5 Lessons Learned From Successful Health-Tech Startups

Three entrepreneurs in the industry sound off on what it takes to get your foot into this growing field.

learn more about Zach Cutler

By Zach Cutler

Shutterstock

Opinions expressed by Entrepreneur contributors are their own.

Funding for health IT has reached more than $956 million in 2014, according to an October 2014 study by HIT Consultant, bringing with it an explosion of startups. Additionally, changes in our healthcare system have brought opportunities to grow health-tech startups in many fields. Many of them don't make it. Check out these tips from three successful health-tech startups:

1. Stand out by filling a need or solving a problem.

"The U.S. healthcare industry has been and continues to be the most inefficient industry on the planet," says Dean Stephens, CEO of health-tech company Healthline, a health-information site with millions of monthly visitors. "The perverse and muddled financial incentives, coupled with high localization and fragmentation of services, create hundreds of billions of dollars of inefficiency."

Related: A Fitbit for Your Employees' Emotional Health? It's Already Happening.

As when starting any company, those interested in starting a health-tech company should try to fill a need or solve a problem within the industry. This will help them to stand out from the competition and show why their business is relevant and worth paying attention to.

Benjamin Wolin, co-founder and CEO of Everyday Health, a digital-media company that owns sites and produces content related to health, started the business in 2002 with two co-founders with the goal of allowing different players in healthcare to reach out and communicate with consumers. They knew consumers would come online to get health information and make healthcare decisions.

"We wanted to provide great content and tools to help consumers live a healthier life," Wolin says. "We knew that if we aggregate a large enough audience of consumers -- and now healthcare professionals -- we would be able to provide a valuable service to marketers and other healthcare constituents looking to reach consumers and healthcare professionals."

2. Be willing to learn.

The health-tech field is still relatively new and growing and changing every day. Because of that, those wanting to start a health-tech company need to be willing to learn and adapt to the changing industry.

"When we started the company, the market was far from saturated in good health-tech ideas in our space," Stephens says. "It has taken years of IP development to build the foundation that we can now leverage to address the healthcare transformation that all of us are witnessing today."

Wolin's advice? Companies should be nimble and open to evolving their business, thinking and strategy.

"Building a business is always a work in progress," he adds. "Always leave yourself open to change. Be willing to be off-balance for a little while so you can eventually find your stride."

3. Having the right team is important.

At the end of the day, it's always about your people, Wolin says. "I always knew that having a great team is important, but I don't think I really appreciated the difference between a high-performing team and just a good team."

Related: Big Data Has the Potential to Transform Health Care

Dr. Hubert Zajicek, CEO and co-founder of Health Wildcatters, a healthcare seed accelerator, agrees, saying no health-tech entrepreneur has all the insights and answers.

"Having a complementary team with diverse skill sets in place can be the biggest differentiator," he says. "Ask a ton of questions, and get someone with a healthcare background on your team."

4. Be prepared for challenges.

Starting a business is never easy, and the health-tech field comes with its own set of challenges, including slower penetration because of regulatory FDA concerns, HIPAA patient privacy rules, reimbursement rules and bottlenecks.

"The digital healthcare landscape is changing quickly," Wolin says. "Digital health and the healthcare system are disconnected, but are slowly starting to converge. That convergence is creating tremendous disruption, but also tremendous opportunity."

Stephens faced challenges as well, including taking on a product-architecture design that was larger in scale and complexity than what was envisioned at the beginning, and growing a culture that fits today's needs in a highly competitive marketplace for talent.

5. Fundraise, fundraise, fundraise.

To make it, entrepreneurs need to have tenacity and some irrational exuberance. Stephens found making it through two deep recessions difficult, saying Healthline needed to "hoard cash to keep the lights on." His company went on to raise more than $60 million in venture capital.

Entrepreneurs who want to found a health-tech startup should always be fundraising to make sure they have the funds to keep their business going.

Wolin and his co-founders raised $100,000 from friends and family to get Everyday Health started. Now, the highly successful company is listed on the New York Stock Exchange with a market cap exceeding $400 million.

"We had one employee and had to find a way to pay their salary," he says, adding that for every "yes" an entrepreneur receives, there will be 100 "no's" to follow.

Related: How I Launched My Health-Care Startup

Zach Cutler

Founder & CEO, Cutler PR

Zach Cutler is an entrepreneur and founder and CEO of Cutler PR, a tech PR agency in New York and Tel Aviv. An avid tech enthusiast and angel investor, Cutler specializes in crafting social and traditional PR campaigns to help tech startups thrive.

Related Topics

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change
Marketing

6 Ways to Wring All the Value from Your Earned Media Coverage

Press coverage can help your brand gain visibility and increase credibility — but not if no one sees it. What can you do to get more value from the media placements you've worked so hard to earn?

Thought Leaders

5 Small Daily Habits Self-Made Millionaires Use to Grow Their Wealth

We've all seen what self-made millionaires look like on TV, but it's a lot more subtle than that. Brian Tracy researched what small daily habits these successful entrepreneurs adopted on their journey from rags to riches.

Business Solutions

What Bill Gates and Steve Jobs Taught Me About Getting to Know Your Customers

Despite the push toward chatbots and technology-driven customer service, nothing can replace determining what your customers want through personal social interaction.

Business News

Out With the Kibble and In With the Steak. The World's Richest Dog Has a Net Worth of $400 Million – And a New Netflix Docuseries Too

'Gunther's Millions' is set to unpack the pooch's mysterious fortune and what those around him have done with his inheritance.

Fundraising

Working Remote? These Are the Biggest Dos and Don'ts of Video Conferencing

As more and more businesses go remote, these are ways to be more effective and efficient on conference calls.