How Can Corporations And Startups Collaborate In Healthcare?

This year CIVITTA, together with Garage48, implements the Data 4 Recovery Hackathon and Acceleration program on behalf of the European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, and the European Innovation Council and Small and Medium-sized Enterprises Executive Agency (EISMEA).

As a result of the hackathon, 12 teams have entered the Acceleration Programme, and on September 22nd, we'll have an opportunity to see their development results during the Demo Day. Register now to stay up to date and get to know the next tech stars in health-tech. 

In July, as part of the Data 4 Recovery Acceleration Program, CIVITTA and Garage48 held a public talk with Daren Wilson, the General Manager of Roche Slovensko, about making healthcare startups and corporations collaborate. Below, we put together Daren's vision on building fruitful cooperation between corporates and disruptors, especially in the healthcare market.

Data Will Define The Future Of Healthcare

In a COVID-recovering world, we have a unique opportunity and an urgent request to accelerate innovation in healthcare.

Roche is a healthcare company with a 125-year history of innovation and delivering meaningful value and sustainable health solutions to worldwide societies. The company envisions a new world with personalized, precise healthcare solutions, where the technology helps to diagnose patients early and treat them better. In Roche, people believe that health data, AI, and blockchain solutions will define the future of healthcare and support those who are working with such technologies.

When the startup innovation matches the vision or strategic priorities of the corporation, then we have the ingredients for a great collaboration. That's why, for example, Roche once provided the 5-years of support to startup FlatIron, helping the team to accelerate with money and corporate expertise, but not involving in the startup's decisions until setting the deal and buying the startup for 1.9 billion dollars. And it's one of the series of Cinderella's stories of collaboration between Roche and startups.

Startups Are From Mars, And Corporations Are From Venus

Let's have some fun and claim that startups are from Mars and corporations are from Venus. A play of the famous book, Men are from Mars and Women are from Venus. We must admit that we are different. Startups and corporations have different cultures, different mindsets, different ways of working, different expectations, and speed of operation. These differences can be barriers to engagement. As a result, most startups fail to achieve successful partnerships with corporations. But as there are always two sides to one story, let's look at each of them.

On the corporate side, the reasons for failures are often the corporate culture. The regulated industries often are risk-averse and lack entrepreneurial experience. Add here the hierarchal, command, and control ways of working, which slows down decision-making.  Mix with contracts, legal, and compliance. You will get quite unfriendly to the startup climate, huh?

On the startup side, emphasizing early startups, their pace of innovation is breakneck (which is a good thing but tricky for a slow corporation). Startups are often in idea development, market discovery stages, so their business propositions may be under-developed or unclear, which is understandable but can make it challenging for a corporation to relate to them, especially a corporation that strives for perfection.

Startups are often challenged in finding the right corporate person to connect to. Startups may not be ready if they end up with a demanding corporate partner. Thus, there are two different types of mindsets, speed, amounts of resources, and readiness to risk. So there are two completely different worlds. However, these differences complement each other, and both sides can achieve many two-way values from collaboration.

Startups Help With Agility And Creativity

To stay a great partner to the healthcare ecosystem, Roche recognizes the need to adapt to a changing world, become more agile, less hierarchical, and more collaborative. Thus, Roche seeks out startup engagement to gain inspiration, agile learnings, and participation in co-creation. Startups provide them with the out-of-box thinking they are looking for.

Another reason to collaborate with startups – to fulfill the corporate vision and strategies. In healthcare, companies are seeking to add value to diagnostics and medicines. Startups can play an essential role here by providing services that improve the patient care pathway, help in clinical trial recruitment, manage patient health data, etc. 

Suppose we are still talking about healthcare and pharmaceutical companies. In that case, there are strong companies and GDPR rules that prevent Roche from engaging directly with identifiable patient data, and thus they need a third-party partner.

Corporations Help With Expertise

Obviously, it is best that the startups share this perspective, but here are some insights that Daren has gained.

Idea validation and access to markets and customers. Corporates can be a great sounding board to validate and enhance the startup idea. Corporates also can help startups to test and advance their solutions. In addition, they can connect startups to potential customers, such as physicians or patient groups in a Healthcare system. For example, one challenge for startups in Europe is to scale their solutions to other EU countries. You will often bounce off the borders of your country and then jump to the USA for market expansion and VC funding. In addition to the EU commission supporting scaling across EU Member states, corporates can promote and help scale startups solutions through their country affiliate businesses.

Expertise and Mentorship. As a startup, you may only be the two founders or a small team. Here corporations can compliment you with regulatory, compliance, marketing, leadership, and research expertise that you may be missing in your team. They can provide you with an understanding of how the healthcare system works, how to get your product certified, how to access key stakeholders, and how to successfully commercialize your solution. These types of engagements can be beneficial to support the company's growth.

Corporate as a customer. As a startup, you might already have a market-ready service or product, and corporations can be some of your first customers to bring your service to market. This may or may not be with funding, depending on the arrangement you make.

Well, How To Be Prepared For Collaboration With Corporates, You'd Ask.

