Your legal firm has executed a thorough patent search, and your provisional patent application is on file with the PTO. Your web-based search for competitors has turned up no companies that look like competitors, your business case for commercialization has gotten the thumbs-up from your incubator, your strong technology team is ready to create additional functionality, and your business development team is poised for outreach. But:

• Is your innovation truly as unique a way to address the targeted opportunity as you believe it to be?
• Is the market opportunity as large and ”ready” as you think it is?

1. If a problem and related opportunity in health care innovation is sizable, chances are very strong that other companies have it, or are in the process of addressing it to the marketplace with different IP that is good enough, if not as elegant, as yours. Viewing the competitive set too narrowly is a common problem that can both stall progress and create a stigma that the company does not know what it is doing.
2. “Addressable market” and “market actively embracing innovation” are two very different matters. Well-meaning target market representatives may well encourage you. But factors ranging from timing to a myriad of external factors effectively limit your truly accessible market opportunity, and must be rigorously factored into operating plans and financial projections.      
   

Healthcare is a heavily regulated industry, and the industries serving it have learned to operate essentially according to the Hippocratic Oath: “First do no harm.” The good news is that senior decision makers in the provider, payer and healthcare sectors are being driven to develop better processes to fast-track productive innovation.

However, the central message remains clear: Your business case must thoroughly address how your solution successfully addresses a lengthy and detailed list of risks (real and perceived) in the eyes of your market targets as thoroughly as it presents how it uniquely fulfills its high-impact value propositions.

Two somewhat offsetting industry characteristics can be leveraged to your advantage:

1. Notably in the payer and provider customer segments, there is very much a  “follow the leader” or “herd” ethos. Once one of the name players commits to an innovation, the script for leveraging the credibility of that commitment is proven.
2. Leadership in the industry is increasingly coming from other industries where rapid change is the norm. So, the story is becoming more welcoming to innovation, but be mindful of, and proactive about, addressing the risk management catechism.

The commonly cited statistics for obtaining Seed and Series A capital for healthcare ventures (a success rate of about 5 percent) is similar to that for technology investment in general. But there are two critical differentiating factors:

1. Healthcare investing is more specialized than most verticals. “General” investors tend not to feel comfortable with healthcare, and leave the field to firms that exclusively specialize in it.
2. Because the technology can, literally, have life or death implications for organizations as well as individuals, the due diligence process covering the science, the business case, principals’ qualifications and other elements is much more detailed and grueling than for most other innovation categories.

Young healthcare technology companies frequently underestimate the importance of three specific criteria for investors’ “checking all of the boxes:”

1. Do you plan to build your company for eventual sale as an operating company or for the value of the intellectual property? Although you may well be undecided early on, build a credible business plan that shows directionally how the two paths would diverge once a decision is made.
2. Both the initial go-to-market strategy and action plan and the market growth and sustaining strategy and action plan should reflect both of these paths.
3. Having at least one senior operating principal with health-care industry operating experience is crucial.

Identifying and obtaining an industry-recognized pilot partner, and micromanaging the execution of that pilot, may well be most important thing that you ever do.

All too often, young companies leave too much of the implementation, execution, and results interpretation up to the operating partner and are surprised when the end result of the pilot is either inconclusive or unsuccessful. Not infrequently, pilot partners have so much going on that the desired focused attention just does not happen.

Word gets around after you have raised capital or executed a successful pilot, and you will receive overtures not just from employment seekers. You will be approached by organizations wiling to “broker” any number of customer introductions, access to capital, access to expertise.

Be excessively careful in doing due diligence on all third parties, notably via trusted third-party references. This might sound like common sense, but there is a plethora of pretenders in the healthcare innovation industry, and sorting them out often requires more specialized expertise than you have in-house.