In my last piece, I introduced many incubators and accelerators from the Boston area, some more established and national, others newly founded and local.
One national accelerator with inarguable success is Techstars. Techstars was founded in Boulder in 2006 by David Cohen, Brad Feld, David Brown, and Jared Polis. Their now-legendary success story began in 2007 with the first cohort of ten companies: two were acquired in the first year, three had positive exits, and two currently generate millions of dollars in revenue. Using this momentum, they reinvested their winnings and founded more programs: Boston in 2009, Seattle in 2010, New York in 2011, and Austin in 2013. According to their website, they purposely selected sites for their offices other than the Silicon Valley because they believed that these regions had underserved startup ecosystems.
Boston is now one of 15 Techstars programs, providing the Boston start-up economy with both city programs and vertically focused programs. “There may be healthcare companies that are interested in going to a city program like Boston, but they would also have the option of applying to the Sprint Accelerator, powered by Techstars, which focuses specifically on mobile healthcare. All of our programs are similar in terms of being mentorship-driven, three month accelerator programs,” says Sonya Caprio, VP of Marketing.
Taking a look inside Techstars is interesting, and it gives us some great insight into what’s needed for healthcare startup success. Let’s start with the application process first. At Techstars, it’s recommended that startups apply by the early deadline to give executives enough time to evaluate the teams and to beat the rush of hundreds of other applications. Techstars also employs talent scouts in their network, including mentors, investors, and venture capitalists. They may first reach out to a subset of companies through these channels to evaluate them as well, later following-up with the top 100 companies and Skyping with them in addition to conducting in-person interviews. The selected companies are then invited to participate in a 3-month mentorship program.
Ty Danco, Director of Techstars Boston, says an entrepreneur’s ability to network is one of the most important markers of success. “The more they learn how to network in life, the more likely they are to get good customers, leads, and employees,” he says.
Techstars Boston Managing Director Semyon Dukach highlights the need for a strong team. “Ultimately the only thing that matters is the team,” he says. “One of the best measures of team effectiveness is early revenues, especially if the product isn’t quite finished yet. In the case of medtech, though, it’s also important that there aren’t any unmet regulatory hurdles, since it’s usually not realistic to get FDA approval during the 3-month timeline of the program.”
Each Techstars cohort program lasts for three months, but I’ve learned that it could also be viewed as three one-month programs. The first month involves getting to know the resources, getting a network in place, finding the right help, and getting the access you need. The second month is all about execution and getting some traction. In the third month, generally the CEO peels off and talks to investors, perfecting their pitch. At the conclusion of the program, at an event called “Demo Day,” startups pitch, build adoption, and/or acquire customers.
Here’s the challenge: being accepted to Techstars is extremely competitive, with fewer than 1% of applicants gaining entry into a cohort program. For these few lucky startups, the benefits are attractive: $118,000 in exchange for 7-10% equity, access to a $100,000 convertible note, numerous perks like office space and premium services, but most importantly, the invaluable mentorship and relationships they receive from the Techstars network of entrepreneurs and investors. This inclusion into a 75+ nationwide investor network means a better chance of success.
“Techstars companies can apply anywhere through the Techstars system but we hope to recruit those to Boston who are attracted to Boston’s undeniable strengths as a world leader in several fields where Boston is strong – such as fintech and robotics, but especially health care,” Danco says. “No other city in the world can match Boston for it’s ability to grow a company based in the life sciences.”
Boston also has the benefit of surrounding hospitals, which interact with Techstars companies on a regular basis. Lissy Hu of Careport Health, for example, founded her company out of her frustration with the difficulties of finding good after-care facilities, making use of Techstars mentorship. Her first pilots were in Boston, then in Massachusetts, and now Careport Health is being piloted or used at several world-class facilities around the country.
More than any other Techstars office, the Boston office does focus on healthcare and medtech companies. “It’s natural that Boston is a site and that some of the companies from Boston will be medtech – look at the rest of the community with the research hospitals, pharma companies, etc. That is no accident,” says Walter Winshall, one of the founding investors at Techstars Boston.
Beyond the three-month program, there are other intangible benefits of Techstars like FounderCon, their annual founders conference. And with the announcement of Techstars++, Techstars graduates have extended access to additional mentorship and business development opportunities with high quality partner organizations like the Mayo Clinic.
“The Techstars++ program is meant to be an extension of the program similar to how university alumni operates at colleges. Through the program with Mayo Clinic, they can quickly gather use cases that prove their value proposition very efficiently. Some people need help figuring it out, some already have it defined and can just ask. This adds additional value to the entire program,” Winshall says.
Danco echoes Winshall’s sentiments. “Any Techstars company, past or present, is now invited to be embedded at the Clinic, able to test their value propositions, demonstrate their products, and vet their theories with the most knowledgeable users throughout the hospital chain, from doctors to administrators to purchasing personnel to IT experts,” he says.
Robert Schultz has an MBA in Information Systems from University of Massachusetts-Boston and a BS in International Business from Northeastern University, where he served as Business Manager for the university’s largest student publication, The Northeastern News. Schultz is an experienced healthcare technology startup enthusiast who was involved with the patient monitoring company Aware Engineering through the MassBio MassCONNECT program.
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