We sat down with some leading entrepreneurs, and asked them to share the top three reasons why health tech startups fail. They’ve shared their hands-on experience and views on what makes (and breaks) a startup in health tech…
The hard truth is that most startups fail. Being able to launch, nurture and grow your business takes more than a healthy bank account and a passion for success. The health tech space is a particular challenge, as some of these entrepreneurs will share.
By taking heed from those who have done it (and done it well), you are in with a better chance of beating the odds and launching a successful startup in health tech.
The data doesn’t lie
According to CBI Insights, The number one reason why startups fail is due to misreading market demand — this is found in 42% of cases.
The second largest reason why startups fail (29% of cases) is due to running out of funding and personal money.
As around 90% of all startups are doomed to failure, it’s worth every minute of self education and research, to make sure you set yourself apart from the rest. Let’s see what these successful startup owners have to say about failure and success in health tech...
John Kamara: Founder of AfyaRekod
Universal Patient Portal
1 – Not recognising that markets differ greatly
Startup promoters often forget that not all markets are the same. The size of the market is segmented with each having their own needs and expectations which, if not clearly captured, will become the limiting factor of market entry and penetration.
2 – CEO/team without industry experience
Industry experience of the principal promoter, investor, team and other stakeholders plays a critical role in how the health tech startup is perceived in the identified market.
3 – Market strategies and scalability
Health tech startup success lies in the proper understanding of the target market and end user / consumer access for the product. It’s a projected utility case which must be all inclusive in order to drive the action of key industry stakeholders, essentially the policy makers.
Tips from John
“As a startup especially in the tech digital space, you must know the infrastructural availability and requirement to birth the idea. Understanding of policy framework for the startup sector is also important. Finally, position profitability clearly, especially if your idea is a disruptive one.”
More about AfyaRekod
Max Cotton – CEO & Founder of Another Round
Victora Repa | Founder of BetterMe
1 – Healthcare is a very competitive sphere
2 – Business is a marathon, not a sprint, startup founders should be resistant and flexible.
3 – They react to negative events, instead of acting.
She added: “Solving a real problem is the most important for a startup. Don’t focus on cool new tech and cool designs: start with the real problem. Technology and design are secondary. The pain and needs of your future clients are your top priority.
Top tips from Victoria:
- Fail often and cheaply. Accomplished experts are afraid to make mistakes, so they are not creating anything new. But in the 21st century, you should run fast just to stay still.
- Manage energy, not time. To maintain your maximum level of performance, stay disciplined: follow a diet, engage in regular physical activity, get enough sleep and do things that fulfill you.
- Don’t listen to pessimists; they take your energy away. There will always be people who think that your idea is too global, that you are too young, or you lack the necessary skills. Ignore them. Work on solving the problem for your users.
Karin Andrea Stephan: Founder of Earkick
Anxiety tracker app
1 – Identifying the right problem, but trying to solve it too broadly can be very dangerous.
Just because something can be done or is on a stakeholder’s wishlist, doesn’t mean it needs to be built. It’s better to focus just on one specific niche or topic, solve for that and not get distracted.
2 – Running out of funding
Many startups run out of funding before the required regulatory milestones are achieved and/or sufficient evidence is generated to prove customers want to buy their product. It’s not enough to accomplish one milestone after another in health tech. Founders need to have a solid multitrack strategy and that often feels like flying a plane while building it and having to make sure it can land safely.
3 – Assumptions!
Leaving too many assumptions untested such as that customers are willing to pay out of pocket for products and services that are health-related or that a product/service will fit into existing workflows.
Tips from Karin
“Launching a mental health startup with a big vision and serving a global purpose is an amazing opportunity. No matter how hard things get along the way, my co-founder and I always remind ourselves to enjoy the ride, to be 100% alive and to keep ourselves mentally and physically healthy.”
More about Earkick
Dr Anas Nader: Founder of Patchwork Health
Healthcare workforce initiative
1 – Not creating a configurable product to suit the nuanced needs of different healthcare organisations
2 – Not appreciating the importance of effective change management and investing in implementation teams
3 – Not being prepared for how much longer the fundraising and procurement process can take compared to other sectors
He added: “Having a comprehensive understanding of these, and the impact they will have on how you develop and market your product, is absolutely crucial to successfully launching a health tech solution.”
Tips from Anas
“My biggest piece of advice – and something that we’ve always done at Patchwork – is to approach your relationship with clients as a partnership from Day 1.
“Work closely with the end users of your product from the design phase until after go-live to understand the nuanced pain points you need to solve and tailor your solution to meet their specific needs.
“Building long term partnerships is paramount, as it will help you to intuitively develop your product to ensure you continue to meet each organisation’s evolving needs.”
