For the past five years, Tennessee entrepreneurs who wanted to launch a new business idea might have tried to catch the eye of Jumpstart Foundry.
Jumpstart is what’s called an accelerator in the tech world. It’s a company that helps other companies grow — playing the roles of mentor, shareholder and money matchmaker. Since its inception, it’s put about 40 fledgling tech companies through a sort of how-to-run-a-business boot camp, setting them up with seasoned advisors and showing them off to potential investors. And it’s been successful. Last year, an MIT business professor ranked Jumpstart the 14th best accelerator in the country.
But to climb to the top of that list, the company has decided it will no longer champion just any technology idea. Instead, it’s shifting to one of Nashville’s most established — and lucrative — industries: healthcare.
A Healthcare Ecosystem
Jumpstart president Marcus Whitney gives these statistics: Jumpstart has graduated 37 tech companies, and they’ve gone on to raise $25 million in total. Only seven startups were related to healthcare.
“But those seven companies, about 20 percent of our graduates, have raised more than half of the money and have had a better success rate — meaning they’ve survived more than the average Jumpstart company,” Whitney said.
One of Jumpstart’s graduates, called NextGxDx, created an online marketplace for genetic testing and has received at least $6.2 million in funding, according to startup database CrunchBase. Another, InvisionHeart, which found a way to send cardiac data wirelessly, has collected $3.8 million.
Some of the biggest investors in Nashville achieved their wealth in healthcare, Whitney said. They understand what the industry needs, and that makes them willing to put in sometimes millions of dollars to help new companies.
“I don’t believe that our healthcare founders were any better than our music tech founders or our social network company founders,” Whitney said. “But this ecosystem is just really well suited for healthcare companies. It really is.”
A Shift In Priorities
Jumpstart has decided to capitalize on that ecosystem. From now on, Whitney said, it’s working only with healthcare technology startups.
And it’s not the first technology accelerator to spot the opportunities in healthcare here: Healthbox, based in Chicago, opened in Nashville in 2013.
But Jumpstart is also boosting its own investment. It used to give $15,000 to companies in its program in exchange for a portion of their equity. (Healthbox gives $50,000, according to the Nashville Entrepreneur Center website.) Now, Whitney said, Jumpstart will invest $100,000.
In the past, he said, “I think there were a lot of companies that came in and we just liked the people. We didn’t think the business model was all that great, but we just liked the people and we thought we could get them to a business model that was much, much different.”
That probably won’t happen anymore.
“It will be more about helping them to accelerate product development and helping them to accelerate signed contracts — true acceleration of the business, not figuring out the business.”
Whitney hopes the bigger investment, along with the healthcare connections in Nashville, will attract the top healthcare startups in the country to Jumpstart — and propel the accelerator from number 14 into the top five.
“Five years ago, I think we were one of 100 true accelerators in America,” he said. Now, he estimates, there are about 2,500. “The space has gotten very, very noisy. We know it’s more important to be different than anything.”