as a warning sign; evidence-based medicine was named such for a good reason! Utilising resources such as incubators and accelerators helps ask questions, make mistakes, and gather enough data to support a pitch presentation.
