Editor's Note: this is a guest post written by Dave Chase, CEO of Avado.com patient relationship management company, which was a finalist in the TechCrunch Disrupt. He was formerly a management consultant to medical practice, Accenture consulting for 25 hospitals and founder of Microsoft health business. You can follow him on Twitter @ chasedave.
Healthtech represents the sector is constantly growing, but from a pool of $ 1 billion that VCs poured into startups in the past year, medical companies only got about 3 per cent of the total. Not so many startups healthtech were able to provide these large enterprises cartridges; However, last week, I drew the attention of one company healthtech seem to be doing it right: Zocdoc, which raised $ 50 million round from summer time earlier this month and suggested some points to consider for startups looking to draw lessons from experiences in Zocdoc (check out the post here.
As the above company numbers from Rip in the post, a lot of startups have not yet really demonstrated the wisdom shown by Zocdoc, resulting in an increasing number of failures healthtech over the past few years. A recent study, inter alia, underlined the phenomenon. After interviewing 110 digital business health RockHealth has recently released the findings of the study, showing the gap between companies that actually receive funding and the many people who have come up empty.
This trip sheds light on why so many companies could not blow healthtech or had to undergo significant changes in order to survive. Below you will find some of the best reasons for startup failure healthtech:
Is well known that insufficient attention kills startups in healthcare or not but it is especially common in health care. Healthcare industry suffers from an abundance of pain points and is in serious need of shocks, so it's tempting for new startups to try to resolve them to make the greatest impact. However, these startups ignores the old saying about how to eat an elephant is one bite at a time. Too many startups biting off more than they can chew. It is better to choose one major pain to deal with and go with him.
Expected consumers to pay
With the exception of weight loss programs there are not many examples of consumers pay directly for health services. Over time, this may change, the greater burden of healthcare costs gets switched to consumers, as outlined in part II of a series of health disorders (see references below). Nevertheless, I would be very cautious of any business, expecting that consumers pay in the near-term.
Expected users to enter much information
Although I believe there are more reasons why Google Health is not expecting consumers to enter information is one of the major factors in why personal health records (PHR) failed to gain significant traction. Most of the PHR rely on individual data entry, and few are willing to do so.
Requires an enormous amount of money
This tends to occur during periods of bubble where there is a grand vision and frothy financial markets threw huge amounts of money. Eventually, they were not sustainable franchise.
Require multiple and complex partnership
These runs depends on too many partnerships are likely to run into problems, these partnerships often involve the established players. Unfortunately established players have significantly different sense of urgency. Many good ideas die on the vine, waiting for business development and legal departments on established players who do not share launch a sense of urgency.
There is no understanding of the dynamics of recovery
This is definitely the number one reason why healthtech startups failed. The results of the study RockHealth highlight an important aspect of this. On a positive note 77 per cent of the VCs think health IT investments will increase in the United States by the year 2011. Already 35 digital health care companies with $ 2 m + in year 2011. It is important to note that 80% of them receive funding are B2B (i.e. sale of health professionals in business, etc.), but most entrepreneurs digital health surveyed think consumers will pay for your product or service. Despite this most entrepreneurs digital health early build B2c companies.
Before it's too late, I hope these companies will find a way for anyone except consumers pay. This can be through advertising model or technology licensing for organizations. In this case, the consumer is a product, not the client. The client is an organization.
You can find a complete study of RockHealth in embedded below for your viewing pleasure:
The following is a series of health violations listed above:
Health violations: Pharma 3.0 will encourage the transition from life science investing HealthTech
Health violations: providers will use the HealthTech differentiate and produce better results (part II)
Health violations: providers do newspaper industry mistakes (part III)
Fragment image courtesy of Wikipedia Commons
Avado is a patient relationship management platform that enables health initiative, a partnership between the individual and their health & wellness vendors and gives individual health related records.
