Health IT, Startups

Healthbox isn’t the only accelerator that’s changed its approach

Healthbox‘s decision to revamp its healthcare accelerator model was an interesting development but as Lisa […]

Healthbox‘s decision to revamp its healthcare accelerator model was an interesting development but as Lisa Suennen, Venture Valkyrie blog author and consultant, it’s not an isolated case. She authored a report for the California HealthCare Foundation that provided a state of healthcare and life science accelerators in the U.S. and beyond last year.

In response to emailed questions, Suennen said she’d like to see more significant changes for accelerators. “I think that they have to move towards far more equity through investments like a fund or away from equity entirely and towards a service model. The model of so many accelerators is not sustainable for the long term.”

Healthbox said its 2015 accelerator classes, starting with Boston, will be branded Healthbox Studios. It’s putting an end to automatically taking 2 percent to 5 percent equity stakes in companies as part of its program. It also has a more flexible and shortened eight week program.

I’ve highlighted a few accelerators that have changed their approach before Healthbox made its move. Two out of three of them — HealthXL and Rock Health, ended their structured accelerator programs in favor of more flexible approaches.

Rock Health ditched its accelerator program in September 2013 in lieu of using seed funds to invest in digital health startups. Around that time it raised its third seed fund. Its revised model involves investing more in fewer companies to the tune of $100,000 to $250,000. Although it believes accelerators have an important role to play, it decided it wasn’t the right model for Rock Health any longer. It uses the funds to make it easier for its companies to complete their seed round and raise their next round. It continues to provide its portfolio companies with strategic advice and support.

HealthXL started as an accelerator in Dublin, Ireland and London in 2012 for digital health startups. Applicants accepted to the program could secure an initial €15,000 investment ($16,950) and then be eligible to apply for €500,000 ($55,000) in funding from Enterprise Ireland. Ten teams were selected to participate in bootcamps culminating in demo days.

Since then, it has dropped the accelerator program in favor of a global program for companies that are past the accelerator stage. Think early to growth stage companies. Its partners, such as IBM, Cleveland Clinic, Novartis, Bupa and Partners Healthcare, pay a subscription fee to participate in the program. They identify specific challenges within broader “moonshots” highlighted by HealthXL and their partners such as changing patient behavior and big data applications for healthcare. HealthXL selects applicants to its program with solutions that intersect with their members’ needs and hosts events in different cities in which they present their solutions to members.

In a phone interview with Martin Kelly, who heads up HealthXL in Dublin, he said it made the change because there were so many entrepreneurs who lacked a network to give them access to health systems and pharmaceutical companies but they didn’t want to surrender equity. Kelly sees it more as a network of businesses rather than a program.

Kelly added that it is hosting an event in Dublin this week, which includes seven companies from the US and two from Ireland who will present their solutions to an audience of investors, entrepreneurs and industry members. In April it’s hosting another event in Boston. Some other cities on the map include Dubai, Melbourne and San Francisco.

He notes that it works with accelerators to identify potential companies for the program. Asked if he saw a problem with the proliferation of accelerator — Suennen’s report estimates there are about 115, he said the issue isn’t with the number of accelerators but the quality of the programs.

“I think the risk with having a proliferation of accelerators is that if they’re not focused on the needs of patients and the healthcare industry, then you have a lot of companies that aren’t going anywhere,” he said. “Those accelerators that can provide value-add are good.”

StartUp Health continues to run a three-year academy program and doesn’t see itself as an accelerator. It’s geographic agnostic (as is HealthXL) and has cultivated a global startup portfolio. Unity Stoakes, a co-founder of StartUp Health, provided emailed responses to questions.

He said that it still takes an equity stake in academy participants of 2 percent to 10 percent depending on the company. He added that much of its programming is free and open to startups outside of the academy, including insights data, curriculum, and expert interviews.

“The biggest changes of the past year include accepting a broader range of solutions into StartUp Health that we think will pair well with others already in the ecosystem. We also use data and technology in very advanced ways to help make the process of building a company much more efficient. We also have leaned into crowdfunding opportunities in a significant way and launched the first Healthcare syndicate specifically to help our companies activate a community of investors and raise more capital.”

He added that it makes adjustments based on the needs of the entrepreneurs in the community and real-time data we are getting from the market such as what business models are working, where the funding is going, who is investing.

“We also have a full technology and product development team focused on analyzing market data, portfolio trends and focused on building systems that our companies can use to more effectively and efficiently get customers, raise capital, promote their business, and make connections that will help them scale.”

[Photo credit: Flickr user Nana B Agyei]

 

Update: This post has been updated from an earlier version to correct the date when Rock Health ended its accelerator.

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