San Francisco USA

Out of the EU Box: Digital Health Incubators and Accelerators in the USA

The US spends the most money on healthcare per capita compared to any other country in the world – a result largely due to inefficiencies in the healthcare system. Policies like the Affordable Care Act seek to decrease healthcare costs while increasing the quality of care across the country, but many initiatives have been criticized as being disorganized and ineffectual – as seen with the initial rollout of Obamacare.

While government initiatives have often been lackluster, many entrepreneurs have taken things into their own hands. In an effort to “disrupt” the broken healthcare system, it is estimated that digital health companies received a total of $2.1 billion USD in funding in the first half of 2015 alone. From fitness wearables to healthcare analytics to mental health apps, startups are beating the government to the punch, armed with more resources, more innovation, and more flexibility.

Digital Health in the US

Over the past several years, the digital health market in the US has become increasingly popular and lucrative, leading to a surge in digital health incubators and startup accelerators that focus exclusively on digital health. According to a new report, out of 115 dedicated healthcare accelerators in the world – up from about 25 just two years ago – 87 are in the US. Companies like Rock Health, StartUp Health, and Healthbox help build and support new digital health companies.

Incubators – where a new idea is fleshed out, and a company or business model is built – and accelerators – a program that supports an existing company in growing – both typically provide funding (in exchange for equity), office space (but may also be remote), access to customers, and connections to experts or mentors. Incubators tend to be longer in length with no defined “end date,” whereas accelerators have a set timeframe – often a few weeks to a few months long – with a “demonstration day” where the product is presented to the media and potential investors.

Digital health companies have unique startup needs. They often require more funding and more time) than the average startup to get up-and-running. They also require access to physicians and health policy experts, as advisors. It’s in the interest of digital health startups to work closely with incubators or accelerators that specializes in healthcare to provide these necessary resources of more time, more money, and more specialized connections than the average company.

Digital Health Incubators and Accelerators

Digital Health Incubators in the USA

A few well-known health incubators and accelerators in the US include:

Rock Health is a “seed and early-stage venture fund that supports startups building the next generation of technologies transforming healthcare,” based in San Francisco. In exchange for equity, they provide up to $250,000 in funding, and have partnerships with medical institutions, venture capital firms, and other strategic corporate partners.

Based in New York, StartUp Health has digital health entrepreneurs enroll in its “Academy,” a long-term coaching program, and has a large community of investors and advisors to support ongoing company growth. So far, StartUp Health has enrolled over 200 entrepreneurs from 100 startups. Collectively, its portfolio companies have raised over $200 million in funding.

Healthbox, an accelerator for health technology companies, is based in Chicago. The Healthbox Studios program helps seed and early-stage startups reach their full growth potential through an 8-week on or offsite program.

While many digital health incubators and accelerators support these health startups, defining the “success” of these programs is difficult. Most digital health incubators and accelerators are less than two years old, so the startups they support have not been around very long. Often, accelerators define success by the amount of funds raised after exiting the program, job creation, or company acquisitions, but these are not always indicative of long-term market or financial impact. While many resources are being funneled into these companies, the actual value being created by incubators and accelerators is somewhat uncertain.

Looking Ahead

A new report by the California Health Care Foundation (CHCF) (PDF) predicts that the future of digital health accelerators will include 1) increasing specializations, like a focus on aging or cancer, 2) longer and more intensive programs, 3) collaborative models that allow sponsor organizations to co-create startup solutions, and 4) an increase in funds available.

The CHCF report also suggests that many of today’s 87 accelerators – and new accelerators currently being built – will not survive. In order to improve the chance of success, the CHCF author recommends that accelerators increase the skillset among internal staff and more carefully select startups to support. Even though the future impact of incubators and accelerators in digital health is uncertain, the amount of funding and enthusiasm in the industry is promising. While many digital health incubators, accelerators, and related digital health companies may not endure, the survival of a handful of effective companies has the potential to positively impact healthcare in the US.

Friendly reminder: never miss an update again with our newsletter.