Report: Half of digital health start-ups fail in 2 years

Half of all digital health start-ups fail within 2 years of opening shop, according to a new report from global management consulting group Accenture.

The report analyzed 900 healthcare IT start-ups and found that 51% were failing within 20 months of their launch, taking with them nearly $4 billion in start-up funding they obtained between 2008 and 2013.

Accenture advised that larger companies could utilize the failed startups for talent or products in development.

“Rather than discard the investment that has been made in getting sputtering start-ups off the ground, it often makes sense for healthcare stakeholders to acquire them, salvage their best people and technologies and awaken them from a zombie-like existence. Many digital start-ups that are dying or in danger of failure have developed solutions that can help traditional and non-traditional healthcare companies achieve their goals,” Accenture global healthcare biz managing director Kaveh Safavi said in a press release.

The report indicated that over 1700 patents were submitted between the 900 businesses examined in the analysis, which the firm said would be useful for larger groups to examine to accelerate the often protracted R&D phase.

The firm also advised hunting for top-talent among the drooping startups, saying the practice was already prevalent amongst high-end tech companies like Apple and Google.

“In a period of disruption, leading organizations understand that they cannot keep doing the same things and expect to succeed. They must become disruptors instead of being disrupted.  Acquiring a failing health IT start-up with excellent people and promising intellectual capital could be just the prescription for achieving that goal,” Safavi said.

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