In August, downtown Minneapolis-based healthcare incubator
TreeHouse Health teamed up with
LifeScience Alley, a local biotech accelerator, for a well-attended demo day called Healthcare Innovation Is Alive and Well in Minnesota. According to Dr. John Blank, a TreeHouse Health cofounder (and, previously, a pediatric oncologist and health system administrator), the event supported TreeHouse’s ambitious-sounding mission: to turn MSP into the “Silicon Valley of medical technology innovation.”
Healthcare Innovation is Alive and Well featured lectures and workshops on pressing issues facing early-stage medical technology and life science companies — raising capital, bringing ideas to market, becoming cashflow-positive and more — plus an open, craft brew-fueled networking hour with some of the region’s top healthcare decision-makers.
But the real stars of the show were the innovative startups tapped to pitch their solutions to the high-profile crowd. Many were current TreeHouse Health tenants:
Cellanyx, whose diagnostic solution could revolutionize the industry’s approach to certain cancers;
PerkHealth, a virtual health coaching app that made
The Line’s
10 life-changing startups list last year; and
VitalSims, an education platform for medical professionals.
TreeHouse Health’s portfolio is compelling. But Blank believes that if MSP is to live up to TreeHouse’s “Silicon Valley” promise, more needs to be done to support current and future medical technology entrepreneurs. At the moment, MSP lacks a critical mass of native venture capitalists willing to go out on a limb for potentially disruptive healthcare ideas.
Blank cites an early-stage health IT firm, currently in residence at TreeHouse Health, that had struggled to meet a $2 million funding round target with local backers despite a proven technology solution and more than $1 million in annual revenues. After six or seven months of banging on doors in MSP, the firm broadened its search and eventually completed the round with outside investors.
“There are plenty of investors interested in the health IT space,” says Blank, a Massachusetts native, “but they’re mostly based on the East or West Coasts and tend to fly over Minnesota.”
That’s why Blank and the TreeHouse team are fanatical about boosting the visibility of the companies in and outside of TreeHouse’s portfolio, starting with initiatives like the Life Science Alley collaboration.
TreeHouse is also working to attract promising companies that began life in regions better known for tech innovation, like Boston (arguably the capital of the U.S. life sciences industry) and the Bay Area. According to Blank, TreeHouse currently has one tenant from each region, with an eye for more.
A key selling point for TreeHouse and MSP in general, he says, is location. “You can easily travel anywhere in the continental United States and back within a 24-hour period, or even in the same business day” from MSP, says Blank. He mentions a TreeHouse tenant that recently flew overnight to Seattle for morning meetings with hospital executives there, then caught an early-afternoon flight back in time for dinner—a nearly 3,000-mile round trip in less than 24 hours.
“That kind of turnaround isn’t possible when you’re based on the coasts,” says Blank.
Another big advantage for MSP: a diverse array of established medical “payers” (health systems like Mayo and HealthPartners), insurers (like UnitedHealth Group), and device/technology manufacturers (like Medtronic and St. Jude Medical).
In other words, local life science and medical technology startups that
do manage to find funding here are apt to find lots of paying customers close by, regardless of niche—an important measure of security for any early-stage company. Over the long term, that existing customer base, coupled with a healthy dose of Minnesota nice, should prove enticing for coastal entrepreneurs looking to relocate to a cheaper, business-friendly locale.
“[MSP] is one of the few places in the country where you have Fortune 100 companies in every major healthcare sector,” says Blank. “And it’s a friendly enough place that you can make real progress toward building a professional network within a few days.”