It may seem counter-intuitive, but one of the reasons some entrepreneurs are drawn to healthcare is regulation. No other sector outside of defense is subject to such scrutiny, and for good reason: when dealing with people, extra caution is essential.
Rules, requirements and regulatory complexity can be barriers to entry into the digital healthcare startup world, but they also provide opportunities.
Founders often find creative ways to reconcile the extra oversight, such as saying that their launch is just a proof of concept, or that they can’t justify the cost of hundreds of thousands of dollars a month in advertising to attract new users.
When venture capital was scarce, there was an imperative to prioritize speed and maximize the runway of smaller seed rounds. However, the environment has changed: growing investor interest and ample capital available have resulted in an even greater need to allocate a significant budget to compliance.
Speed and efficiency can be essential for startups, but regulatory compliance doesn’t have to be a bottleneck or financial loss.
If compliance isn’t a consideration from the start, sooner or later founders will find themselves in a situation where they’ll have to scramble to sort things out behind the scenes and spend huge amounts of money on legal fees — which is the best-case scenario. In the worst case, a deal can explode.
Understandably, these concerns are overlooked at the outset. There is a certain amount of creativity and dissatisfaction with the status quo that founders need to build something that doesn’t exist yet.
But when you build a digital health business, the ultimate end user is a person who needs medical care. The stakes are higher than making the next puzzle game or food delivery app.