This post addresses three reasons why investing in global health technology startup companies is a good idea. It is not meant to denigrate non-profits and universities, for there are non-profits, large and small, that do phenomenal work across the globe. In fact their stellar programs, policies, research and pilots are the evidence base around which much of the swirl of innovation in this area circles. But having collectively spent a great deal of time in the worlds of academia and non-profits, there are some advantages to startup companies that are well worth highlighting. There are at least three good reasons why startups are a good idea for sparking and commercializing global health technologies:
Startup companies are by definition extremely lean and efficient. We have noticed that when grants from foundations and others go to large non-profits and universities, enormous overhead percentages are charged often cutting the actual working capital of a grant essentially in half. Of course in smaller non-profits, overhead is often underfunded. In most startups, this issue of massive overheads is simply not the case and investors are getting bright minds working for equity, reasonable salaries (if any) and with extreme and urgent efficiency.
Startup companies are willing to take risks and can turn on a dime and evolve the business model rapidly. In a typical grant scenario, there is enormous pressure to set out a goal and stick to the terms of the grant agreement. Believe us, we know from experience. Yet, as startup mavens will tell you, business models must evolve and must evolve rapidly based on findings in the marketplace. Why? Because this is how the innovation engine works. A tolerance for risk and an ability to shift strategies rapidly when a better option or new angle becomes clear is in the DNA of startups.
Startup companies MUST focus on the satisfaction of the end user and customer or they will fail. Commercialization is the be all and end all, not an afterthought. In many academic and non-profit settings, research is king. We love research too and do not belittle its importance in any way. But there is an enormous, well-known gap between good research and a commercialized and widely available product. Universities are not typically set up to commercialize global health technologies--quickly. Sometimes the holy grail is simply a publication in a stellar academic journal. For startups this is not enough. The product must get to the field, be acceptable to end users, be purchased by end users or their suppliers and continue to be accessible and well-liked by the customer.
Yes there are many excellent exceptions to these generalizations but we still posit that startups are an underutilized engine for more efficient, faster commercialization of global health technologies and that investments by foundations, governments and others ought to be expanded (rapidly). Do you have a point or counterpoint? We'd love to hear it.
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