VC’s advice to healthcare startups: Build your business in the Midwest, it’s cheaper

At a recent conference in Minneapolis, a panel discussing where the best medtech startup opportunities are located gave an answer sure to please the hometown crowd: the Midwest was singled out as a great location for starting new firms. “We love the Midwest,” said Jan Garfinkle, founder and managing director of Arboretum Ventures, a venture […]

At a recent conference in Minneapolis, a panel discussing where the best medtech startup opportunities are located gave an answer sure to please the hometown crowd: the Midwest was singled out as a great location for starting new firms.
“We love the Midwest,” said Jan Garfinkle, founder and managing director of Arboretum Ventures, a venture capital firm that specializes in the healthcare sector, and just happens to be located in Ann Arbor, Michigan. “In the Midwest, companies can be developed for one-third the cost of what it would take on the coasts.”
Garfinkle, speaking as part of a panel at the MedTech Investment Conference on May 21, said when it comes to rent, salaries, and work ethic, the Midwest is very attractive for companies and investors. High prices for real estate and wages are continuing to be a challenge for employers based on the East and West coasts, she added.
Other issues for startups include low reimbursements for devices and therapies, especially from the hospital sector, where fee-for-service is the rule, said Garfinkle. Healthcare reform might also limit growth in some areas by increasing regulation, the panel said.
And competition from the top of the economic food chain also received a mention. At the end of the discussion, when asked a true or false question on whether Apple and Google will move into the medtech industry, the four-member panel was unanimous: “True.”