Peter Lucas founder of Hedia, is sharing his insights for a
successful launch of a Digital Health startup based on his experience with Hedia, which has recently raised 2M Euros to scale up their product. Peter is a passionate experienced entrepreneur who previously founded 3 other ventures. Check out Peter’s top 5 learnings below.
It is true what they say. Time will tell – and time will teach you all the things, you need to know. I’ve learned (and am still learning) a great deal during my journey as a founder of a digital health startup – And I hope my blindsights can help you with yours!
Here are the 5 most critical learnings I’ve gotten along the way of starting Hedia.
1- A digital health team should not imitate a tech team
Perhaps one of the most common advice you can get is to think about how you build your team. It doesn’t make it any less true though and, in digital health, it is damn important.
When starting Hedia, I thought a lot about how to assemble the right team. And we got it right from the start – but it wasn’t until later in the process, that I realized why we got it right. It became very clear to me that one of the most important ingredients of the team was my co-founder, Christina’s domain knowledge as a diabetes nurse.
This is because of two things:
- It is essential to have a senior team member that can talk to other health professionals using their terminology.
- You need someone with domain knowledge to validate the clinical concept as an ongoing process.
So the key learning point for us was that a digital health startup should not imitate the team architecture of a regular tech startup. The founding team of a digital health startup is a thing for itself and should be tailored to the essence of what your product is about.
2- Challenging your assumptions is key
You need to challenge your basic assumptions when defining what type of company you are building. When it comes to health tech, the definition is not a technicality, it is absolutely crucial.
Now, as you probably know, there are a lot of labels in this sector. And your job as the founder is to figure out how they differ – and which box you fit in.
For the first 6 months of Hedia’s journey, my co-founders and I were positive that Hedia was a wellbeing tech.
It wasn’t until we had run our pilot (which we at that time thought was just a normal MVP) that it really hit us – when developing an advanced insulin calculator, our diabetes assistant went from being “just” tech to being a medical software device.
At the drop of a hat, this changes everything: your sales forecasts, the validation of your product, the way you raise capital, how much capital you have to raise, the timeline of your product development – oh, the list goes on.
3- The market is complex
Besides spotting a market opportunity that addresses an audience’s pain points and truly understands the audience’s journey, your business should be based on a thorough understanding of the digital health marketplace.
Entering the digital health market is complex. There are a lot of players, governments, health insurers, pharma, healthcare companies, and notified bodies – and they affect the market’s policies. So you need to ask yourself, do you have proof of technology, proof of concept and proof of business?
And do you want to collaborate with public health authorities? Partner up with private companies? Or “walk the path alone”?
It can be challenging to navigate in this market, and the vast majority of digital health startups need to get how reimbursement schemes work and what both health authorities, potential corporate partnerships, and/or patients are willing to pay for.
After that, you adjust your sales forecasts. You will probably experience, they will be a lot more conservative than you originally had imagined.
So as a health tech entrepreneur, you need to get a full view of the marketplace and think about how your business idea can navigate under that sort of pressure.
4- You need to raise a lot of capital – and it won’t come easy
Digital health has become a popular sector to invest in the last couple of years, and right now, the interest in the sector is as strong as ever.
Nevertheless, there are two key points to remember when raising capital for this type of startup.
1st: You need a lot more capital, than you expect
I have been asked many times “why can’t you just push out your predictive bolus algorithm now? Why do we need to wait 3 years?” and just as often “why do you need so much capital – it’s just an app?”
The short answer is that it’s not just an app. It’s a regulated, clinical validated app.
This means that we need to run clinical trials to validate the predictive insulin algorithm because if our product doesn’t work as it should, people die. So the severity of what we’re doing is just extremely high.
Now, this is the case in most MedTech. There are no loopholes (and there shouldn’t be.)
Every medical device software also needs to go through a regulatory approval process. These processes demand resources in terms of time, and money as well.
2nd: Investors are not as used to digital health as wellbeing tech
It will literally pay off, that you take some time out of your calendar to really understand the different types of investors in digital health.
Because digital health is still a fairly new industry to invest in – you will meet investors, that will have a hard time grasping your need for capital.
It is not until fairly recently, that digital health VC’s entered the market. Up until their birth, you could roughly divide the investors into three categories: biotech and life science VC’s general tech VC’s and of course business angels with various backgrounds.
Now, it is my experience that it vastly varies, what’s most important to them. Some want you to have a very deep understanding of the reimbursement schemes in your target markets because this is where they see the biggest opportunities for pay off. Others focus more on data on how your current users like your product.
The newer players, the digital health VC’s, will probably have a 360-degree focus.
Same goes for all; that you need to be transparent about why a health tech startup needs so much capital – why the development of your product and expansion to other countries demand more time than other tech startups – and why it is definitely all worth it in the end.
5- Adjusting your timeline expectations may be necessary
Back in 2016, when we started Hedia our first idea of a reasonable timeline was optimistic, to say the least. Of course, this was about the same time we still thought we were a wellbeing tech – so we hadn’t the slightest idea of what was about to come in terms of regulatory processes and clinical trials. But these are necessary bottlenecks to make sure we have the best and safest product for our users.
So what I really want you to take with you, is that the process is tougher than you think – but you’ll know a heck of a lot more tomorrow than you do today.
So just brace for the battle good luck, and ping me if you’d like to know more about Hedia and our journey.