The growth rate for new digital health accelerators has significantly slowed down over the last 2 years. At the same time, it is getting more and more difficult for many accelerators to fill their portfolios with good quality start-ups. With a little more than 350 digital health accelerators currently existing, and around 15,000 health app innovators out there in the market, there are less than 50 new businesses that accelerators are battling for.
How will digital health accelerators survive in this increasingly competitive market place? What are today’s expectations of start-ups and how can accelerators cater for these changing needs?
The first digital health accelerators appeared in the US almost 15 years ago. Since then, they have been playing a vital role in the emerging digital health ecosystems all over the world. Over the last few years, an average of 8 billion USD have been invested via accelerators into digital health start-up companies. Especially during the last 2-3 years, a considerable number of corporate accelerators were mushrooming in addition to the more traditional independent ones.
In today’s landscape one can find 3 basic models of digital health accelerators:
The big question now is, whether the different accelerator models are really addressing today’s wants and needs of start-ups.
What do start-ups expect from digital health accelerators?
A global survey carried out by R2G in 2018, revealed that start-ups rank the following 3 to be their most valued services: funding, mentoring & business modelling and partnering/ networking to get access to their target market and clients. In contrast to their US counterparts, European start-ups tend to require more help with certification and access to political decision makers.
The results clearly highlight that digital health accelerators need to think carefully about the kind of support and services they offer. It also proves that the digital health market has reached another level of maturity. Providers and payers have understood that digital solutions and services can contribute to increase the quality of health services delivered or are able to provide a completely new array of services to patients and professionals. However, this requires start-ups to address topics such as certification, outcomes measurement, reimbursement or access to the right decision makers in a complex and regulated healthcare environment. And this is exactly the support they are expecting from accelerators.
Of course, there are those start-ups who will stay out of the regulated healthcare market with their apps – but then again, will these really need accelerators in the end?
What should digital health accelerators do to create value?
Digital health accelerators can continue to remain a driving force and deliver value to start-ups and their stakeholders if they embrace the following 4 dimensions of change:
A targeted focus, positioning and resulting value propositions are key:
digital health accelerators need to be clear on the type of start-ups they want to have in their portfolio, i.e. in which stage of maturity they are in, which user groups they are addressing with their app or solution and in which segment of the healthcare market they are aiming at. The resulting portfolio of services and support will require to address the specific wants and needs of the target markets and segments. The more focused this approach is, the more attractive is the value proposition for start-ups.
In this context, it is absolutely legitimate to pursue a niche strategy and look for alternative business models. Niches can e.g. be regional ones, segment-based or disease- or application area specific. Partnering with organizations, including public health entities, can be presenting a lucrative alternative business model.
The old saying “Do good and talk about it” is certainly true for digital health accelerators: start-ups will only approach accelerators they know and ideally have already had the chance to establish personal relationships with. Hence, a good communication strategy to ensure brand awareness is important. Such a strategy needs to consist of both, digital channels (such as websites) as well as personal ones (such as events or workshops).
The dilemma of corporate accelerators
Corporate accelerators have often not lived up to their expectations and several firms are currently re-evaluating their approach.
For sure, these entities provide good access to corporate know-how and resources. However, what many corporates have often failed to achieve, is an integration of innovation from accelerators into their core business, processes and their culture. Sometimes, new solutions and services require corporates to re-think and alter some of their traditional ways of working and doing business – which is hard for them to accomplish. Corporate accelerator programs also need to ensure that they embrace and include external expertise and networks and not stew in their own juice.
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