How Healthtech startups can overcome challenges in their industry

Opportunities in Healthtech

In 2018, digital health interventions had the potential to save the US healthcare system $500 billion. Healthcare cost reduction is one of the primary value propositions of healthtech. The global elderly care market is worth over $800 billion and the long term care market is set to be worth $1.7 trillion by 2028. The demand from the patients side is also high with patients historically being interested in screening and diagnostic tools. Since 2011, the total funding and deal sizes have consistently increased though after 2016, the number of deals has remained the same showing there are investors who are keen to invest in healthtech.

Challenges

Regulatory barriers are high in the health sector. Understanding the requirements, communicating with the relevant government institutions and time taken for approvals can be daunting and have an opportunity cost. Different regions have different health regulations. Infrastructure costs can be high and gathering data will be a challenge. Larger competitors introducing me-too products is another challenge as established companies in the health sector have the financial resources, brand recognition and strong supply chains to keep entry barriers high. Attracting human talent is a challenge as healthtech startups have a very high failure rate. Also, human talent in the healthcare sector can be costly to hire. Lastly, relationships with the right people are needed so entrepreneurs need to have great networking skills. 

How can challenges be overcome by Healthtech startups

Diverse Team - In a complex sector such as healthtech, where expertise is needed from the heavily regulated healthcare sector and the fast evolving technology sector, a diverse team is essential. A diverse team that consists of individuals who are experts in healthcare and technology is a must. But also the team has to be balanced with other individuals who have entrepreneurial skills such as critical thinking, strategic planning, financial acumen, communication and leadership skills.

Advisory Board - Having an advisory board of experts and industry leaders can help the startup. Having prominent experts on the board can prove the legitimacy of the startup to potential investors, partners and customers and they can help the startup founders get connected with important people through their networks. The advisory board can also give industry specific advice and drive strategic decision making. 

Strategic Partnerships - Having strategic partnerships with larger organizations is a great strategy. A partnership with a reputed player can give a reputational boost and make the startup more legitimate when networking in future. The larger entity can invest in the startup and also share its supply chain, technology and industry expertise. There will be losses like having to give away equity or being tied to exclusive agreements but the benefits outweigh the losses in the long run. 

Talal Rafi is a global consultant on innovation, entrepreneurship & gender equality and is based in Sri Lanka. He is a member of the Expert Network of the World Economic Forum. His work has been published by the World Bank, International Monetary Fund, Asian Development Bank, World Economic Forum, London School of Economics and Forbes.