Gauging Healthcare Startups with Ara Chackerian: Boom or Boost

As the economic expansion continues to deepen, healthcare startups are thriving on an influx of venture capital and an output of influence. The bottom line? Startups are enhancing their footprints in an already robust segment of the economy. For healthcare innovators like Ara Chackerian, the meteoric rise of startups is no surprise. No stranger to startups on the medical imaging side of healthcare, Ara Chackerian recognizes that the new “players” in medicine drive innovation and value. However, investors remain anxious about the startups they continue to underwrite. While many startups remain in an enviable cash position, some venture capitalists are concerned that their investments “aren't resulting in either mergers and acquisitions or initial public offerings.”[1]

The Power of Innovation

Ara Chackerian realized years ago that healthcare innovations like digital imaging, AI, robotics, and the like had the potential to improve patient outcomes and streamline the “business” of medicine. Championing novel concepts like Transcranial Magnetic Stimulation, Chackerian wooed investors with the promise that innovation lifted the overall success and sustainability of the healthcare sector. Indeed, digital recordkeeping, “Big Data” computing, and advanced diagnostics are now among many mature technologies employed by healthcare firms that arose because of the innovative edge of startups. That said, good ideas require great investment. Part marketer, part operator, Ara Chackerian understands that successful healthcare startups depend on talented entrepreneurs that can innovate, “sell” the innovation, and deliver some returns to investors.

New York City Testcase

According to 2017 data, 79 New York City healthcare startups raised $703 million in venture-capital funding in 2017.[2] Johnathan LaMantia of Moderhealthcare.com believes that the Big Apple is especially well-positioned to nourished startups. Referencing a report published by NYC Health Business Leaders, LaMantia notes, “The report highlighted conditions in the city that foster startups, such as access to capital, proximity to major universities and support from local and state government.”[3] LaMantia adds that the report, “included companies in the healthcare categories of devices and supplies; services; technology systems; pharmaceuticals and biotech; and other healthcare.”[4] That said, even startups rooted in hospitable settings like New York City can deeply struggle at first. “One of the issues is that health tech startups often lose money initially,” notes Imran Babar, vice president of Manhattan-based OrbiMed.[5] Babar also affirms that the initial negative cashflow “makes it more difficult to find a buyer or declare an IPO.”[6] Babar’s concerns echo the concerns of venture-capitalists who have deeply invested in the digital startups of health care. Looking at startups in NYC, Johnathan LaMantia notes, “Although there were dozens of life-sciences IPOs last year, no digital health companies debuted on the public markets.”[7] Echoing LaMantia’s sentiments, Dr. Bijan Salehizadeh, who serves as managing director of NaviMed Capital, sees an “overheated” startup market and anticipates that private investment in health technology companies will decline in 2018 and beyond.[8] Further voicing his concerns about an overheated environment, Salehizadeh states, “"I hope for the state of the ecosystem it (overheating) decreases, so that we don't get into a dangerous place with digital health."[9] Salehizadeh emphatically believes, "We need more entrants to buy digital health companies."[10]

Beyond the Anxiety

Despite concern from investors, the 2018 outlook for healthcare startups is not all “doom and gloom.” For Ara Chackerian and other successful entrepreneurs who moved their healthcare startups into the mainstream of medicine, “Precision/Personalized Medicine” provides a path beyond the anxiety of early cashflow hiccups and delays in IPOs. John Gardner of NGP Capital views the movement toward Precision/Personalized Medicine as a game-changer for healthcare startups. Noting that precision and personalization are no longer just the wheelhouse of clinical studies and oncology/pharma, Gardner asserts, “we are seeing the emergence of real, scientific wellness companies that combine genomic/biometric screening with rigorous population analysis and coaching support.”[11]

Startups could also benefit from engagement with clinical data interoperability. In Garner’s view, a focus on “seamless data integration and communication between players (especially between new entrants and traditional healthcare incumbents) and handle seemingly mundane regulatory, operational, and reimbursement-oriented tasks offer a much-needed value.”[12] Perhaps the legitimate threat faced by healthcare startups comes from behemoths like Amazon, Apple, and Google.[13] As these large, diversified companies flex their collective muscle in the healthcare environment, startups are forced to “up” their technology game.

Final Thoughts

It’s an exciting time for healthcare startups and the investors who back them. With money flowing back into the economy and healthcare continuing to occupy a huge sector of the service sector, startups continue to carry innovation and positive patient outcomes into the marketplace. As successful healthcare innovators like Ara Chackerian know, the startups of today become the cornerstone healthcare services and treatments of tomorrow. While there will always be concerns about the profitability of startups, investors should recognize that the “wind” is picking-up in all sectors of the economy. Now is a good time to take some risks and invest.

[1] Extracted from: http://www.modernhealthcare.co...

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Ibid.

[13] Ibid.