Healthcare is an evergreen industry worldwide. As advances in medical sciences and pharmaceuticals continue, there will be no dearth of innovative ideas to launch healthcare based startups. In all probability, most health startups will be IT-based. Primarily because IT now touches almost every sphere of our lives.
Consequently, there are lots of health IT startups coming up with most of them faring relatively well. However, funding them can prove cumbersome. Luckily, here are some excellent ways to get funding for your health IT startup that you may consider.
Related read: How Much Does It Cost to Develop an App for Healthcare?
Seed funding for health IT startup
With some research, you can find seed funding for your health IT startup. However, it is worth remembering; your idea needs to be unique and innovative. Copycat startups seldom attract any financers. If you are confident about the success of your unique startup, try some of these avenues for seed funding.
Several well-respected healthcare providers that own chains of hospitals, clinics and diagnostic centers are offering seed funding for health IT startups. In fact, these healthcare providers are creating a special fund to seed health IT and related startups. According to one report, a leading healthcare provider will set up a fund worth US$50 million to seed health startups.
This phenomenon will soon become common worldwide: there are several potential areas in health IT that entrepreneurs are yet to explore. If you have a fantastic startup idea in the health IT sector, try approaching one of these healthcare providers that have a seed fund.
Google Ventures describes itself as the investment arm of the Alphabet. Inc. Established in 2009, this company says it has made investments in over 300 startups. Google Ventures claims to seed life sciences and healthcare startups.
The company's portfolio of startups it has seed funded is relatively impressive. Though the website does not provide any contact details, you may approach any of their team members through their LinkedIn profile. They also have a Facebook page under their corporate brand name.
Crowdfunding platforms are an excellent way to raise seed funding for your health IT startup. There are several crowdfunding platforms that specialize in seed funding healthcare startups only. You can find the one that best suits your need and launch a crowdfunding project on any good platform.
Here, it is worth noting that crowdfunding works differently than direct seed funding. When you opt for crowdfunding, you need to convince members of the public that your project is feasible and viable. Additionally, you have to offer something in return for their investments. Sometimes, crowdfunding does not necessarily raise the needed amount while on the other hand, your health IT startup may attract more funds than you want.
There are several banks worldwide that fund health IT startups. In the US, for example, Silicon Valley Bank ranks among the leading seed funder for health IT startups.
Some banks have formed special divisions to finance innovative startups in health IT. A great example is India, where the government offers funding to health IT startups under its Micro Units Development and Refinance Agency (MUDRA) Bank, a state-sponsored initiative implemented through public sector, private and cooperative banks.
Venture capitalist networks
For a health IT startup, you can also seek seed funding from networks of venture capitalists. In fact, a lot of venture capitalists from China are investing heavily in attractive startups around the world. You can approach any of these Chinese venture capitalist networks to raise funds for the venture.
Before approaching Chinese venture capitalist networks, it is essential to know the rules and regulations of such investments in your country. Some countries seem to be wary of China pouring in funds into their companies for various reasons. While a Chinese network may agree to seed your health IT startup, local laws may stonewall it altogether.
Global pharmaceutical giants including Novartis, GlaxoSmithKline and Pfizer, among others have been seed funding medical and healthcare related startups since nearly three years. According to various sources, their combined investment in healthcare startups stands over US$ 10 billion. This amount is not surprising because all pharmaceutical firms are trying to diversify their areas of business.
It is now possible to approach any of these companies to get seed funding for your health IT startup. Understandably, they would be more inclined to offer funding since your success would directly benefit their operations too. Pharmaceutical companies are looking for excellent healthcare startup ideas to fund. And they are willing to do so if you have the right stuff to attract them.
Other than these, you can also approach local venture capitalists, investors or draw on your savings. If your health IT startup will not require much funding, it is better to borrow money from relatives and friends. Some IT giants may also envisage interest in your health IT startup. However, IT companies are already saddled with too many proposals in their areas of operation. Unless your health IT startup idea is something unique and innovative, the chances are that IT companies might overlook your proposals and business plans. Regardless, you may consider any of these options for seed funding your health IT startup.
This is a guest post by Sophia Lawrence.