Author: Eller Mallchok, Jumpstart Foundry Managing Director
We are all watching the world rapidly change around us. It’s hard to keep up with where things are headed during the COVID-19 pandemic and how the turmoil of the current bear market will pan out.
Either way, amid the chaos, life and work continues for many entrepreneurs; particularly so for healthcare entrepreneurs. Health startups have started offering their innovative solutions and technologies to help the healthcare industry deliver quality care in extreme (and evolving) conditions like what the world is experiencing today.
If your digital health startup solution can help mitigate the spread of COVID-19 or assist providers in monitoring patients, please contact us and we’ll gladly feature your company in an upcoming Vital Innovations newsletter, where JSF is spotlighting the companies making a difference during this uncertain time.
The good news is that there are still solid resources for funding that entrepreneurs can tap into.
In order to meet the increased demand for innovation, healthcare startups are going to need additional resources—primarily, capital resources. But it can be tough for entrepreneurs to raise capital when the world is in, for lack of a better term, ‘hunker down mode’.
Here are just a few useful funding resources to keep in mind:
SBA Disaster Loan
Many startups are eligible and should apply for SBA Disaster Loans once they become available. While we are still waiting for final legislation to pass, we can pretty much guarantee that there will be capital available for entrepreneurs that shouldn’t be left on the table. Here is a list of resources so you can read up on who’s eligible and find out how to apply for a Federal SBA Loan.
There are also actions you can take while you wait to best prepare yourself to fill out the application. Start by preparing your P&L records and payroll history to calculate how much you are eligible for. Additional reading/planning materials can be found here.
Seed Funds & Accelerator Programs
Scheduled funding and accelerator program cycles aren’t necessarily on hold and many will continue to deploy capital this year. (In fact, Jumpstart Foundry is still investing in 18-20 healthcare companies in 2020. The application deadline for Spring funding is March 31 and you can submit your application here!)
If you’ve ever thought of participating in an accelerator program or applying for funding from an early-stage fund like Jumpstart, now might be the time to do so.
However, these sources of funding should NEVER be considered just for their capital. Do your research and understand the resources, connections and advantages that a fund can bring to your table as strategic partners, and know if they require participation in any programming, reporting, presenting, etc. Sometimes accelerator programs can end up being a distraction to founders. But if you’re committed to engaging with the fund/program (and understand the value beyond the check), then now would be a good time to apply.
While individual angel investors are typically a great resource for seed/early-stage capital, many of them are likely hunkering down and limiting the number of deals they commit to at this time; or, at least, limiting the size of deals they make. Entrepreneurs might want to consider raising smaller amounts of capital from many individuals. Many angels will be playing things safe, but having capital in private companies—especially healthcare companies—might be an attractive alternative. A great place to start is on AngelList, where you can identify individuals or groups of angels that are interested in healthcare and actively deploying capital.
While knowing what sources of funding are available is incredibly important, knowing how to approach those sources is what can ‘make or break’ your shot at getting the capital you need to succeed.
Fundraising is a delicate and time-consuming task that many entrepreneurs must learn how to do. Knowing first where to find the right capital and then how to approach that capital source is key. At this moment in time, the task of fundraising may seem daunting or flat out impossible to entrepreneurs, but if you know where to look and how to position the raise (and have a compelling story to tell) the capital will always come flowing. Best of luck in your fundraising pursuits at this hectic time!