Tuesday, May 28, 2024 May 28, 2024
78° F Dallas, TX

In DFW, A Digital Health Ecosystem Emerges With Health Wildcatters As The Guide


About a month ago, somewhere around 600 people crowded into the lower bowl of the Majestic Theater in downtown Dallas for Health Wildcatters’ annual Pitch Day. It was the culmination of a 90-day program for these 10 startups, and now they were pitching their products to a room peppered with men and women who may choose to sink a significant amount of capital into them.

This is the third graduating class for the relatively nascent healthcare accelerator, which takes pride in being the only such incubator in the southwest. But things looked a little different this time—big shot executives from organizations such as the Tenet Healthcare Corp. and Texas Health Resources introduced the companies. In the crowd were representatives from most of the region’s major healthcare providers: Baylor Scott & White, Methodist Health System, UT Southwestern Medical Center. A week after this, the Dallas Regional Chamber presented it with the 2015 Blueprint Award, its president, Dale Petroskey, beaming that “they exemplify the momentum of DFW’s economy.”

Its past graduates have cumulatively raised more than $12 million. Two of its co-founders created the venture capital firm Green Park & Golf, which has funneled more than $20 million into startups from inside the program and beyond, about 80 percent of which are in the healthcare field, its founders estimate.

“What’s really interesting is that, in the aftermath of (Pitch Day), there are a lot of people you didn’t know in the audience that just bought a ticket and you didn’t know they were there. They’re highly relevant people who are looking for investments, looking for innovation,” says Hubert Zajicek, the CEO and co-founder. “I see more representation from relevant people every year. I think that’s natural because we’re better known and our reach is better. Chances are they’ve heard of us.”

Fifteen Health Wildcatters graduates (about half) have established their company headquarters in Dallas after finishing the program. These are all healthcare companies, but they remain diverse: Some make medical devices, others offer digital health services. Some are pharmaceutical companies. All are vetted over a 90-day period at Health Wildcatters by dozens of mentors, a pool that grows during each class, Zajicek says. There are now 130 mentors and 70 investors involved in the 12-week course. The chosen startups have access to these resources in return for granting 8 percent equity in their companies; they also get $35,000 in initial seed funding.

“I would encourage the local investment community to consider this: You’ve got three months to look at” the startups, says Dr. Clay Heighten, a co-founder of investment capital firm Green Park & Golf and a co-founder of Health Wildcatters. “You see what they have in July and you see what they have in November. If you’ve got the same product then that you did at the start, that’s not something I really want to invest in. As an investor, you can’t just go to Pitch Day.”

In speaking with Heighten and Zajicek, the two mention how Dallas had no such ecosystem for investing in healthcare startups, no unifying thread. Health Wildcatters, many say, is quickly becoming that great unifier. The timing is ideal, too. In 2014, digital health accounted for 8 percent of all venture funding in the U.S., according to California-based analyst and capital investment firm Rock Health. Last year clocked in with $4.1 billion in total investments and the first half of this year notched $2.1 billion. And private investors aren’t the only ones watching.

“I’m the liaison for looking at what’s going on in the disruptive innovator space,” says Jesse “Jay” Beck, Texas Health Resources’ vice president of strategic marketing. “I think THR is very, very open. We’re not going to throw money around at everything, but we’re very open for a partnership aspect.”

Beck says the Arlington-based health system is currently vetting a former Health Wildcatters graduate for one of these partnerships, although he declined to identify which. Children’s Health recently announced a new initiative that will funnel money into startups that can help expand its offerings beyond its brick-and-mortar facilities. The mobile urgent care startup Mend, which is based in Dallas but is not a Health Wildcatters graduate, was the first to link with Children’s. There are opportunities here, whether for partnership or for private investors, Zajicek says.

“There’s positive interest in groups that do pilots like Tenet,” he adds, “so I think there’s a lot of that going on as well that would give us confidence that we can build on last year and the year before.”

Health Wildcatters has a few quantifiable success metrics. The most obvious is whether the startups are investable, to which Zajicek can point to the cumulative $12 million the startups have raised as evidence. The next is whether they’re seeing more applicants, which they are (more than 150 this last time out, he says). And finally, what about the quality? In sitting in Pitch Day, these startups have taken their products before institutions like the Cleveland Clinic (medical device company Noninvasix), Texas Health Resources (services company Exhale Healthcare Advocates), and the Mayo Clinic (telemedicine company Obaa, which participated in a small pilot there).

“As we get this market built out like Health Wildcatters, it’s going to benefit all of us,” Beck said.