How industry led accelerators must change their value proposition to increase success rate of partnerships

80% of digital health partnerships are frequently destined to fail. Accelerators have been one of the most used tools for the healthcare industry to initiate partnerships. Industry led accelerators in particular have been promising to improve partnership success ratio, but they have to change their value proposition.

1 out of 5 partnerships in digital health is unsuccessful. (For more key insights on Partnerships In Digital Health, download R2G’s latest free whitepaper.) Today there are more than 300 accelerators which are actively scouting and working with digital health startups. Typically, investor driven accelerators have set of service offerings that includes funding, mentorship, technical access, exposure channels, business knowledge.

  • Financial value proposition from investor-led accelerators usually consist of initial funding, commonly in the form of convertible note and investor access. In return, accelerators typically ask for 6-8% of equity.
  • Mentorship is significant pillar of curriculum in many investor led accelerators, which usually imply guidance and intensive learning and growth. For example, TechStars has tailored mentorship program from network of 4800 seasoned entrepreneurs, investors and partners.
  • Dedicated office space and technical access during the acceleration programs is not binding according to the expectations of startups. However, physical space to engage with startup one-to-one is nice to have.
  • Exposure channels provided by investor led accelerators are noteworthy, including networking events, investor presentations, demo days, alumni network with tailored introductions and corporate partners in industry. Some of the experienced investor-driven accelerators maintain extensive worldwide network (e.g.TechStars, Startupbootcamp), which is certainly appealing feature to startups.
  • Business consulting of investor led accelerators usually extends to business models, internationalisation strategy and scaling fundamentals, team development, market & competitor analysis.

Aside of general common set of offerings, industry led accelerators are tapping their potentials in providing new value proposition which could play vital role in improving partnership outcomes.

  • Their financial offerings extend to the equity free conditions, additional royalty agreements and other forms of potential mutually beneficial financial gains. Such steps could be seen in Creasphere or Baselaunch, both are industry led accelerators derived from the collaboration of stakeholders in digital healthcare: Creasphere – collaboration efforts of Roche, Sanofi and Plug and Play and Baselaunch – partnership of private allies such as Pfizer and Roche, Novartis venture fund, Johnson & Johnson and others.
  • When it comes to mentorship, new value proposition offered by industry led accelerators is mentorship from healthcare experts, clinicians, researchers and other healthcare industry professionals. For example, Cedars-Sinai Accelerator is promising direct access to clinicians and front-line staff at Cedars-Sinai hospital as well as their medical groups.
  • Industry led accelerators’ clinical expertise certainly could play crucial role for the startups, which want to get explicit contact with industry stakeholders who might happen to be the end users of their solutions or simply to validate the solutions in real-life settings.
  • Their exposure channels are narrowed down to the deep network of healthcare experts, health system executives, experienced healthcare entrepreneurs and healthcare investors, in some cases, even to political decision makers. It could expand access for startups to the distribution channels.
  • Some of the exceptional business knowledge such as regulatory assistance, certification or clinical validation support are part of the programs of industry led accelerators. Such deeper understanding of the context and environment gives them strategic advantage over the investor led accelerators.
  • Ready-to-use laboratories and access to the clinical infrastructure, workflows are other new value propositions which are worth mentioning. For example, Merck Accelerator gives startups entry to the Makerspace, an Innovation Center where startups can make test their solutions and develop prototypes.

Moreover, there is need to extend their capabilities on a more operational level. Industry led accelerators should strive for long-term commitment, which could be represented in extensive acceleration programs (e.g. Baselaunch). Time-consuming and cumbersome decision-making and poor operational models hinders startups from engaging, instead Agile partnership management needs to be considered. Unrealistic and mismatched expectations from the partnerships often ruins partnerships development at the early stages. Rather, industry led accelerators should try to match the ambitions carefully from the very start.

Industry led accelerators if doing right could improve significantly how partnerships work. Potentially, they should focus more on the new value proposition that they could offer from their expertise. We believe that industry-led accelerators have great promise to revitalize partnership outcomes by adding new value proposition and extending their operational excellence.

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