One of them is drchrono, a Mountain View, Calif., developer of a mobile EHR for the iPad. The firm graduated from RockHealth. “We found a large number of investors and a large amount of developers in a small amount of time,” said Daniel Kivatinos, the chief operating officer of the firm.
Dr. David Brailer, founder and CEO of the San Francisco-based healthcare investment firm Evolution Partners, is clear-eyed in that he assumes most of the incubator graduates “will disappear.” But, for healthcare leaders, Brailer said, “This is learning. It's experimentation.” It's the kind of thing you'd want, “to have 100 experiments going on,” if you're a healthcare organization CEO, and, “if you want to learn.”
Of course, that's not the view from the startup workbench. Peace, 46, in Chicago already has a few paying customers after being part of several startups. This is “the first one that I've been bootstrapping,” she said.
The incubator's “strategic partners” attracted Peace to HealthBox. They include St. Louis-based Ascension Health and Chicago affiliate Alexian Brothers Health System; the Community Health Network of Indianapolis and the Ridgeview Medical Center of Waconia, Minn., near Minneapolis. “For me, it's all about growth,” Peace said.
In addition to making contact with potential customers, Peace said a surprising benefit she's received from the incubator has been the close connections she's made with her incubator colleagues. “It's very lonely when you're out there on your own as a CEO,” Peace said. “There's nobody to talk to about what you're going through.”
At the incubator, “we work at a table in a loft. I'm running my business three feet away” from the next startup. “We're able to learn from each other. If I ever go back into the hospital world, I'd have all the executives do the same thing.”
Since its founding in Chicago in January 2012, HealthBox has run similar programs in Boston, Nashville; Jacksonville, Fla.; and London. “Part of the reason why we do this is we feel that healthcare innovation happens across the country and across the globe,” HealthBox founder and CEO Nina Nashif said. “Healthcare organizations are everywhere. Clients (that is, tech entrepreneurs) are everywhere.”
But IT venture capital funding is concentrated in Silicon Valley and Boston. That allows incubators to serve the function of bringing a city's most promising startups into a one-stop shop where they can be showcased for investors. Strategic investors “don't want to miss the next opportunity,” Nashif said. “The incubators are able to find the chosen few with promising ideas and businesses.”
Some of the firms, such as Peace's Ludi, already have customers and sales. Others are little more than an idea. Either way, no one is asked for a credit check. HealthBox selectors focus on only a few questions: “Is there a market need for this (and) how much do we believe in the founders?” Nashif said.
Different regions have different strategic partners and investors. In Chicago, supporters for HealthBox operations and its investment fund include Walgreen Co., the retail drugstore giant; Express Scripts, a pharmacy benefit manager; Blue Cross and Blue Shield Venture Partners, an investment fund of 22 Blues plans; Merge Healthcare, a health IT developer; and SandBox Industries, a tech incubator working outside the healthcare industry. There are also several venture capital firms involved.
At the end of the entrepreneurs' training period comes “demo day,” when they get up in front of a roomful of potential investors and pitch their wares in five-minute spiels. “I go to all the demo days,” said Missy Krasner, a Mountain View, Calif.-based adviser at Mergenthaler Ventures who canvasses health IT incubators for investment opportunities. With more than a dozen incubators now in operation, “the independent accelerator is at its tipping point.”
Follow Joseph Conn on Twitter: @MHJConn