According to a Pitchbook report to Forbes, healthcare startups raised over $23 billion in venture capital funding in 2018, exceeding 2017 funding by 61 percent. Startups need the money to fuel their R&D and big pharma companies are more than willing to invest in young talent to drive innovation. As the demand for novel healthcare products continues to rise, so too does the supply of startups with the necessary flexibility and expertise to fulfill them.
There has never been a better time to be a motivated entrepreneur looking to launch his or her own healthcare startup. But getting started takes more than a bright idea and a few months’ worth of seed funding. Know that the road ahead is riddled with potholes and sharp turns – and there might just be a brick wall at the end of it.
To get a better idea of what it’s like to be an entrepreneur in the healthcare space, Xtalks spoke with Kim Walpole, founder and CEO of Trials.ai, a company which uses innovative artificial intelligence (AI) technologies to optimize clinical trials. From her very first business selling popsicles to kids in her neighborhood she was just 10 years old to launching three startup companies, Kim has a wealth of knowledge in building a business from scratch.
This is the first instalment of a two-part series that profiles Kim’s experience running a healthcare startup company and her experience as a CEO. Here are some essential questions to ask yourself before you are ready to launch a healthcare startup.
Is the Healthcare Startup Life for You?
The startup life can involve long hours and varied workdays, often pushing a single person to wear different hats to complete all the tasks usually divided among five people.
“If you are someone who needs structure and a clear process in your job, this life is not meant for you,” said Kim.
But if structure and schedule is the only thing you know, it doesn’t mean you can’t adapt to a new workstyle. Indeed, your transferable skills (i.e. time management, communication, organization and leadership) are meant to adapt into any company, big or small. Importantly, be prepared for a steep learning curve ahead.
“A former employee of mine who came from big pharma and later started his own company told me, ‘I didn’t know that I could grow so quickly out of necessity’”, said Kim.
Is Your Problem Worth Solving?
There is no shortage of healthcare problems worth solving, but does your product or service improve people’s lives?
Kim started Trials.ai after her best friend was diagnosed with late-stage pancreatic cancer, at which point the cancer could not be cured.
“There were a couple of promising treatments at the time but by the time they could get clinical trial-ready, [my friend] would be gone,” she said.
She saw inefficiencies in clinical trial models, which had barely changed in decades. She wondered why the pharma sector had not yet adopted smart technology used abundantly in other industries.
According to the FDAReview.org, it can take almost 12 years to complete trial phases I-III. Some of the factors contributing to this slow process relate to poor trial design. Here, Kim saw an opportunity to solve a problem that affects millions of people each year.
“Let’s pull together smart minds who can actually execute this mission of getting treatments to patients faster,” she said.
From this desire to solve an important healthcare problem, Trials.ai was born. The company uses AI technologies to streamline clinical trial protocols to get treatments faster to patients.
What Do You Bring to the Table?
There are many critical roles involved in a healthcare startup, but which one do you fulfill? From tech person to visionary to marketing guru, it’s important to figure out what you’re good at then recruit team members who complement each other.
Have You Tested Your Hypothesis or Product?
This goes beyond doing market research at your computer. Talk with potential customers to gauge if this product adds value to their lives and if they’re willing to pay for it.
“A lot of would-be entrepreneurs get so married to their product that they don’t really go out to test their hypothesis on real, would-be users or buyers,” said Kim. “Before you get a team together and really move forward, get out there and talk to the people you think would be your customers.”
How Good is Your Investor Pitch?
Pitching your idea to investors is essential for funding your startup. Among the hundreds of hopeful candidates, how do you make sure you stand out and successfully strike a deal?
Essential elements of a good pitch include knowing the problem you’re trying to solve, your target audience and your business model inside and out, according to Kim. It is also critical to communicate why your solution makes sense for the problem and what investors can expect in returns. Finally, remember that investors are not only investing in your product, but they’re investing in you and your team: convince them that your team is capable of executing the tasks at hand and exceeding their expectations.
Surround yourself with like-minded people
Kim recommends building your professional network early and using this to help you bring investors, partners and other assets to your team.
“You tend to be that much more successful and that much more engaged when you’re surrounded by them,” she said.
You can start picking up what works and what doesn’t, and potentially outsmart the competition.
Behind every success is an abundance of failures
More often than not, you’ll hear a lot of “no’s” in those investor meetings. Consider the feedback: maybe your business model is flawed or maybe it was miscommunication. Be sure to learn from your mistakes and to stay motivated in the face of adversity.
Go in eyes wide open
Even with a solid game plan, know that startups can be four times more expensive and take four times longer than what you imagined, added Kim. At the end of the day, make sure you’re doing what you love and you’re passionate about the people you serve.