More about Patchwork Health
Tim Warrington: CEO of Service Robots
UK robot manufacturer
1 – Not planning for failure
As with all business – planning for success is always pushed along with ‘thinking positively’. But I believe after 25 years in business, you should always plan for failure. What if this doesn’t work as it should, what other markets are there we can use? In business, health or otherwise, you have to be fluid and business plans are usually rigid. You need to keep an open mind and be prepared to move quickly in a totally opposite direction.
2 – No fundamental business acumen
Businesses I have come across in the healthcare industries are sometimes run by health care professionals that see a gap in the market – which is good. But without fundamental business acumen, this great idea can become more of a mission than a business and it can fail.
3 – Remembering the smaller companies
Healthcare is vast. Most companies that start in this industry aim for the big names like NHS trusts and BUPA, but forget there are lots of smaller companies globally that can use your product or service.
Business is like building a house one brick at a time whilst fending off people trying to knock it down. Sometimes you have to allow for giving a product or service for free to establish a name or a brand. This is fundamentally against most people’s beliefs but it’s important. If your product or service is as good as you say, trialing it within the healthcare industry would bring sales if done correctly.
Tips from Tim
“Be prepared to work like you have never worked before, for no money, no time. Aim for success but be prepared to pivot if things go wrong. Don’t be afraid to start again.”
More about Service Robots
Natalie Parsons: Founder of Dearbump
Pregnancy wellbeing startup
1 – Lack of funding
Health tech platforms need to be evidence driven and so it’s impossible to not have the backing of qualified health practitioners. They undertake years of training so they aren’t cheap. Start-ups need to consider these costs otherwise money can be consumed very quickly.
2 – Not addressing a consumer need
For example, there’s 1000’s of healthcare apps. What truly makes yours different? Working in tech and having an app have all become buzzwords that attract investors. In reality some founders don’t conduct market or consumer research to find out what consumers really want. For example, do people want to sit and wait three days for a face to face call with an expert they’ve connected with through an app? Why can’t the answer to their problem be addressed without an appointment?
3 – The app and tech is difficult for people to use
This prevents adoption of the product and leads to fewer active users. The best approaches to health tech are simple and don’t require people to adapt and change their behaviour entirely.
Tips from Natalie
“Conduct your research, before spending money on fancy branding and a fancy website, see if you can generate real interest from people willing to pay for your product. You can start with a basic landing page and build a list of people interested.
“Network as much as you can. There are lots of people out there willing to offer advice and guidance to founders.”
More about Dearbump
Arden Tomison – Founder of Thalamos
Mental health tech initiative
1 – Failing to balance your purpose with your business model or revenue
2 – Not spending enough time thinking about different patient perspectives
3 – Failing to properly understand your regulatory commitments
Tips from Arden: “Build responsible innovation from the ground up. This means consciously considering clinical safety and consulting the lived experience of real service users at every stage of product development.
“At Thalamos, we take a “by design” approach to information governance, clinical safety and lived experience. By addressing the potential impact on patients of each decision that is made – from design right through to implementation.
“You can ensure that your product is optimised to successfully improve care quality and patient outcomes. It will also help you avoid any potential pitfalls that could cause problems further down the line.”
More about Thalamos
Ethar Alali: Founder of Automedi
Decentralised circular microeconomy converting plastic waste
Ethar said: “Ultimately there’s really only one reason health tech startups fail. You run out of cash.
“WHY you run out of cash is really a function of two variables. You don’t get enough funding or your burn rate is too high and there are a host of different reasons for each.”
Tips from Ethar
“As a health tech startup, you need to think very broadly and cast a wide net. Getting a grant and investor funding can be very difficult and everything has to be on-point at the best of times. With a reduced pool, this can be a big ask! So a diverse portfolio of funding options is your best bet.
“The National Institute for Health Research publish several very tempting grant funding options. SBRI is often touted as one of the best, but you have to be wary of SBRI funding most of all.
“These funding options are often highly encouraged, but they are unfit for purpose in a 21st century health system. This works as a proposal system which is run by InnovateUK who then procure the winners to deliver the R&D project. So it suffers from the same weaknesses as most public procurement options.
“It adequately evaluates silo innovation. These non-transformative innovations tackle specific diseases or symptoms in the moment or track something that can provide a digital footprint.
“However, you have to spend a lot of money just to apply. It might cost £8,000 just to fill in the form.
“Also, SBRI has no understanding of systemic innovation and the submission platform makes this worse. It doesn’t allow what would be regarded in industry as competent risk management and certainly doesn’t allow enough in the way of diagrammatic explanation. This is essential to communicate system innovation which touches on more than one thing.”
Ben Rose: CTO of Logitbox
Medical training app
“One of the key failure points in health-tech is not building for scale. With every release of Logitbox, we asked ourselves how the app would function if it had 500,000 users.
“This scalability foresight prevented us from a common issue start-ups face; gaining momentum but then having to stop and start again from scratch because the fundamental building blocks aren’t right.
“This kind of mistake is costly financially and kills the energy of the core team. It is absolutely critical to take the extra time to think hard before you build.”
More about Logitbox
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