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Disruption in Healthcare

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In the last LAUNCH festival in Sydney, seasoned Silicon Valley investor Jason Calacanis gave a quick explanation on why he doesn't like to invest in healthcare startups (I have to paraphrase because I didn't take good enough notes), and the ideas are typical of Silicon Valley type innovation. Healthcare is resistant to new ideas. This mantra had seen Silicon Valley investors turn away HealthTech companies again and again. It could even be true if you required that new ideas be disruptive.

Innovation is built into the foundation of modern medicine through evidence based medicine. The EBM process of switching practice to that is proven to do better drives incremental innovation: drugs, diagnostics and devices that are marginally better than their predecessors will replace older technology. This makes medicine fertile ground for innovation.

Innovation in healthcare is also required to be exceptionally safe. Change management is hard. This makes innovation in healthcare expensive even relative to the big returns one can expect in this sector. To be able to raise venture capital in HealthTech, entrepreneurs need show they are disruptive but in order to sell they need to show they are not.

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