Challenges Start-Ups Face at Health Tech’s Bleeding Edge

By Danielle Davis


“What’s the old saying? You can tell the pioneers by the arrows in their backs?”

I had asked Eric Buffkin, the President and Chief Operating Officer of eTect, about what it was like to be a start-up on the “bleeding edge” of the digital medicine trend.

I didn’t exactly expect him to liken it to real bloodshed. There was a pregnant pause.

“Nah,” he laughs, “We’re in a tremendous place.”

eTect is a Healthbox graduate from our first accelerator cohort in 2013, and their technology, the ID-Cap, really is on the edge of something remarkable. They call it a “powerful platform for in-body communications” and what that means is this.

Imagine a typical gel capsule anyone would use to take medication. Now imagine that in addition to having medicine inside, that the capsule also holds an ultra-thin, completely ingestible wireless sensor. Once the sensor hits the digestive acids in your stomach, it is literally powered by your body to send a signal to a small device nearby so the dose of medicine you just took is detected, recorded, and sent on to your doctor to show that you did, indeed, take your pills.

The possibilities for this technology are endless and all the major players in healthcare are interested.

So….where is it?

Well, that’s why we’re here. The ID-Cap is in clinical trials and it’s moving along well. But, the bigger challenge that Eric – and other entrepreneurs with emerging or “bleeding edge” technologies are facing – is that the broader healthcare industry is not ready to embrace these kinds of disruptive technologies quite yet. It’s risky for all parties involved. Not only is the technology new, but so is the market for it.

Eric tells us what every start-up wants to know about the realities of taking on the healthcare industry with a disruptive technology.

Reality #1: Innovating in technology and innovating in healthcare technology are NOT the same thing.

One thing that everyone needs to understand about Eric is that this isn’t his first start-up. It’s not his second or third either. Eric is a serial entrepreneur with more than 20 years of experience bringing communications technology innovations to market. eTect, however, marks his first time innovating within healthcare…

“Oh, I came out of the tech business blissfully naïve of the complications of the health business when I started this,” Eric confesses. “We were a bit on the naïve side about some of the complexities.”

Eric explains that being part of Healthbox, a healthcare-specific accelerator really helped eTect.

“The most valuable part was that we gained a much better understanding of the way the business of healthcare works.”

“Healthcare has a fundamentally different path to market. There are lots of moving parts – especially the way money changes hands.”

This is one of the more difficult realities start-ups of all kinds face when innovating within healthcare. The “path to market” is anything but a straight shot, you won’t go it alone, and, most times, the person you’re trying to reach at the end of the path with your product is not the one who’ll be paying for it when you get there. Healthcare-focused accelerators, VC firms, strategic partners, or even university-led entrepreneurial programs within medical schools can offer tremendous insight about the best ways to equip your business model for the long road ahead.

And, according to Eric, it is a long road. “It’s like you’re coming around the curve expecting to see your destination and instead you see another 500 miles of road. At times, it’s very frustrating, but at other times very thrilling. You just move the technology forward. You’re going across the chasm for a number of years, but with the right help you’re making great progress.”

Reality #2: It’s persistence, not patience.

When I first asked Eric for his best advice for other start-ups trying to break into healthcare with a bleeding edge technology his initial response was, “Be patient.”

“You have to make sure you are extraordinarily patient. Your teammates have to be patient too. It’s a long haul to take something that’s really bleeding edge. Especially when you’re making a big change.”

But as he kept talking, he changed his mind. I promised I would make the revision.

“You know what? It’s not patient. They have to be persistent. It’s persistent. Persistence implies action.

This is more about continuing to take small actions over a long period of time – you’re not just waiting.”

I want other entrepreneurs to appreciate the way Eric’s advice pivoted. I think it’s in that change that you really get what he means. If you have a bleeding edge innovation, you’re not just waiting for the market to catch up to you. Especially in healthcare. You are out there nudging the market along, running into it to move it if you have to.

Reality #3: You’re only going to go as fast as “big” healthcare can let you.

If persistence implies action, it also implies something about the speed at which that action takes place.

Healthcare is notorious for its inability to integrate change quickly. In this industry, you often hear people say that it’s like trying to change the course of a cruise ship. Eric – coming from the tech-world – has some good perspective.

“You have to remember: Just because you have the capacity to change something in 6 months doesn’t mean that your healthcare customer has time to absorb it in that timeframe.”

“Don’t be timid. Just understand that these are the kinds of companies you’re working with. The big health players – there’s an organizational inertia their companies operate in. It’s not a conscious effort to make things slow. In fact, some of these companies have the some of the best people I’ve ever worked with. It’s just that their hands are tied by the regulatory and policy conditions that they work under.”

Reality #4: The opportunity and the frustration are one in the same.

It strikes me as ironic, but it seems like the same things that lured eTect into digital medicine – the burgeoning market, the yet-to-be-regulated technology, the community of first-movers, the endless possibilities – is also what makes it challenging to work there.

“Digital medicine is an emerging space. There’s a broad opportunity, but lots of people are just dabbling. It can be frustrating. You want to see it evolve. You want to see it become an industry.”

“Lots of people see the power of digital health, of mobile health. Just about every drug company, insurance company, and integrated health company has a digital health program. A large portion of that constituent, though doesn’t really know what they want to do. Lots of things are being experimented with, but it doesn’t seem like people have found the right formula yet.”

“It’s not that they don’t want to. They just don’t yet know what this means for their business. Like when you got your first smart phone. Yeah, it makes email easier, but what else can it do?”

Reality #5: If all bets are on, it’s just a matter of time before someone hits the jackpot.

Although early stage investment is always a “bet” for an investor – and every start-up always looks at investment as a validation of their model’s economic viability – the ante goes up a little on the bleeding edge.

The marketplace is still waiting for yet-to-be-proven technologies to prove themselves, and for the industry to reach consensus on whether it will zig or zag. In this world, investment can signal movement toward a particular camp – it can reveal an odds-on favorite.

“When the National Institute on Drug Abuse came out as a strong supporter for what we’re doing….when Healthbox selected us for their program…when Florida Blue wrote a follow on investment…”

“When you have organizations with those kinds of pedigrees express that kind of interest and make a bet – that’s the kind of stuff that becomes exciting.”

Where are they now

Since Healthbox, eTect has gained some major recognition in the world of healthcare start-ups – and the ID-Cap has caught the attention of a number of “big healthcare” players.

2014 began with eTect winning the SXSW V2V venture competition and ended at TEDMED as part of the event’s start-up village, “The Hive.”

The following month, in October 2014, the company completed a pivotal clinical trial of the ID-Cap system that demonstrated >98% accuracy in a twenty-patient group over the course of several months.

They since gained the attention of the National Institute on Drug Abuse and the company was awarded two clinical study programs, the first of which is currently underway. Additional testing continues, as researchers conduct studies with the ID-Cap in therapeutic areas as diverse as HIV, atypical antipsychotics, opioids, Hepatitis-C, sickle cell disease, cardiovascular care, and cancer.

This year, the ID-Cap technology will see improvements in miniaturization, performance, and usability and eTect will continue vying for a place in the emerging digital health marketplace. The company has developed a partnership with a large manufacturer of capsules and capsule equipment, and is currently discussing programs with multiple biopharmaceutical companies.

About the Author

Danielle Davis

Danielle Davis, MBA, works as an Innovation Consultant for GuideWell Innovation where she manages the relationship with partner Healthbox to run accelerators for entrepreneurs in the health industry. A financial whiz, Danielle is also actively involved in Waste Not Want Not, a local non-profit tackling hunger in her community. Connect with Danielle on LinkedIn or email her at