Make something better … that simple, succinct mission statement was the impetus behind the launch of Jumpstart Foundry (JSF) several years ago and serves today as the litmus test for evaluating companies that would like to participate in the unique, healthcare-focused accelerator program.
Six years ago, JSF founder and CEO Vic Gatto found himself frustrated with the venture capital world. Looking around, he saw three big issues that he felt weren’t being addressed by a business-as-usual approach.
First, he noted, the rate of failure among companies receiving venture capital was far too high. “Probably one out of four makes it … so three out of four fail, and angel investments are even worse. The goal is not one out of four,” he continued. “That’s not success … 100 percent is success. You might not ever get there, but that is the goal.”
Second, he believed too much money was being thrown at startups. “It’s a problem because it’s not required capital,” Gatto explained. “More money doesn’t necessarily lead to more products or more success.”
Finally, he wanted to see beautiful, elegant products being made in the healthcare space. “Apple has taught us to expect that in consumer products, but healthcare today does not create intuitive, easy-to-use, beautiful products.”
Although Gatto – who sits on the board of SouthComm, parent company of Nashville Medical News – didn’t have a ready solution to address those three issues, he did have an idea. He brought together about 20 people as a skunkworks project – one that is developed by a small, loosely structured group to solve issues through innovative approaches. In 2009, Gatto , along with co-founder Marcus Whitney, launched Jumpstart Foundry to change the basic approach to supporting young, innovative companies.
“We started in every industry,” Gatto said, adding the best way to learn is to be open to everything. However, Gatto and Whitney, who serves as JSF president, have found their healthcare investments to be far more successful. By last year, the accelerator narrowed the approach to focus on healthcare companies.
To address the amount of capital being provided to those picked for the 14-week program that runs each May-August, Gatto said they set a rate of $100,000. “You are forced to be more innovative, more creative, more thoughtful if you have a small amount of money,” Gatto explained. In five years, he added, 37 companies have been launched and 68 percent are still in business or have been successfully sold … significantly better than the 25 percent rate common to the VC world. “We’re already nearly three times as good as the industry, and we use a lot less money,” he pointed out. “I think we’ve proven we have a model that can be more successful than the traditional venture capital model.”
As with a traditional VC firm, JSF has a portfolio of companies. For the $100,000 investment, JSF owns 7.5 percent of the company. Notable JSF alumni include NextGxDx, InvisionHeart, Evermind, and Octovis, among others.
Jumpstart companies have enjoyed a capital raise success rate of 74 percent and have raised an additional $26 million in follow-on capital. Of the companies launched to date, seven have been in the healthcare industry. “Healthcare has raised over half that money … more than $14 million,” Gatto said, adding the investor community is comfortable investing in healthcare in Nashville given the city’s global reputation within the industry.
One of the biggest drivers of success, however, has come from a different type of capital … human capital. “We have 120 mentors who help us build these companies,” Gatto said. These experts cover a broad range of skills providing insight on everything from marketing and design to financial management and technical development. Companies chosen for the summer accelerator also have access to a series of seminars and classes to further refine specific skills.
Recently, JSF has partnered with Nashville business service firms to create Starting Blocks. Accessible to cohort companies, alumni and participants in the six-week Micro-Accelerator™ program, Starting Blocks provides access to best-in-class vendors at pre-negotiated, most-favored-nation rates so that young companies can have access to the tools to grow their company in an affordable manner. “Like track, the whole program gets them off the starting blocks very quickly,” Gatto said, referencing the fast start runners get out of the blocks.
The new accelerator class launches May 17. At press time, companies had not been finalized for the 2015 program, but please visit our website at NashvilleMedicalNews.com for updates.
WEB: Jumpstart Foundry: www.jsf.com
