HIMSS is a great show, one of the highlights of my year. Maybe I’m weird, but I find myself looking forward to it for much of the preceding year.
One of my favorite events is the Health IT Venture Fair (this year called Health IT Venture Fair & Strategic Partner Forum), held each year on Sunday, the day before the conference officially opens. Evidently I’m not alone. Two years ago, the room was filled beyond capacity, with attendees bringing in chairs from the hallway. It was moved to a larger venue last year, but they still ran out of program books. (Advance registration is encouraged, but many registered onsite the day of the event.)
The Venture Fair is a forum for early stage HIT companies to show off their wares to potential investors, as well as to learn about creating company value. Each prescreened vendor presents a short (e.g., 10 minutes) company pitch – a highly abbreviated “dog and pony show,” highlighting its solution, growth expectations, and other matters of interest to potential investors. Another part of the agenda includes panel discussions aimed at the entrepreneurs. These are intended to instruct them in various aspects of building an HIT company, such as financing, executive acquisition, and legal issues.
Beyond appealing to vendor junkies like me, why is this important enough to attract standing room only crowds?
For one thing, HIT is all about innovation. New, better approaches are springing up all the time. As evidence, consider that as of today there are almost a thousand vendors registered to exhibit at HIMSS, yet more than one in four are first-time exhibitors. That screams of a dynamic, innovation-driven industry. And that doesn’t even account for the many vendors who have decided to not exhibit for any of several reasons, such as cost or a market focus other than providers (e.g., payers).
Whether returning exhibitors, first-timers, or non-exhibitors, most of these companies need outside financing at some point in order to more fully develop solutions and grow fast enough to deliver on their promises. Relatively few can generate enough sales revenue to adequately fund growth from operations.
Excluding the largest companies at the end of the bell curve, many of the remaining vendors in HIT are either backed by outside investors or hope to be some day. Even those that have received start-up funding from friends and family or angel investors often reach a point where they need to take on more capital. The institution of choice is often the venture capital firm.
These VCs make a living by predicting which companies in this volatile industry will emerge as winners. This is no easy task, considering all the variables that must come together for an HIT company to continually prosper. It’s a job that truly blends art and science … and most would say that a little luck helps, too.
So, venture funding plays a key role in our industry, fueling innovation, growth, and jobs. The venture industry has had its challenges the past two years, but some signs point to a resurgence. This is good news for all of us – entrepreneurs, VCs, consultants, and of course the providers and payers that are these companies’ customers.
For me, the Venture Fair sets the tone for the conference, one focused on vendors and their customers together addressing our health care system’s needs.
Jim Gibson has been in health care for over 25 years. In 2002 he founded Gibson Consultants after several years in healthcare IT and group health insurance. Gibson Consultants is a national search firm specializing in healthcare IT companies.
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