From stakeholder engagement to market education: success tips for healthtech startups
Founders, investors, and mentors share the challenges they faced during their journeys in India’s health sector, and offer tips on how innovators can overcome these issues.
In Part II of our writeup on healthtech startups, we move from ideation approaches to implementation strategies of entrepreneurs in this sector. Challenges include market education, partnership engagement, and funding approaches.
Identifying a pain point faced personally or by a family member, or spotting new tech trends, is a great way to get started on the entrepreneurial journey, as discussed in Part I of our analysis: How founders get ideas: what these healthtech startups teach us about finding the right problem to solve. The founders shared their insights at a heathtech meetup organised at Arbor Brewing Company in Bengaluru by Unitus Ventures, Villgro, and Montane Venures.
Challenges: market education, talent, partnerships
Ubiqare Health offers specialised medical care to patients inside their homes via a combination of expertise in healthcare, embedded computing, and cloud platforms. “The most crucial challenge is to find more and more early adopters among specialists and hospitals. The adoption rate of a new way of doing things is understandably slow in healthcare when compared to other industries,” explains Pillalamarri Sridhar, Co-founder of Ubiqare.
The startup is launching targeted awareness drives among specialists and hospitals on the feasibility, viability, and efficacy of delivering specialty follow-up care at home. “The second challenge is to enable collaboration among dispersed medical professionals, in a short time-frame. Our operational model and technology platform will enable this teamwork,” he adds.
The third challenge is to increase awareness and acceptance among the people who may need such prolonged complex care at home. “We are reaching out to them through social media and targeted communities,” Sridhar says.
Access to talent and funds is an issue for Arindam Ghatak, Co-founder of Biomoneta Research, which offers decontamination solutions. “We believe the best way to attract smart money is to demonstrate impact very quickly. Along with the manufacturing setup, our immediate focus is to build a network of satisfied beta customers who will be our cheerleaders towards gaining traction and follow-on funding,” he explains.
Market access can also be an issue for small startups, for which right partnerships are key. “We are building relationships with companies that have a large presence in the air treatment industry, and with organisations that influence hospital infrastructure across the globe. This will help us make an impact on markets beyond our current reach,” Arindam adds.
Generating publishable clinical evidence on the innovation was a challenge at first for Bempu. “We are now partnering with clinical institutions and NGOs that are highly experienced,” explains Annika Gage, International Key Account Manager, Bempu. The company makes temperature monitoring bracelets used in tracking the health of premature and low birthweight babies.
“We launched a research grant for reputable researchers who wanted to conduct studies on our hypothermia bracelet, which will result in five different publications. From an international sales perspective, it has been difficult to enter other emerging markets quickly after a product launch because other countries are not ready to accept Indian quality standards,” Annika adds. Therefore, Bempu completes CE certification for all our products.
User acceptance of new-age technologies such as augmented reality AR, VR, and mixed reality is a challenge for Bhaskar Rajakumar, Founder of Mediknit, which focuses on professional medical education. Awareness is better, however, in countries like Singapore and Hong Kong. The startup is also publishing papers and making presentations internationally to increase awareness.
The idea for the startup came from Bhaskar’s own struggle to learn from experts after he completed his educational specialisation. Launched in 2016, Mediknit is working with over 35 institutions or organisations, and 400 faculty. It offers over a 100 courses, with 70,000 registered users, across 15 specialties, and nine countries. Its revenues last year were close to $1 million, Bhaskar claims.
Other challenges faced are access to the right faculty and training them to deliver blended learning programmes; volunteering and partnerships can help here. Penetration of good quality internet is another issue in remote areas, though the situation is improving; more than half of Mediknit’s users came from Tier II and Tier III cities.
The founders also offer a range of success tips for aspiring entrepreneurs, especially in the health space. For example, getting to market and sampling what the customer needs early in the cycle is quite important. “This certainly would give clarity and keep the entrepreneur’s focus,” advises Sridhar of Ubiqare. It is key to research the market opportunity thoroughly as well.
“Many market reports publish top-level data that lead one to estimate a huge market, whereas the ground situation is vastly different. Validate the data with a bottom-up, scaled-down estimate, and one will come face to face with reality,” he adds. He also calls for persistence when one is addressing an unmet need, especially in conservative industries. “Things take time to work out, and founders most adapt to inputs while not getting bogged down,” Sridhar cautions.
Arindam of Biomoneta Research offers three tips as well to aspiring entrepreneurs. Be very aware of what it costs to enter the market. Find mentors and well-wishers to support your journey, who will not hesitate to give you tough advice.
“Build a network of friendly beta testers who will support early versions of your idea, and who have the maturity to not adversely judge the idea based on early failures,” he adds.
It is important to anticipate and address hurdles such as regulatory requirements and clinical evidence generation early on when building products or services, advises Annika of Bempu.
“Invest in working with regulatory experts and researchers to ensure that these things happen in a timely fashion or they will cause setbacks,” she cautions.
She also recommends building a diverse team and a positive organisational culture as the company grows. “Make sure you are looking at your product offering from a systems approach. Does it fit into an existing budget category for your target customer, or will you have to advocate for a new one? You must find out who will be responsible for ensuring it reaches the end-users,” Annika adds.
