Common pitfalls to avoid in health tech startups
Forbes reports that as many as 98% of startups funded by angel investors fail
The ever-changing landscape of health tech is driving incredible innovation. While many entrepreneurs start off with wonderful ideas on how to solve particular problems in healthcare industry, many fail to hit the mark. This, according to research, leads to 70% of startups to fail, which amounts to $1.3M in total funding closed. (1)
In order to avoid such losses to the industrial economy, startups need to pay special attention to the common pitfalls in order to maneuver them with precision that is required to keep the business afloat. Such pitfalls include:
1. Poor understanding of healthcare ecosystem (2)
Entrepreneurs need to enable their team members to develop a keen understanding of the systems they want to solve problems for. This is imperative because often time, ideas led by entrepreneurs need vetting by members of the ecosystem. It is important to reassure the team that the goal of the startup is to solve problems that are challenging to the healthcare communities, and this should be backed by adequate market research. Moreover, there is a higher likelihood of failure if the product does not fit into the existing workflows. (3)
The complexity of the healthcare ecosystem often makes it very difficult to navigate the solutions without insight from people directly involved in the healthcare industry. Therefore, it is important to connect to the industry experts that are a right fit for the startup.
2. Finding the right team with wrong motives
Startup owners often look to the industry leaders to build their team but despite hiring the best-of-the-best, they might end up creating a team that lacks cohesion. This is often caused by a lack of communication from the entrepreneurs with their teams. It is important to remember that finding the most experienced person is an important part of the equation, but there are other aspects worth considering as well. For example, an ideal team member understands and embraces the mission and vision of the company, and they are able to incorporate it in their daily work.
3. Inadequate business model
Forbes reports that as many as 98 percent of startups funded by angel investors fail because of a poorly thought-out business marketing strategy. (2) It is realistic to expect that startups inevitably face problems that require a unique approach to solve. In this regard, innovative approaches to business model might yield more positive results and allow for more growth. It is also worth noting that brainstorming out of-the-box ideas requires startup founders to avoid staying in their echo chambers. (3)
In conclusion, by creating an efficient and cohesive team with the right understanding of systems to come up with creative solutions, a startup company can move through the hurdles that often bring down other startups.
Bibliography
1. 406 startup failure post-mortems [Internet]. [cited 2022 May 27]. Available from: https://www.cbinsights.com/research/startup-failure-post-mortem/
2. Most Common Health Startup Mistakes – and How to Fix Them – Healthcare Weekly [Internet]. [cited 2022 May 27]. Available from: https://healthcareweekly.com/healthcare-startup-fails/
3. 10 reasons why health care startups fail – STAT [Internet]. [cited 2022 May 27]. Available from: https://www.statnews.com/2020/02/10/10-reasons-why-health-care-startups-fail/
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