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Does Colorado Hold the Secret to a Thriving Biotech Industry?

Colorado’s digital health innovators have achieved something incredible. In less than a decade, they have built a statewide ecosystem containing more than 150 digital health startups, including industry leaders like Healthgrades and Welltok.

They have accomplished this despite annual funding levels that consistently rank far below those of health-tech hotbeds like Silicon Valley and Boston. New understandings of the stages of startup development and new organizations that support innovators during these stages have made this achievement possible.

As the biotech industry explores ways to increase the success rates of new drugs while decreasing the high costs of commercialization, it should consider the structure of Colorado’s digital health ecosystem. We may be able to unlock a tremendous amount of value by supporting biotech startups in a similar fashion.

From opportunity generator to market integrator, here are the five support systems that have helped Colorado build a thriving digital health ecosystem.

The Opportunity Generator

10.10.10 CEO Tom Higley (center left) talks opportunity generation with his team.

Over 318,500 health-related smartphone applications are currently available for download. According to a recent report, that number is growing by 200 each day.

“We don’t need the best and brightest among us to build yet another app,” said Tom Higley, CEO of 10.10.10. “We need them to grapple with the sprawling, intractable issues that must be solved if we’re going to build a better world.”

In recent years, healthcare organizations have started holding hack-a-thons to encourage innovators to solve pressing issues like medication adherence and data security. Generally lasting a day or two, these hack-a-thons introduce innovators to a set of health-related problems, and then give them the datasets and expert advice they need to develop solutions to those problems.

Unfortunately, hack-a-thons rarely lead to the formation of new companies, because most innovators need more than 24-48 hours to devise an effective, original, and commercially viable solution.

To help innovators build solutions that meet these criteria, Higley has created 10.10.10, a first-of-its-kind, Denver-based venture generator. During the first half of the venture generator’s 10-day programs, innovators work closely with experts to identify opportunities to solve the healthcare industry’s toughest issues.

According to Higley, the first part of 10.10.10 has been designed to ensure innovators solve critical, pervasive, and unaddressed problems instead of building “me too” solutions. It does so by guiding them through a fundamental and often-overlooked stage of startup development called opportunity generation.

The Venture Generator

10.10.10 surrounds innovators with talent and resources during venture generation.

In digital health, building a well-balanced team is just as important as finding a lucrative opportunity. Digital health startups need skilled entrepreneurs, experienced clinicians, and inventive technologists to develop scalable solutions.

Alongside a well-balanced team, digital health innovators also need what Higley refers to as an “unfair advantage,” which usually takes the form of a policy change, a new technology, or intellectual property. They also need a prototype to show investors, partners, and customers that complies with existing regulations.

While incubators and accelerators offer services to help innovators accomplish these tasks, they usually do so only after a company has formed. 10.10.10 offers these services during the second half of its program, after innovators have identified a viable opportunity and enter a stage Higley calls venture generation.

“I want you to start with problems that matter,” Higley wrote in an article describing the process of venture generation. “And I want you to create the new ventures that can make these dreams a reality.”

The Ecosystem Integrator

Prime Health’s annual pitch competition regularly draws hundreds of attendees.

For most innovators, identifying a viable opportunity and building a strong company are merely the first steps in a long and difficult journey. To reach their destination, they usually have to collaborate with a wide range of partners.

Since 2011, several organizations have been working to build a digital health ecosystem in Colorado. They do this by holding networking events, panel discussions, and conferences throughout the state. Most of their gatherings are hosted by incubators, accelerators, and co-working spaces. These events help innovators meet one another, share best practices, and find ways to collaborate.

“Effective ecosystems result when the academic, public, private, investor, and non-profit sectors create and support collaboration and information flow,” said Dr. Arlen Meyers, CEO of the Society of Physician Entrepreneurs. “Creating and connecting the dots is not enough.”

“The resistance to the flow of information must be minimal.”

The largest of these organizations, Prime Health, holds monthly gatherings, quarterly summits, and an annual pitch competition. Attendees include entrepreneurs, clinicians, investors, administrators, politicians, and academics.

By encouraging their members to form a business ecosystem, a community in which individuals and companies compete and collaborate to produce value, ecosystem integrators like Prime Health help innovators find the right partners.

The Industry Integrator

Both 10.10.10 and Prime Health will move to Catalyst HTI when it opens in 2018.

As a digital health entrepreneur, Mike Biselli observed that healthcare executives and tech entrepreneurs existed in vastly different worlds. He quickly realized that monthly meet-ups would not be enough to bridge the divide between them.

“After I exited my startup in 2013, I started exploring ways to solve this problem,” Biselli said. “It was clear that we weren’t going to make any real progress until the health systems and the tech startups began speaking the same language.”

Biselli’s solution? Catalyst HTI, a 180,000 square foot industry integrator currently under construction in downtown Denver. Featuring seven floors, the building will house more than 50 digital health startups alongside health systems like Kaiser Permanente and technology companies like Hitachi.

In contrast to an incubator, accelerator, or co-working space, all of which cater to startups, Catalyst HTI will contain tenants of all kinds, from healthcare providers to software developers. It’s an attempt to achieve what Biselli calls industry integration, the merging of the healthcare and technology industries.

“By housing innovators alongside clinicians, administrators, and executives, Catalyst HTI will accelerate the pace of innovation in the healthcare industry,” Biselli said.

The Market Integrator

Each year, StartUp Health convenes digital health entrepreneurs from around the world at its Festival in San Francisco. [Credit: StartUp Health]

Thanks to these robust support systems, digital health startups in Colorado have access to the resources and talent they need to thrive. But for startups designed to scale globally, the state represents only a small fraction of their target market.

As regional ecosystems have matured, a tiny number of companies have launched to connect them. New York-based StartUp Health helps the 200+ digital health companies in its portfolio find investors, partners, and customers around the world. The organization opened an office in Colorado at the end of 2016.

“We’re trying to accelerate the pace of innovation in healthcare,” StartUp Health CEO Steve Krein said earlier this year. “In doing so, we’re trying to accomplish what would normally take a hundred years in only 25 years.”

“We simply believe that connecting everyone is the best way to do that.”

By linking innovators with investors, partners, and customers across the globe, Startup Health functions as a market integrator, building the digital health sector of the global economy with every ecosystem it connects.

The Biotech Opportunity

Though there are similarities between the biotech and digital health sectors, the differences between them are fundamental. Even so, I believe the model of startup development pioneered in Colorado could be applied within our industry.

Imagine how these support systems would operate had they been designed for biotech startups. An opportunity generator might help innovators avoid biopharmaceutical dead ends by rigorously vetting candidates for drug development. A market integrator could link startups with contract development and manufacturing organizations, making it easier for them to scale globally.

Regardless of whether these support systems take hold in the biotech industry, the Colorado model is instructive. It suggests that not only is a vertically aligned ecosystem possible, but that the demand among innovators for assistance of this kind is strong enough to sustain the creation of such an ecosystem.

It suggests that the secret to a thriving biotech industry lies in organizing our ecosystems to support startups at every stage in their development.


Bart van Praag is the CEO and founder of Dovetail Integrated Systems. Follow him on Twitter and LinkedIn.

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