Last week, on May 16 2016, Pitango Venture Capital, together with its partners IBM, Medtronic, Rambam Medical Center and Impact1st Investments, launched our joined Digital Health incubator in Haifa, named MindUP. This successful launch event was planned for more than 9 months. Last year, in September 2015, the MindUP team was advised by the Israeli Chief Scientist Office (CSO) and the National Incubator Management (The “Heznek” program) in the Israeli Ministry of Economy that it won a tender to establish a new Government sponsored incubator in Haifa, to be focused on the growing Digital Health domain.
This is the first time Pitango is setting up an incubator. Naturally, we had to deal with a few questions as we contemplated the creation of MindUP: What has changed? Why did we start an incubator? And why team up with this diversified group of partners? And last, but not least – why did we decide to focus on Digital Health, and in Haifa?
Here are some points for consideration, which can help address some of these questions, which reflects on our thought process:
- VCs can no longer afford to stand on the seed funding sidelines. In the past, seed investments were left for the famous Triple Fs (Friends, Family and Fools). VCs tended to step in and lead Round A and invest in follow on rounds onwards. But today entrepreneurship became a main stream for young people. Jobs’ security in incumbent industries is declining due to the digital wave and technology advancements, and new jobs are being created in startup companies. If young people traditionally had only 2 career choices (academic studies or get a job in an existing businesses), today they have a 3rd option, build their own startup, a path more and more young people choose to pave their future. Incubators, accelerators, crowd funding and Internet based funding platforms, coupled with pervasive Internet infrastructure allow startup companies to grow fast from seed stage, leapfrogging to later stage funding, skipping the leaner path of value creation. In order to invest in these companies, we have to be involved in seed stage. Incubators such as MindUP seem like a perfect way to attract and invest in seed stages, monitor and diligence these companies during the incubation period, while offering them a long runway and business mentorship to achieve value driven milestones. We expect MindUP to invest in some 40 companies over the next 8 years.
- Innovation is created in shared work spaces, in major metropolitans, less in isolated “garage operations”. Entrepreneurs today have a different way and style of building startups compared to their peers in the early and legendary days when Silicon Valley was created. They like cool shared work spaces, and mostly in urban environment. Such Innovation labs are situated in areas chosen by artists, designers, following the footsteps of members of our creative societies, which can be usually found in the less expensive parts and down-town areas of major metropolitans, (Tel Aviv in Israel, NYC and San Francisco in the U.S., Berlin in Germany, Barcelona in Spain and many more). Diversification and multi-disciplinary environments are embraced. MindUP is a unique partnership between VC’s (Pitango & Impact1st), Medical Center (Rambam), major multinationals (IBM and Medtronic), leaders in the IT and HealthCare space. MindUP brings all of us together, so we can offer our portfolio companies an invaluable knowhow, experience and expertise to create category leadership in Digital Health.
- Incubators have changed their rolls. Years ago, Incubators were formed in order to provide job opportunities in the periphery, helping new comers (immigrants) secure jobs and creating working environments. Today they are designed to cultivate innovation, to advance new technology domains to achieve leadership in new markets (Cyber security, Food Technology, and Digital Health are just a few examples). They attract powerful global companies to become part of these mixers.
- The digital Tsunami is at the heart of the HealthCare industry these days, just like the digital wave in the financial sector – Fintech. IoT (Internet of Things), smart sensors, cloud computing, data sciences and big data analytics, are changing the healthcare world, introducing prediction capabilities, mobile platforms, and patient centric solutions never existed before. Mobile health, Healthcare IT and e-Health are becoming major industries. Whatever can be transformed from molecular to digital – will become digital. All the rest will be digitally managed and monitored.
- Haifa is a center for Healthcare and Biotech. There are new technology clusters being created in Israel. While Tel Aviv is leading the Internet and IT domains, Beer Sheba is becoming the Cyber Capitol and Haifa is focusing on Healthcare. With great universities like the Technion Institute of Technology and Haifa University and a great Medical Center like Rambam with its 1,000 physicians, Haifa became a natural location to build MindUP and Rambam a natural partner in it
- Pitango’s investment strategy makes it a natural partner for this incubator. From the very first days of our partnership, we focused on the Israeli innovation market with a diversification philosophy – by stage and by sector. For more than 20 years we have been investing in IT alongside HealthCare. MindUP is a natural evolution of our investment strategy.
We hope that MindUP will be home for innovators, who will make our lives healthier, safer and better.
And if you’re an entrepreneur with a Digital Health idea, we definitely want to hear from you.