Part III: Go Edupunk - Healthcare Incubators: Time to Burn or Become Steel

Blogger's Note: Today I'm skipping around a bit during our week-long look at healthcare incubators.

Before we look at when incubators in healthcare/startup health WON'T work, let's take a look at what's working from the business end of startup tech incubation.

Part of the problem with incubation in startup health is that startup tech has been playing this game for at least 2 decades.

As a result, they've got a cast of characters - expected players who will scoop in and pick off any smaller firms whose products and services they want to integrate.

Want the ultimate exit? Look for acquisition by Google, Microsoft, Yahoo, etc.

But it wasn't until earlier this year that Microsoft and Google's health interests pushed them into releasing PHRs. In health, we couldn't look to the big boys for adoption. But that's changing as we move towards consumer-centric care.

So who might we expect to see adopting healthtech incubators' grads? Of course the same cast of characters is now attending to our space, so you might go after Google, MS, Yahoo.

But what about other firms?

Of course you could look to big pharma if you've got biotech grit, or one of the DTC genomics firms like 23andme if you're working in genetics/medtech equipment or processing.

But what about hospitals? Are big brick and mortar healthcare factories looking at investment in startup health?

Sure, but probably not at the level of a total acquisition - they're much more likely to cough up cash for partnerships or to pay for leasing/subscription/installation/service/support fees.

Wait a hot second...That's AT LEAST 4 big potential markets for health startups (big tech, pharma, biotech/genomics, hospitals).

So why aren't we seeing more incubators birthed to take advantage of a group of buyers with big wallets in a space that's, as Unity Stoakes puts it in this Organized Wisdom interview with Esther Dyson, "under-focused on and under-funded?"

It's crucible time for consumer-centric healthcare tech; as a recent issue of SmartBrief Leadership e-newsletter put it, time to "burn or become steel."

The Health 2.0 movement is at a precarious turning point ("the terrible 2s") - we've got companies with some very interesting traction, large community strength numbers, and even a few with some revenues in the black (a very few).

But the cyclical boom/bust nature of tech movements, including startup tech in health, opens wide the doors of opportunity for investors and larger big money sector leaders to fund incubation.

For goodness sake - we're dealing with people's most precious asset (even above financial security) - if you don't have life and limb intact it'll be hard to enjoy the fruits of the post-bailout economy.

You'd think more companies and individuals would be flocking to the space to look at incubation and VC/mentoring networks. But it's still a pretty insular world.

If startup tech can be THIS creative - with an online artisan food marketplace I love, Foodzie, birthed in the 2008 TechStars incubator, blogging about a "Magic of Mole" cooking class (warning: 'gastroporn' alert - do not look at the Foodzie page while hungry!) at La Cocina, an incubator for food entrepreneurs - SO CAN STARTUP HEALTH.

Want to see more examples of startup tech incubatees? Here's a look at some of the firms in the Y Combinator stable.

If you want more startup tech ed, check out this short video interview with VC investor Brad Feld, who reminds us that incubators are NOT the same as angel investing. But angels are a series for another time...

ADDITION: Just to really get your bloomers in a bunch, here's an irreverent panel at CommunityNext moderated by Guy Kawasaki that blows business model and 'standard' VC value benchmarks right out of the water.

The point? We need more innovation in HIT, eHealth and mHealth, not less.

I'd like to see increasing design-consciousness among medical equipment manufacturers in particular - haven't they learned anything from Amy Tenderich's open letter to Steve Jobs and the Diabetes Mine Design Challenge?

Need examples of the kind of innovation I'm talking about, and how it might be specifically translated to healthcare incubator selection?
  • Reserve a spot in an incubator for a medical equipment maker looking to integrate biomimicry.
  • A no brainer? A startup team designing a fitness game for the Nintendo Wii or for wiihabilitation.

Startup health incubator. Steel health. Steal Health? Crucible? Hmmm. I like it.

I like it alot.

Any investors want to do a startup health incubator?

Tune in tomorrow for when incubators in health WON'T work, and a discussion of the elephants in the room, including IP.

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