Can India’s First Industry-led Global Health Incubator Boost Start-Up Ecosystem

Shu Joshi, Managing Partner, LSV Capital Partners

Recently, Aster DM Healthcare, Life Science Vision Capital (LSV)and Social Alpha (Foundation for Innovation and Social Entrepreneurship) announced India’s first industry-led global incubator and accelerator “XHealth Innovation Labs” for data technologies. With the ambition to radically transform how future medicines and health services are delivered by tapping into the power of emerging data technologies, the Innovation lab will run a 12-week incubator program coupled with two weeks at Aster’s hospitals in Bangalore. The program will see, 10 health tech start-ups graduating in Jan 2021. Applications for the same, will open on 20 June 2020 for the first cohort starting in Oct 2020. The newly formulated innovation labs will incubate 10 start-ups in each cohort twice a year. The incubated companies will develop both scientific and commercial solutions.

In conversation with Shu Joshi, Managing Partner, LSV Capital Partners on healthcare incubators in India,and

Shu Joshi, Managing Partner, LSV Capital Partners
Shu Joshi, Managing Partner, LSV Capital Partners

what to expect with this new Innovation Labs.

  • What is your view of the start-up scene in India?

There is no doubt that the world is waking up to new realities every-day amid growing COVID-19 concerns. The pandemic induced crisis has enabled us to look at things with a relatively new perspective. It has propelled us into recalibrations, innovations and new ways of engaging, personally and professionally. When it comes to Indian start-ups, we have always maintained a bullish outlook. Fortunately, I have been associated with UK start-up scene for a long time and I think it would be fair to say that the tech start-up scene in India that used to be more subdued in comparison to London. Now, and maybe it’s because I’m originally from India and a bit biased, I believe the start-up scene is much more exciting, vibrant and active than even London. If we talk facts, India has the 3rd largest start-up ecosystem in the world and is expected to witness year on year growth of an expected annual rate of 6-10 per cent even in the post COVID-19 time. In terms of funding Indian start-ups raised over $11 billion when 2019 came to a close. The Indian startups have gone on to raise sizeable ticket sizes from various global and domestic funds. The top 15 deals constituted about 40 per cent of total deal value, demonstrating that most funds are valuing deal quality more than quantity.

Look, India is the world’s fastest growing smartphone market, with 470+ million internet users, second only to China. The number rose approx. 23 per cent last year, and there’s lots more headroom for growth because even now only a third of the 1.3 billion population is connected to the internet. India was a bit late to the tech party. But in the last few years, the country has ramped up its efforts. In terms of growth, the numbers are more impressive than any other economy in the world.

  • Why launch XHealth Innovation Lab now?

COVID-19 has clearly proven that we haven’t spent enough on life sciences and digital healthcare sector. Specifically talking about what India need to do is to create close industry-government collaboration and couple that with a rapid addition to its healthcare and life sciences workforce in order to tap the post-covid opportunities. Time is now to further strengthen the life sciences and digital healthcare sector to meet the demands of the future and this will require a multi-dimensional approach. One such initiative is X Health Innovation Labs, where we are collaborating with global partners to incubate 20 start-ups companies in life science, digital healthcare and med-tech space every year for next 5 years. Our aim is to incubate and accelerate 150 companies in the next five years.

  • What kind of start-ups are you looking to incubate?

New opportunities in digital healthcare and life science sector range from tele-health to remote patient care to digital therapeutics to newer algorithms for improved insights on patient awareness, on diseases, adherence to treatments regimen, disseminating real-time information on developments in therapy areas etc. Pharma companies have also started collaborating with start-ups after recognising the potential of digital platforms, mobile apps, and social media for giving scientific detailing. We see a huge potential of deep tech space (Ai, deep machine learning, NLP) where tech enabled solutions can expedite the rate of drug discoveries and applications include everything from gaining deeper data insights, computational and model-based engineering, virtual analysis, and digital continuity to reduce cost and streamline operations. It is abundantly clear that these differentiated offerings must align with an appreciating virtualised economy and where the service is as important as the physical product. If you are an entrepreneur building in any of these sectors, do reach out to us. We have a lot to offer.

  • What will this 12 week incubation entail?

Xhealth Innovation Labs is India’s first global healthcare incubator accelerator with a hospital immersion module offered as part of its core programme structure. This is the first time that an incubator and accelerator is able to bring such a capacity in digital healthcare and medtech space in India. Selected start-ups will go through team building, business modelling, MVP development, Pitch preparation for demo day in 12 weeks. Those start-ups which are ready with MVP will get access to one of our partner’s hospitals to test it in real world clinical setting. Clinical validation and real world evidence is critical to success of any digital healthcare start-up today. Our Global Accelerator Program is committed to bringing best-in-class start-ups from all over the world to India. Start-ups will work intensively with top corporates in Southeast Asia for 12 weeks and gain from our long established partnerships. In Phase 2, we have expansion plans to take Xhealth Innovation Labs to Singapore, Dubai and Europe.

  • How do you define success or failure of start-ups?

The definition of successful or failed start-ups is surprisingly complex. The words “successful or failed start-up” seems pretty straightforward at first glance but like so many things in the start-up world, the definition of what a successful start-up truly is vague and frustratingly quite subjective. While some founders might strive for that billion dollar valuation, others measure their success by how happy their customers are or the biggest impact they’ve made on the world.

Far too many times, have we seen companies with attractive ‘numbers’ and big investors backing them up fall and get shut down. But even when that happens, does it really mean they have failed if they are shut down? Is it still a failure if the founders and investors picked up lessons that helped them achieve success later on, on a much larger scale (Which is usually the case)? Doesn’t that make that failure not a failure but a step towards success?  Naturally though, numbers may help to predict whether a start-up is on target with respect to its specific goals at the moment. Depending on the industry and circumstances, these numbers may include gross margin, CAC (customer acquisition cost), burn/ churn rate, annual contract value, profit, free-to-paid conversion rate, NPS (net promoter score), and numerous others.

In my definition, a successful Start Up is one that has impact. For most founders, profit and revenue are merely a result of their Start Up’s real purpose and that is: To make a positive impact in the world.

For the more practical minded, a successful Start Up might be measured by how much of an impact it’s had. Also you can’t pin point either success or failure to one factor because its always multi factorial combinations that are at play and these multiple factors define whether a start-up would be able to reach its desired milestones in a specific time frame. Impact is the best metrics. Start-ups should be able to build some sort of positive impact on lives of its employees, customers and stakeholders.

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