Despite the fact that funding for healthcare startups is continuing to rise, it’s still the case that one out of every two new companies fails within two years, as Accenture pointed out in a new report.
But just because a startup fails doesn’t mean the team and talent behind it, as well as the innovation and resources, aren’t a hot commodity for existing companies. These “zombie” startups are still providing a big contribution to the industry.
“Rather than discard the investment that has been made in getting sputtering start-ups off the ground, it often makes sense for healthcare stakeholders to acquire them, salvage their best people and technologies and awaken them from a zombie-like existence,” said Kaveh Safavi, managing director for Accenture’s global healthcare business, according to Business Wire. “Many digital start-ups that are dying or in danger of failure have developed solutions that can help traditional and non-traditional healthcare companies achieve their goals.”
For the report, Accenture looked at 900 healthcare IT startups. Out of those, 51 percent were at risk of failing within 20 months of their launch. For various reasons, established companies can reap the benefits of work and innovation that has already garnered potentially substantial funding.
Accenture has estimated that $2.5 billion will be invested in startups over the next two years, primarily in the areas of engagement, treatment, diagnosis and infrastructure.
These are the key aspects that make zombie startups valuable, despite “failing,” according to Accenture.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
- Infuse top talentAs the healthcare IT industry evolves, there is a diminishing pool of qualified technical talent with capabilities in emerging areas. Buying digital health zombies for specific talent can build a bench of top talent quickly.
- Fuel innovationIn an industry where innovation and competitive differentiation now go hand in hand, leading healthcare organizations value a more agile and iterative product development cycle. Buying zombie start-ups can initiate and accelerate R&D efforts by capturing intellectual property and patents.
- Bolster existing solutionsOrganizations want to enhance and scale existing healthcare IT market offerings to provide more complete solutions that attract or retain business. By shopping for a natural fit with a digital health zombie’s products and services, companies can extend asset and capability integration.
“In a period of disruption, leading organizations understand that they cannot keep doing the same things and expect to succeed,” Safavi said, as Business Wire reported. “They must become disruptors instead of being disrupted. Acquiring a failing health IT start-up with excellent people and promising intellectual capital could be just the prescription for achieving that goal.”
So those startups that don’t reach the goals they had originally mapped out, all is definitely not lost.
