Big ideas are often hampered by small budgets. In the world of healthcare, the drawing board is often littered with cast-away notes for projects that never saw the light of day due to lack of funding. I’ve recently noticed a number of accelerator programs, grant challenges and contests in the news that, presumably, are trying to help healthcare entrepreneurs and small businesses overcome this fiscal funk in an effort to bring new and unique products to market that will ultimately advance patient care.
A recent HealthcareITNews.com report notes that “venture capital [VC] funding for healthcare IT in Q32011 more than tripled, with $207 million in 17 deals compared to $66 million in six deals in the previous quarter. VC funding for the same quarter last year came to $62 million in seven deals. Fifty different investors participated in these funding rounds.”
There’s money to be had, if you know where to look – and have the right product idea and business plan to back it up. The folks at Sandbox Industries are big believers in enabling innovations to make it to market, so much so that they have created Healthbox, “one of the first business accelerator programs in the healthcare industry to provide a platform that supports innovation among seed-stage companies,” according to the Sandbox website.
“Healthbox is a three-month program for seed-stage companies that culminates in an Investor Day, in which participants are able to pitch to a broad group of healthcare investors, including Healthbox’s strategic partners - Blue Cross Blue Shield Venture Partners, California HealthCare Foundation, HLM Venture Partners, Merrick Ventures, Ridgeview Medical Center, Sandbox Industries and Walgreens - as well as angel and venture investors from across the country,” says Dan Phillips, Director of Healthbox.
The program, which is currently reviewing applications, will start in January 2012 with around 10 teams, which will work out of Chicago for three months on their chosen technology projects. Each team is allocated $50,000 in exchange for 7-percent equity and the aforementioned Investor Day, which will afford the teams the opportunity to raise additional money.
I recently spoke with Phillips to learn more about the program, and how it is helping to bring healthcare IT innovation to market.
Why did Sandbox decide to invest its resources in getting Healthbox up and running?
DP: As manager of the Blue Cross Blue Shield Venture Funds, Sandbox connects with hundreds of healthcare entrepreneurs and startups each year, yet only makes investments in a select few that meet the fund’s criteria. We often encounter high-potential entrepreneurs with great ideas who are simply not far enough along with their businesses to receive VC funding. So we’ve been looking for a way to engage with these entrepreneurs in a deeper way and support healthcare innovation at its earliest stages. We feel that Healthbox is an optimal vehicle to connect with entrepreneurs and healthcare communities across the nation and fill the existing gap in funding and support for these types of companies. Early on, we were fortunate to identify some great strategic partners who share this vision, making the idea a reality.
What role do these partners play in assisting the program’s participants?
Our strategic partners contribute both funds and invaluable guidance to Healthbox and its participants. They provide input in the selection of participants and programmatic planning, and also work with the teams during the three-month program. Additionally, some of our partners have offered to act as test sites or beta customers for participating Healthbox companies when appropriate. Healthbox also enjoys the support of a broad and diverse mentor network that includes individuals from leading healthcare organizations, including providers, payers, entrepreneurs, investors, etc.
How many applications have you received so far? Are you encouraged by what people have submitted – seeing any trends in ideas/concepts?
We expect to receive the bulk of applications in the last couple weeks leading up to the deadline, but we’re already encouraged by the quantity and quality of submissions (we received over 50 submissions in September). The entrepreneurial teams come from diverse academic and professional backgrounds, so we expect an interesting mix of participants this January. We’ve also seen an equally diverse mix of ideas and businesses, from Web applications and informatics to healthcare services and diagnostics.
This statement on your FAQ page really intrigued me: “Businesses that involve significant regulatory barriers are less likely to be appropriate candidates.” Healthcare is obviously heavily regulated. Has this hampered interest from certain areas of healthcare?
The operative word here is “significant,” so we’re talking more about therapeutics and pharmaceuticals that must go through multi-phase clinical trials to establish safety and efficacy. These types of companies are unlikely to make major progress during a three-month program and are therefore not well suited for this model. On the other hand, mobile apps and even non-invasive devices would still be appropriate candidates. We intend to cast the net wide, so if the company is developing a capital efficient business that addresses a major challenge in healthcare, we want to hear about it.
How will you determine if this program is a success?
Our primary objective is ensuring Healthbox companies receive funding at the end of the program, positioning them for growth and success moving forward. So we will measure success based on the number of companies that receive outside funding after the program’s conclusion, the number of companies that are operational and growing one year later, and the number of new employees added. We also expect that participation will be rewarding for our strategic partners and mentors, who will get to work with promising young companies and engage with the broader healthcare community.
Do you plan to offer it again in 2013?
Yes, we intend to make this an annual program. Depending on demand and the impact of the program, it’s even possible that we would open multiple sites around the country. This program is really about stimulating innovation in the healthcare industry, not just Chicago.
Jennifer Dennard is Social Marketing Director for Atlanta-based Billian's HealthDATA, Porter Research and HITR.com.