The goal of a startup is to find the right thing to build as quickly as possible. However, the vast majority of startups fail, that’s a fact. As a new research by Harvard Business School shows 75% of all start-ups don’t succeed. According to the researcher Shikhar Ghosh, startups fail not because the product is bad but because the market it is not adequate, it does not exist or it is insufficient, customers don’t buy therefore less revenue than expenses. The Startup Genome Project has also analyzed data from 3.200 companies and came up with some answers summarized in the following infographic:
Healthcare startups are among the ones that fail most. According to a study by University of Tennessee, 56% of startups in education and health still operate four years after launching.
The cost of startup failure in med tech is high: It throws away $10 to $200 million dollars, the time of 20 to 120 people, between 3 to 20 years of work and 3% to 25% of your life!
Recently, a couple of approaches have emerged that can make the process of starting a company less risky. The first one involves identifying unsolved problems because a well-characterized need is the DNA of a good innovation. This is what biodesign process is about, a needs-based invention process for medical device innovation aligned with an attractive market opportunity so that is sustainable. Developed by Stanford University in 2001, it has already launched 26 companies, raising over $200 million, creating over 500 new jobs and treating more than 150.000 patients.
The second approach that could reduce the failure rate of new ventures and help launch a new, more entrepreneurial economy, is a methodology called the “Lean Startup”. According to conventional wisdom, the first thing every founder must do is create a business plan, a static document that describes the size of an opportunity, the problem to be solved, and the solution that the new venture will provide. Typically it includes a five-year forecast for income, profits, and cash flow. Instead of executing business plans, operating in stealth mode, and releasing fully functional prototypes, young ventures based on the Lean Startup test hypotheses, gather early and frequent customer feedback, and show “minimum viable products” to prospects. This new methodology states that treating new ventures as established firms is a mistake.
d·HEALTH Barcelona has incorporated both approaches, biodesign and lean start-up, to its training process. Fellows will get immersed for eight weeks in a clinical setting, observe everything that happens and detect what does not happen, interact with professionals and with patients while working in a multidisciplinary team and learning about science, technology, business and design with internationally renowned experts and entrepreneurs. They will acquire the skills to select the best observed needs based on clinical impact, stakeholders, the treatment options and market’s characteristics to later build prototypes, present them in front of a panel of investors and get the funding to make them real.
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