The startup world is littered with amazing accelerator programs like TechStars, YCombinator, and MassChallenge. And in some sectors, startups have such specific needs that they require their own accelerators, hence competitions like the Cleantech Open. But in the healthcare space, there’s another model in town: the corporate sponsored open innovation challenge.
Global pharmaceutical giant Sanofi today announced the five semi-finalists for its Data Design Diabetes Innovation Challenge (DDD), now in its second year, which points to an interesting accelerator model for the healthcare space..
The backdrop here is both a pressing need for innovation in healthcare, which consumes an increasing share of GDP as well as of the federal government’s budget, and a growing realization by large companies in the space that startups are the key to healthcare innovation.
“Startups and these types of challenges will be very much of the industry going forward,” said Michele Polz, Head of Patient Solutions at Sanofi. “Doing challenges like this allows us to cast that wider net.”
The aim of the DDD is to couple the power of open datasets increasingly made available by the Department of Health and Human Services with the power of entrepreneurs, technologists, and designers. For that reason, when Sanofi launched the competition last year it explicitly didn’t just open it up to physicians. They were surprised by the number of applications in year one, and pleased to see entries by entrepreneurs and academics as well as healthcare professionals.
The contest begins with a crowdsourced suggestion process that narrows down the focus around areas for innovation around diabetes. Those suggestions from the crowd lead to the creation of “focus areas” for that year’s competition. Teams then submit ideas and five are selected as semi-finalists by a team of judges.
The semi-finalists receive $20,000 as well as mentorship and a variety of services including a prototyping “bootcamp.” While none of this year’s semi-finalists are from Boston, two of last year’s were, including Wellframe and the inaugural winner Ginger.io, a mobile health analytics startup which has since raised $1.7 million. The DDD was a key to building the Ginger.io’s momentum, according to CEO and co-founder Anmol Madan.
Madan was finishing his PhD at MIT’s Media Lab last year when he entered the contest, and told me that the challenge and others like it are “sort of like the mini TechStars [and] the mini YCombinators of the healthcare space.”
“There’s the financial part of it,” he continued. “The other big piece of that process is also the introductions, the mentorship, and the patient experience.”
For healthcare startups, getting access to patients can be a major challenge. If consumer web is on one end of the spectrum in terms of the ease of finding early test users, many healthcare plays find themselves on the opposite end. One of the biggest benefits that Sanofi can provide startups is easy access to patients.
Participants in DDD retain all their intellectual property and full equity in their company. Sanofi benefits simply by bringing into existence new innovations at a fraction of the cost to do so internally that they can then partner with, and even perhaps acquire.
And DDD isn’t the only such competition. Novartis runs a similar challenge for cardiovascular health. According to Polz, structuring these challenges around a single health area and corresponding goal – like diabetes or cardiovascular – is a key to their success.
As these competitions continue to grow it will be interesting to see how they interact with angel and VC funding. Will open innovation competitions serve as an alternative to seed funding in healthcare, or as a way to unlock it? And what other sectors could benefit from this kind of corporate-managed model? GE does something similar in energy already.
With our mounting healthcare challenges, we should all be rooting for anything that furthers innovation in this space. If more big health companies invest in accelerating startups, that’d be a start.