Read MoreDave is CEO and co-founder of Avado. Avado is a patient relationship management platform that empowers a health partnership between individuals and their & health wellness providers during ...
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AutoIQ is a combination gadget and HTML5-based mobile application that listens to your car in order to save you money. The company sells an off-the-shelf diagnostic gadget that connects to the onboard diagnostic (OBD) port of your vehicle. There are several different payment options for the service’s users. For $50, you receive the gadget and a year of service. You can also choose to buy your own gadget from a third-party and pay just $3/month for the service, or you can choose to pay $5/month for both the gadget and the service on a subscription basis. The OBD port is a standard port, accessible on all modern vehicles without having to get your hands dirty poking around under the hood. The gadget, which the company calls the “translator,” listens to the car’s computer and then “translates” those mysterious error messages into understandable language. Messages can come to you through push notifications, text messages, emails or via the AutoIQ online service. How bad is that “check engine” message, for example? Do you really need an air filter, as your mechanic says?
CityQuest is a new (in-development) mobile application that transforms normal metropolitan landscapes into adventure-filled mini-games that “promote local commerce and vanquish boredom.” While operating in the same general space as Foursquare and Gowalla, the app doesn’t see itself as competing directly with those “check in” based networks. Its goal is slightly different – promote local discovery, encourage users to “get out of the house” and explore their city, visit popular landmarks, discover new businesses and patronize those which are their favorites.
Dropost.it, another mobile app that emerged from Tampa Bay’s first Startup Weekend, allows you to “drop” text messages and media in a geographical area for others to receive when they get there. That media can be music, video, photos, games, or any other digital file. The best way to understand Dropost.it is to think of it as sort of “location-based graffiti.” It’s not designed to be a niche experience, but rather a location-based platform for sharing media. There are several possible uses for this sort of technology, ranging from geo-fenced location-based reminders to in-store promotions where the app’s users receive discounts at local businesses. But the most intriguing thing about this app is how it attaches a real-world location to the online, virtual world.
Leads Direct, LLC is an online lead aggregator and cost-per-lead provider for multiple service-based verticals. That description is being kept fairly high-level because the company’s founders are still at their day jobs. This company is taking a different approach from the other startups in Gazelle Lab in that it isn’t disruptive in terms of the core service being offered, but in the way that the service works. Lead generation is a business that’s been around for some time, and has a sound business model, the founders explain, but the company plans on making some changes to address specific needs in each vertical they target. The company will initially target property management and real estate, where it will provide advertisers with more control over budgets, a better understaning of where ad dollars are being spent and itemized billing – all things its competitors currently lack. In short, Leads Directo will offer a Google AdWords-like toolset for acquiring leads.
Red Hawk Interactive plans to integrate restaurant listings and menu ordering systems into streaming video services. While it can’t discuss specifics, the company says it’s in talks with a well-known streaming video brand. And it’s currently reaching out to others in the same market. To give you an idea of the clients RedHawk has in mind, streaming video services like Netflix, Hulu, or Boxee are the types of targets the company is interested in talking with. RedHawk would provide a way for these service to display links to restaurants via the screen that loads before you start the movie. For example, under the movie’s description, would be a simple option that read something like “Order Food.” Clicking the link would take you to a list of participating restaurants with online ordering systems. The way this interface would look and operate is up to the streaming video provider, as this would be a white label product only.
Teburu (Japanese for “table”) provides a web-based and mobile platform for restaurants to easily manage their online and mobile ordering services. For small to medium-sized restaurants, it’s still a challenge to get the information from the ordering system to the kitchen, says Teburu. Typical third-party systems often forgo expensive point-of-sale (POS) integration and instead phone the restaurant, fax in orders or send orders via email. Teburu makes POS integration a more affordable option, or restaurants can opt for the company’s specially designed HTML5 tablet application which runs on locked-down mobile hardware and software, like a customized version of Android, for example. The app will alert order takers to incoming orders via flashes or beeps. Then staff simply inputs the order in their own system.