Do your research. Understand the corporation: vision, priorities, values, and innovative pipeline, as well as its industry.

Prepare your pitch to engage, not to promote. Structure your pitch on how your startup can help the corporation. Ask probing questions to the corporate and seek areas of common ground and interest. Paint a picture of what the partnership could look like.

Be bold in your vision but practical in your approach. For example, you might believe that your solution will eventually cure the world, but you will need to set the narrative for realistic expectations on what you can achieve in a six-month to a 1-year timeline.     

Do not be desperate. It might seem like a big thing to get a partnership with a corporation. But it might not always be to your benefit. Expectations from the corporate might be too demanding or take you away from your vision. So it's okay to walk away. There will be other partnerships.

Be Aware. Corporates operate on a different schedule. Therefore, you will need to set up the necessary contracts for engagement. This should always include an NDA and a Mutual Agreement of Understanding or a Statement of Work if successful. Be careful, as most corporations are used to working with service providers (consultants and agencies), so they may have clauses of IP ownership in their Statement of Work.

Make sure you have a lawyer friend to help you and review the paperwork carefully. It is better to negotiate a Mutual Agreement of Understanding, where you can clearly define the project's expectations, roles and responsibilities, ownership, and deliverables.

Treat Corporates Like A Tinder Date

Here is probably the essential advice for a startup. Again, just being a little bit fun – treat corporations like a Tinder Date. And what is meant about this is keep looking for the perfect match until you find one.

As complex organizations, corporate employees are all not the same people. Your first engagement with a corporation might be a local product manager in your country who has no experience working with startups and may not see the value. Leverage the connection to ask them if someone in their company can help you with more specific technical questions or advice. 

Persistently network until you find the right people in the corporate to engage with you. They can be found. 

However, Daren recommends first starting your engagement with the local corporate office in your country, especially if you are at an early stage. There might be less funding availability, but a successful local partnership will help you in the local market, the business community, and the healthcare ecosystem. Also, it is beneficial to the corporate reputation. You will most likely find your project being promoted by the local office to the other corporate offices in Europe or their global operations.   

Many organizations are setting up innovation labs and in-house incubators with dedicated employees for startup engagement. You should seek these employees out as they can be your corporate navigators.

The other way to gain access to a corporation is through its startup engagement activities. Look for and participate in their startup meet-ups, Innovation days, and programs. 

Program examples include:

1. Startup Accelerators – Often targeting early-stage startups. Many corporations offer this type of program. For example, Roche has accelerator initiatives in many countries. Such as Central Europe Healthcare Lab, which will run again next year.

2. Startup Incubators – Roche launched Startup Creasphere in Europe, based out of Germany, supporting Plug-and-Play, universities, and institutions. Here the focus is on startups that are past their Series A.

3. Startup Cultivators – This is a developing area for engagement where corporations offer full-service support for startups to bring their solutions to the market. Roche offers different engagement models for Startups – pay for service, profit-sharing, IP licensing, and even Equity Investing. For example, in Europe, they have ROX Health, out of Germany, as the Roche Startup Cultivator, focusing on solutions in Oncology and Neurology. 

Also, the other way to gain access to corporates is through your VC partners and attending Digital Health and startup conferences throughout Europe, like Slush. Most corporations will attend these events to look for novel ideas and potential partnerships.

Suppose corporate collaboration with you has moved beyond mentoring, experience exchange, and a value-added solution in the market. In that case, you might find yourself at the stage where you are talking with our Global partnering. This is a strong sign of your future success.  Who knows, maybe you can be another Cinderella story like mentioned before, FlatIron.

Some Advice?

1. Be careful of exclusivity deals with corporations. Try to keep as much of your autonomy as possible. Try to maintain the ability to partner with other corporations and stakeholders.

2. Sometimes, you can access the funding from a corporation indirectly.  For example, your solution has more societal value and commercial attractiveness. It might not be apparent to a pharmaceutical company. In this case, it might be better to partner with an NGO, patient, or physician Associations and, through them, seek a grant request to the corporations for funding support to pilot. Described way can get you the opportunity to be supported by multiple corporates while you maintain complete freedom to operate (with the alignment of the NGO or association)

3. Keep your focus on building and Innovating – the partnerships will come, and as you make a presence in the market, corporations will come to you.

The Future Of Healthcare Is Happening Now

As we transit through COVID-19 recovery, we have an opportunity to make enormous strides in improving the delivery of Healthcare in Europe. Tackling the healthcare challenges of today and tomorrow will no longer be achieved by any government or through industry competition to innovate. Collaboration through private/public partnerships and startup/corporate engagement is needed to accelerate the innovations and healthcare solutions to improve patient outcomes in Europe.

Read more about the Data 4 Healthy Recovery initiative and its Acceleration programme from here.

#data4EUrecovery  #COSME_EU

This project is undertaken on behalf of the European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, and the European Innovation Council and Small and Medium-sized Enterprises Executive Agency (EISMEA) by CIVITTA and Garage48.

Photo credit: The Slovak Spectator - SME