Yesterday afternoon, I was a part of a group that talked to three companies engaged in changing pieces of the healthcare system. Two were life sciences companies, and one was a healthcare environmental company.
They all came out of the iBio/Propel. Barbara Goodman has been passionately helping medical science based companies there for a long time. It was fun for me to interact with them and others in the room since I don’t see a lot of life sciences companies every day.
A while ago, Foley and Lardner held a healthcare summit and companies from all over the midwest were there. That law firm has been supportive of the startup community through Catapult.
The path to success in life sciences and healthcare is slightly different than typical startups. The valley of death is in a different place during the funding cycle, and they have different issues to confront-like the FDA.
One advantage healthcare companies have is that they don’t have to search for a market, or product/market fit. The company is built to solve a problem.
Whether you like or hate Obamacare, it doesn’t really matter. Healthcare is going to change. The economics and metrics are changing. Additionally, the baby boom generation is getting to the age where they are going to start consuming a lot of health care.
The only way to efficiently take care of a huge population is to use technology to commoditize services, and use tech to monitor, diagnose, and treat people. There are not enough humans on the planet to take care of all the people that need it.
Lots of investors are shying away from healthcare. Returns have been in the tank. The FDA is a monolith constraining innovation. Obamacare has a medical device tax, and has created much uncertainty.
People are going to get sick. They are going to need cutting edge health care to keep them well.
Chicago, and the broader midwest, is in a unique position to leverage this change. Within a days drive of Chicago there are medical schools, research universities, and medical companies that will buy firms for an exit.
Many people are intimidated by healthcare, but I am not. Sure, I am not a scientist. But, I understand economics, markets, and network effects. Sometimes it’s important to get a set of eyes on something that has no experience, no pre-conditioned ideas or constructs. For example, more ships were build in World War Two by a person that had never built a ship in his life than anyone else.
Fresh ideas spur innovation.
Having a bunch of healthcare startups working near the regular startup community is beneficial. There is a lot of cross pollination that could happen.
My input yesterday was to get people to think about marketing, sales cycles and trying to create network effects into their business. Right now, there are very few medical companies looking to harness the power of the crowd. But, if they define their “crowd” correctly, they can utilize principles that businesses like Twitter and Google have used to grow.
Because of big data and all the other changes, we are going to see revolutionary changes in health care in the next ten years. Huge profits will be made from investing in startups targeting this vertical. There are established players that could topple, and big companies with money that want to acquire innovation.
Big potential. Right now, we have some of the bones. We have the entrepreneurs. All we need is the risk capital.
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