“Follow the mantra of FEAR: Face Everything And Rise,” jokes Bhaskar of Medknit. Roadblocks are actually the stepping stones to success, especially when dealing with negative opinions in early stages. “If you focus, and have a clear plan, success is a given. Frequent validation of problem issues and solution approaches is important,” he adds.
Bhaskar also stresses the importance of a good team. The first 10-20 people are the key for your growth and integrity. “Choose them very wisely; any mistakes might hinder the growth potential significantly,” he cautions.
Investors at the meetup also offered perspectives on positioning and growth. Indian health technology startups are strategically positioned to go-to-market faster than their peer startups in the US or Europe, according to Adam Walker, Growth Associate of Montane Ventures.
“This is because of the greater accessibility to healthcare data from Indian hospitals and clinics. Indian startups can therefore get access to patient data faster and in greater volumes to inform and train statistical models used in screening and diagnostics,” he explains. Indian startups can get a good three-year head-start over their US and European competitors, he says.
“If a medical device company intends to sell in the US market, it can take them seven years or more to go through FDA trials. This creates a "Valley of Death" for startups between Series-A and Series B financing, because Series B investors tend to require more evidence of commercial viability,” Adam cautions.
In contrast, the regulation around medical procurement throughout Asia is more lax. “Therefore Indian startups have a greater opportunity to show early commercial validation, and therefore a lower risk of crossing that Valley of Death,” he sums up.
Mentor and incubator tips
Startups need to cultivate a circle of advice, but also take the final decision on their own. To be successful particularly in resource constrained setting, startups need several inputs, according to mentor V Ramanathan. Such inputs for tech startups include insights from specialist doctors, regulatory intelligence, product development support, and sales.
He calls for the creation of a broader ecosystem of support for healthtech startups. “Incubators are trying to fill this gap, but more industrial collaboration would help. We need more experts from the industry to volunteer to support startups and bridge the need,” he adds.
Market immersion and diverse teams are important requisites as well. “Most startups look at possibilities and solutions from the technology angle. Sure, technology can bring in efficient and effective solutions, but at the end of it all, the market has to accept it,” Ramanathan cautions. Therefore, it is important to understand stakeholder needs, pain points, current options, and competitive landscape.
“Spending quality time with the consumers is highly recommended before even product development. The golden nuggets picked up from consumers will direct a whole gamut of activities right from features in MVP to distribution strategy,” he advises.
Most healthcare startups struggle to find an institutional mechanism among hospitals to help them validate their value proposition, both in terms of clinical and business impact, according to Arun Patre, Incubation Lead for startups at Mazumdar Shaw Medical Foundation’s technology business incubator, InCite.
He also advises aligning the right form of capital at various stages of growth for the startup along with building the key capabilities in the team. InCite addresses such issues through its CIP (Clinical Immersion Programme), which serves as "hot-desking” within a hospital framework where all of the above challenges have a road to redressal.
Founders should engage with clinicians early on, develop a set of champions for their idea, and invest in design as well as a sound clinical validation path, Arun adds. Healthcare startups are also blessed with a lot of grants as a funding resource. “But it would also be recommended to add equity as a pool to bring in the right form of rigour in the business as well as institutional support structure to grow as an enterprise,” he suggests.
The road ahead
Looking ahead, Nirupa Rao, Investment Manager – Health, Villgro, identifies three key opportunities for healthtech startups in India: de-skilled rapid diagnostics solutions that can be used by paramedical personnel; clinical decision support systems; and distribution models for medtech. Villgro’s portfolio includes 5C Networks (AI-enabled teleradiology); Neomotion and Monc Tech (assistive technologies); and SpotHealth (PoC device to detect neonatal sepsis).
Sector challenges in India include funding, organisation building, and a fragmented ecosystem. “Grant funding has unpredictable timelines with a high probability of funds being delayed. Furthermore, while grant funding takes startups to a specific stage (usually clinical validation), they are still too early for more traditional investors. This has created a funding gap that is difficult (not impossible) to bridge,” Nirupa observes.
Most healthtech entrepreneurs are strong innovators, but lack experience in building organisations. “This is often a roadblock while fundraising from later-stage investors, and while scaling the company,” she cautions.
The Indian startup ecosystem, specifically in medtech, is fragmented. Incubators like Villgro help alleviate this issue by working with ecosystem partners at organisation levels.
“Getting early customer insights is non-negotiable,” she urges founders. Doing this will help in figuring out the unique pain-points and requirements for each segment and ultimately create a priority list for which segments to target first.
Founders should also be systematic in their experimentation and learning. “Make sales mistakes and learn from individual customers first before approaching distributors. Distributor mistakes are much more costlier than customer mistakes,” she cautions.
Nirupa also advises against government sales during the first few years, due to long payment cycles and risks of assessment for trials and warranty price. Detailed stakeholder analysis is crucial as well.
“Most healthtech startups that we see understand patient pain points very well. However, in healthtech, the patient is not always the user. The user is the clinician or doctor,” she explains. Other stakeholders are purchase departments in hospitals, dealers, and distributors, all of whom have differing priorities, pain points, and drivers.
“Understanding each of these stakeholders is critical. The best healthtech companies have products that offer value to each of these stakeholders. This makes market adoption super easy,” Nirupa sums up.