Building something for everyone: the unique challenges of building a healthtech startup
By: Ravit Warsha Dor, Head of Health, Kamet Ventures
Research can make or break your startup
Unlike a regular SaaS or consumer startup, the first few months of a healthtech company require a substantial amount of compliance, due diligence, and testing within the clinical setting it is targeted for. Many times, this would mean partnering with a healthcare organisation at a very early stage, sometimes as early as the ideation phase.
As a consequence, healthtech companies are even more reliant than other startups on early-stage funding to support the R&D process and the product build until they are able to launch and start generating revenue. In spite of the greater emphasis on creating a robust product from the outset, the foundation of a healthtech startup resembles that of pretty much any other type of business — finding a product-market-fit has to begin with an in-depth understanding of the market and the challenge that the company is trying to solve.
To achieve this, founders need to begin with a strong groundwork of desk and market research to establish the pain, opportunity, and solution, and identify the best go-to-market, as well as obstacles the company may need to overcome as it scales. For healthtech founders specifically, this means asking whether the challenge they are trying to solve can be addressed within the existing regulatory frameworks, considering all players in the health ecosystem, and assessing whether the solution can meet the objectives of the various stakeholders, and if there is an opportunity to scale into different use cases and/or geographies at later stages. Disruptive technologies will many times mean changing the current care path, or user behaviours across the health ecosystem. And whilst it may be tempting to improve a broken or ineffective process, it is also hard to promote and implement these improvements, prove the value, and overcome the objections.
The market analysis must consider all players in the health ecosystem, since it might be confronted with “surprises” like doctors being resistant to change, or low patient compliance, even on allegedly obvious cases or the most severe health conditions. Therefore, it is pretty much a prerequisite that the founders either have an in-depth knowledge of the healthcare industry and its regulatory landscape themselves, or can attract the talent, investors, or partners that will provide this expertise as the product-market fit is developed.
Is the problem big enough?
As with other industries, healthtech is undergoing a digital transformation that is increasingly focused on personalisation, with a growing awareness that a one-size fits all approach can never truly help all patients. We are seeing more and more solutions that are collecting data from users to personalise the treatment and adapt it to their specific needs, for the best possible outcome. Having grown dramatically both in attention and investment, the Femtech sector is yet another manifestation of personalised technology, for female specific conditions, as well as for common conditions being expressed differently for women.
However, developing a solution for a rare disease for example, is unfortunately not often viewed as an attractive business opportunity. That is not to mention the challenges that come with finding a viable business model for a startup focused on that.
Other solutions have the potential to address a much broader market. For example, early screening for cancer is vital to the whole population and solutions that help improve the accuracy and efficiency of current tools are in high demand. While many solutions being developed focus on a specific type of disease or patient group, we see a lot of potential in the same approach being applied across new use cases once the technology is proven.
And finally, founders must be realistic about their company’s future. Hospitals (as well as doctors and patients) only have so much capacity for adopting a new tool or system, so it is important to simplify the potential onboarding process by either creating the platform that everyone adopts or designing it in interoperability with other solutions.
Scaling across geographical markets
Geographical expansion is another route to scale for healthtech startups, but again poses its own challenges because each geography has its own regulatory requirements, unique healthcare ecosystem, and different levels of progress and adoption of technology.
For example, Israel’s comprehensive digital healthcare system with a vast library of digital records of patient data, makes it much easier for healthtech companies to plug into the existing infrastructure and incorporate that information into their solution. Other countries have been slower to digitise and have their unique preferences and priorities in terms of how data is stored and distributed.
Founders need to be aware of these limitations and challenges, run dedicated market analysis in each location and focus on markets that are well matched for their solution, rather than trying to shoehorn a solution into a geography that has its own healthcare priorities.
Think about who is using your tech
Perhaps the most important consideration is deciding who are your customers and who are your users, whether that is doctors, patients, providers, insurers or a combination of all. These groups will all have different incentives as to whether they want to use new technology — and so a different business case will be needed from you. Whether that’s highlighting the convenience of the technology to consumers, reduced admin time to doctors, better outcomes or the cost effectiveness to payers.
Healthcare startups need to make themselves as indispensable as possible to the ecosystem from the beginning. This means companies should look to be as functional and all-encompassing as possible, engaging with all players of the healthcare ecosystem, and providing value to as many of them as possible. If they can be the helping hand that doctors simply can’t imagine their lives without, then they are well on their way to growing together with the hospital and for it.
The future of healthtech
Coronavirus has put the health of citizens firmly at the top of everyone’s agenda. Just five years ago, it was a lot harder to engage the various stakeholders around digital health solutions and explain the benefits new technologies could bring to their lives. Now, there are dedicated teams at healthcare organisations whose sole job is to identify and integrate tech solutions.
There is a critical need for digital solutions to address the changes we have all experienced in accessing and receiving healthcare, and this has made patients, procurers, and practitioners less sceptical of new technology. For example, remote care has become a huge market this year and is set to only become more widely adopted as solutions become more sophisticated. The next step will be patients not just being seen by a doctor from home but also being treated there, going through a fully remote care pathway.
There’s no question that building a company in healthtech is hard. It requires greater analysis and an abundance of research as a stronger awareness of the market, not to mention the unique regulatory and societal challenges that come with rolling out a product focused on people’s wellbeing. However, with the greater understanding and appreciation of the benefits of healthtech that the past year has brought, the sky’s the limit for healthtech startups who take the time to really understand what patients and practitioners need to create a society that’s better supported, healthier, and ultimately, happier.