November 20, 2014
By Jeff Haden, Inc. Magazine
This Chicago incubator is based on the premise that success comes from surrounding great entrepreneurs with other great entrepreneurs and with great mentors.
Every big city has a number of business incubators and accelerators. Many small cities do too. (Even mine does.) According to the National Business Incubation Association there are over 1,200 programs in the U.S. alone.
But aside from shared space and (sometimes) shared services, many incubators have more to do with building the business of the incubator itself, not the startups they claim to help.
Here’s another in my series in which I pick a topic and connect with someone a lot smarter than me. (There’s a list of more installments at the end of the article.)
This time I talked about business incubation with Steven Collens, the CEO of the MATTER, a nonprofit co-working space in downtown Chicago dedicated to early-stage medical device, biopharmaceutical, and information technology start-ups (and conveniently located next to 1871, a digital co-working space.)
To be frank, I’m somewhat skeptical of “incubators.” Many claim to offer lots of value to entrepreneurs but wind up just being landlords.
With MATTER we’re trying to do something different. Our fundamental goal is to build the healthcare community and help local startups accelerate their growth. We’re not a real estate play. Unlike many incubators we don’t take equity positions. Unlike many accelerators ours is not a short-term program. We have features of incubators and accelerators… but building the community is our deal.
Doesn’t that approach create its own challenges? The rent you charge members, for example, is really low.
Absolutely. But on the flip side that creates unique opportunities. We already have tremendous support from universities and companies and investors at least in part because they know we aren’t taking a piece. We’re a neutral platform.
At the same time it does create some financial challenges so we rely on a complex matrix of partners. And that means we need to create a community and a culture where the startups who go on to bigger things truly feel they derived value from their time at MATTER… and will someday want to give back to the next wave of entrepreneurs.
That means you rely heavily on organizations to partner with you. And that means fundraising and networking is a huge part of your job.
Sure, but that’s perfect for what we’re trying to do. Entrepreneurs need a network. Entrepreneurs need mentors. Entrepreneurs need education and information and advice. That’s what a real incubator provides. So the organizations that provide private investments are the same organizations that will be mentors and resources. They have a vested interest in seeing those investments pay off–so naturally they will be supportive of the community we’re building.
And we’re off to a great start: we just announced $4.4 million in private funding from twenty-two local tech and healthcare companies.
Even so, while the community we’re building needs financial investments… our community needs their advice, guidance, and collaboration just as much. And that’s why I think our model is so powerful.
Chicago has a $50 billion medical technology industry: 90-odd hospitals, six med schools, 500k med-tech jobs… with that diverse of an ecosystem, what does your ideal member look like?
In very general terms, a serial entrepreneur building a highly innovative company in healthcare, one who has probably raised a seed round (whether formally or through friends and family), and is looking for the services and benefits they get from being a part of MATTER: access to mentors who have built companies, access to the broader healthcare community, access to a network of executives, access to other entrepreneurs… they’re at the stage where they want to build out pilots, determine their go to market strategy, and tap resources that accelerate the process.
Time is money for every startup, and access to people and resources is often the best way to speed the time from idea to implementation.
I really like your “nights and weekend” membership. Many entrepreneurs don’t have the cash to go without a paycheck, so that’s perfect for people trying to launch a company while hanging on to their full-time jobs.
We feel the different membership levels we’ve established will help create a diverse membership community; later-stage startups will mingle with early-stage (or even “idea-stage”) startups. We’re not just trying to create a blend of disciplines across software and bio pharma and devices; we’re also trying to create a blend of ideas and skills and experience across the entrepreneur community.
Hardware is no longer just hardware, and software is no longer just software. Many devices have a software component–that creates a huge opportunity for interesting collaborations.
The key is to get all those people together in one place.
With that in mind, I could argue that limiting your focus to healthcare technology could stifle some great cross-industry collaboration.
True, but with healthcare there are some fundamental differences.
Take 1871. The 1871 model is similar to the MATTER model, but the types of entrepreneurs are fairly different. The fundamental insight needed to build 80% of the companies found at 1871 is not particularly complex.
Use GrubHub as an example, a company that predated 1871 but is the type of company you could see coming out of 1871. The fundamental insight those two guys had to cause them to build a company was an insight anyone could have: people should be able to order food online instead of finding a menu and a phone number etc. Anyone could have that insight–the ability to execute that idea is something else altogether.
In healthcare, tech companies don’t have obvious insights. The healthcare system is hugely complex, with lots of layers of opacity and friction… and unless you have some knowledge of how it works, you’re less likely to come up with an insight that will drive the company.
Basically, “If I don’t even know the problem, how can I come up with a solution”?
Exactly. Healthcare technology entrepreneurs tend to be more seasoned, at least in the healthcare field, and tend to have somewhat different backgrounds than the “typical” entrepreneur. And the path to market in healthcare is definitely more complex.
That’s why we’ve created a curriculum specifically based on healthcare startups–and the reasons why startups in healthcare don’t make it–and are gearing up to offer events and programs that pull in a wide variety of constituents.
Fortunately our mentors will preach to choirs that definitely want to hear the sermons.