Changing the world is hard. Let Jumpstart help you.
It is hard to successfully launch and build a startup. If you’re Founder – you know this already. In healthcare, with steep regulatory requirements and entrenched, resistant-to-change industry, the odds are even worse. Founders are incredible because they understand this reality and yet “jump-in” anyway. Launching a start-up isn’t rational. It’s a calling. We know that and understand that you might need some help along the way. Jumpstart was created to tip the scales in favor of Founders and give you much better odds of success.
Five years ago, we dug into the data of start-up failure. Specifically, we researched the cause of death of over 350 venture funded healthcare start-ups over a 17 year period. We did this to clearly define the most damaging risk factors and learn about the root cause of what makes launching a new innovation so challenging. What we learned led Jumpstart to redesign what it means to be a Venture Capital firm. We do everything differently than other VCs. They are dinosaurs. Huge and fully-adapted to an environment that no longer exists.
Assessing and mitigating the risks.
Our research showed that start-up risk falls into the classic 80/20 Pareto principle. In fact, 84% of start-up failures in our research could be attributed to the five most damaging risk factors. Therefore, Jumpstart’s role as a better VC is simply to mitigate or eliminate these risks in partnership with our Founders. Here are the five causes of start-up death:
Product is five years too early to market
Product fails to fit easily into customer’s work flow
Sales strategy and execution weak or non-existent
Start-up runs out of working capital before reaching cash flow positive
Team fractures and culture fails to grow
You may notice that three of these risks are market or customer related. Over half of start-ups fail because the customers don’t buy what the Founders are selling. Sometimes the market does not yet realize that they have a need for this innovation (risk #1). Other times the market understands the need and the innovation solves the need, but the product does not fit with existing industry workflows (risk #2). Lastly, too many Founders incorrectly believe that their innovation is so incredibly valuable that customers will automatically line up to purchase it. This almost never works. Innovation is not bought by customers, rather it must be sold by Founders (risk #3). This was the 1st big insight and lead to Jumpstart reorienting our perspective to mitigate customer and market adoption risks. If Jumpstart could reduce or eliminate start-up failure due to these risk factors, our Founders would have much more success and our fund would perform very well.
To address this opportunity. Jumpstart developed a philosophy we call “customer first innovation.” We adopt the mindset that innovation only becomes valuable when it meets an existing market need. Therefore, Jumpstart spends 4-6 months each year investing our time meeting with customers and established industry partners to develop a list of 75-125 market opportunities. This market intelligence is very valuable because it provides us insight into the needs of the customer.
We then turn to see what innovations have been created by great Founders from across the US. Between January and April, Jumpstart will attempt to identify and measure every start-up and new innovation. We believe there are about 3,000 – 7,000 new healthcare innovations created each year. It is our goal to map and catalog these innovations. Many will be great ideas that are 3-7 years too early. Others meet a need but are not configured in the manner the customers want to buy. No matter, Jumpstart gathers info on every innovation.
Jumpstart then selects the 20 best healthcare innovations in the US. We partner with these Founders and attempt to provide them with an unfair advantage to “stack the deck” in their favor. This partnership takes the form of an investment to align our interests. However, it also focuses on mitigating or eliminating the remaining risk factors.
What it means to work with Jumpstart.
Becoming a member of the Jumpstart family means we work with the Founders in a hands-on fashion to build sales, raise working capital and growth the team and culture in a healthy manner. Remember that Jumpstart has just “taken innovation requests” from our industry contacts. This provides an ideal opportunity for us to introduce our selected investments to these potential customers in a very intentional setting. After all – we went looking for solutions to their challenges. It’s natural for us to show them the best innovations.
Often Jumpstart will recommend a 15-25% change in the manner that the innovation has been packaged into a product. This helps reduce the sales cycle and often increases pricing power for the start-up.
Once we have built a compelling product/market fit and successfully closed several customers, the start-up needs to grow to capture the full market opportunity. This takes fuel in the form of talent and capital. Jumpstart has built tools to help you with both types of fuel for your business. We manage our own follow-on Growth Fund and work with a network of over 130 mid/later-stage venture firms that we connect our Founders with to provide working capital. In addition, we help you find great people who share your passion for innovation and fit with the culture that Founders have created.
In this way Jumpstart has been able to assemble a very successful portfolio of 48 healthcare companies over the last four years. We believe that conceiving of a novel idea and bringing it into the world is the most important skill set in our economy. There is no innovation or progress without Founders. It no longer needs to be so hard to achieve success. Come learn more about Jumpstart Foundry and how we are able to provide an unfair advantage to 20 of the best healthcare innovations every year. Maybe your innovation has what it takes to be a part of the Jumpstart family.