Healthbox, Busy in Boston, Expands and Diversifies Amid Seed-Stage Flood
It has been a busy morning for Nina Nashif.
The CEO and founder of Chicago-based Healthbox is in town for the accelerator program’s second “innovation day” in Boston. Nine health IT startups will present their pitches this afternoon to a crowd of healthcare industry executives, entrepreneurs, and investors at the Revere Hotel near Boston Common.
You could be excused for not knowing who these startups are or what they represent. After all, dozens of healthcare accelerators have popped up in the past year or so, and with all the startups nibbling at the edges of truly gigantic problems in healthcare, it’s a super noisy sector.
That’s why I wanted to get to the top and see what Nashif (pictured) is seeing. Her training is in health administration and she’s a longtime business executive, having led international services and growth strategy at a Texas hospital, co-founded a wholesale business in New York, and served as vice president of Sg2, a healthcare analytics firm in London.
That was all before joining Sandbox Industries, a business incubator and venture capital firm in Chicago, and spinning out Healthbox as a separate entity.
Healthbox got started in Chicago in 2011-12, and in the past year it has expanded its three-month accelerator programs to Boston and London. Next up, interestingly, will be new programs in Jacksonville, FL, and Nashville, TN. And Nashif plans another session in Boston for early next year.
The biggest lesson learned so far, she says, is that “healthcare entrepreneurs need access to the industry, but just giving them access isn’t enough. We really need to help them refine their business model in the context of the industry.”
That means solving real problems, not going after perceived needs or operating at the fringe. “How do you make sure you’re building for the right stakeholder and you have a business model that will scale?” Nashif says.
One answer to that is pretty interesting and not obvious—especially for an accelerator. Healthbox is looking to diversify in terms of the stage of companies it accepts, Nashif says. I took this to mean admitting more established, later-stage companies as well as seed-stage startups—and it sounds like this is happening already.
As Nashif explains, Healthbox (and other programs) got started in part because of a seed-stage funding gap for young companies. Now that gap has largely been filled, and the healthcare industry—which is well known for being risk-averse—is clamoring for more mature companies and ideas. “What’s the right stage for us to be sitting at?” Nashif asks. “What’s the right stage for the accelerator as well as the industry?”
Diversifying the stage of its companies will probably mean adjusting the deal structure, she says—currently the startups receive $50,000 in return for a 7 percent equity stake. (Each program has a different fund with different limited partners, Nashif says.) But what will stay the same is Healthbox’s fundamental offering, she says: “Our value is speed to market, given our network. We help move them towards commercialization.”
The biggest question remaining, then, is how to actually solve the huge problems in healthcare through innovation driven by small companies.
To that end, Healthbox is trying to create a “pipeline of innovation into the industry, versus a pipeline for VC, through partnerships and dialogues,” Nashif says. (Blue Cross Blue Shield of Massachusetts is a major local partner for Healthbox.) There’s a big knowledge and communication gap between large companies and small companies, she adds. “We need to be the bridge.”
For example, health and wellness is a hot sector these days. “But the right incentive structures don’t exist. Why? Why haven’t we seen results? What are people willing to buy?” she says.
Ultimately, the answers lie in “learning how big corporate works with the small entrepreneur,” she says. And the various pilot programs running in Healthbox’s cities, with help from local partners, should shed more light on that innovation process.
“We don’t have all the answers,” Nashif acknowledges. “These are things we continue to think about.”
Meanwhile, the current graduating class of Healthbox Boston startups exemplifies a trend toward patient-centered care, she says. “There are more and more companies around patient engagement, patient choice, patient access, and how do you provide the tools and information” to make that happen.
And Healthbox’s interest in the Boston ecosystem seems as strong as ever. “Boston was the best place that we could be, after launching in Chicago,” Nashif says, “because of the concentration of hospitals, amount of VC funding, and leadership in creating the health exchanges.”
Tellingly, she adds that Boston is a “progressive environment, but you’re still dealing with a very entrenched industry.”