What to Consider When Starting a Healthcare Startup
There's a wealth of new opportunities at the junction of emerging technology and pandemic-driven investment in healthcare. Perhaps you have a killer idea for a healthcare product or service and are looking to start your own company. A healthcare startup is not for the faint of heart -- there are considerations to keep in mind unique to the healthcare field. Here are a few things you should consider first when putting together a healthcare startup.
Find a Niche
Before you even begin, it's important you find a focused niche to work in -- for instance, health tech, medical travel, pharma, medical devices, or healthcare administration.
Having a niche is one of the most crucial aspects of a successful startup. A niche will help you focus everything about your business, from online marketing strategies to your future expansion plans.
The more focused your niche is, the easier it will be to grow your business. Having clearly defined and specific goals will keep your marketing efforts from going in every direction at once. It also helps keep your sights on what got you into this business in the first place. It's the oldest trick in business -- when looking for your niche, look at where the market is going and find your opportunities there.
Where to Source Funding
After finding your niche, another vital question you'll have to answer: where will the money come from? Fortunately for startups, the pandemic has led to a major surge in investment activity in the healthcare field. Here are some of the more common means of securing funding for your healthcare startup:
- Crowdfunding through platforms like Kickstarter, Patreon, and Indiegogo. If you can find an audience who wants the product or service you provide, you can get funding directly from those who would benefit most. In the case of crowdfunding, a prototype or some videos showing the product's potential will go a long way.
- Angel investors are private investors who often back projects that might be higher-risk than usual. You may have to do some networking, as you'll need the right connections to land an angel investor, but if you can secure one, you may find their expertise as valuable as their funding.
- Venture capital firms are always on the lookout for projects that will get them a return on their investment. You can usually find a VC firm by attending startup pitching sessions. When it comes to getting your hands on venture capital, your sales approach will be everything.
- The role of a startup incubator is to help mature a startup to the point where they can apply to an accelerator program. The good news is, an incubator isn't necessarily looking for equity. But an incubation program can run anywhere from three months to a year. Some incubators will ask for a share in the startup in exchange for funding, so be sure to inquire about this when applying.
- Direct funding from the government or private research organizations is also common.
Set up a Medical Advisory Board
Healthcare is a broad and sophisticated field. Even if you're already in the medical profession, it's helpful to have a broad range of opinions from people with diverse areas of expertise. A medical advisory board of experts in their chosen fields can be a cost-effective way to address strategic, ethical, and marketing questions as your startup develops. Find the best possible personnel for your medical advisory board and involve them closely in the daily workings of your startup. Conduct frequent meetings and let them share their valuable expertise with your team.
Secure Legal Counsel
One of your first steps should be to secure a legal team with expertise in the healthcare industry, particularly in the niche or field where you've chosen to work. For one, you don't want to develop a product only to find it legally unfeasible or in conflict with established regulations. You'll need their help to get your startup established and acquire the proper licenses. You'll also need them to help avoid any potential lawsuits (and, of course, they'll be vital if one does happen to come along).
Compliance With Regulations
The healthcare industry is heavily regulated, and that should inform every aspect of your business plan from day one. Involve your legal team heavily in the development process to ensure you don't run afoul of any regulatory snags -- and, despite how tempting it may be, stay away from any "gray areas" where the success of your product is dependent on certain interpretations of regulatory law.
Administration and IT
Any startup is likely to have significant administration and IT needs, but this is particularly true of the healthcare field, which has complex administrative processes, medical codes, payment systems, and ever-more-sophisticated technology involved. Choose the right software for your startup and hire a qualified healthcare administrator with a degree and / or IT professional to handle those aspects of your business. You might also consider outsourcing your IT needs and functions like medical coding.