Zombie future awaits half IT healthcare start-ups, real soon

14 Aug 2015

Half of all IT healthcare start-ups are doomed to fail within two years, before larger companies purge their ‘zombie’ states to nab talent and technology.

A new report has found that a marked increase in venture funding into digital healthcare start-ups comes as the lifespan of half reaches just 20 months.

They won’t fully die, though, as their staff and perhaps even their business ideas will be snapped up by bigger fish, making for quite the feast of activity.

Accenture’s report looked at 900 examples, with digital healthcare start-ups receiving nearly US$4bn in funding between 2008 and 2013.

The money keeps flowing

The company predicts a further US$2.5bn will be invested in new IT healthcare start-ups over the next two years – by which time half, again, will fail – before yet more purging will commence.

zombie healthcare startups

“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,” said Kaveh Safavi, managing director for Accenture’s global healthcare business.

A three-pronged benefit

The benefits for vultures, in this sense, is three-fold. First, some genuine talent can be acquired and, considering the shortfall in this niche labour pool, that’s huge.

Second, patents aplenty can be sourced. Lastly, cute additions can enhance a larger company’s already existing offering, perhaps ensuring its survival.

“In a period of disruption, leading organisations understand that they cannot keep doing the same things and expect to succeed,” Safavi said.

“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.”

Main image, via Shutterstock

Gordon Hunt was a journalist with Silicon Republic