How the World's Top Seven Medical Incubators 'Accompany' Startups: Models, Strategies, and Global Insights

However, there is still a long way to go for China’s incubators to transition from “quantity” to “quality.” This is because the market effectiveness demonstrated by Chinese incubators at this stage remains very limited, especially in the medical sector. Both the success rate of incubation and the quality of incubated enterprises lag significantly behind those in developed countries such as the United States, the United Kingdom, and Singapore.

Taking the United States as an example, its incubators have taken the lead in applications within the medical field. JLABS, the incubator under Johnson & Johnson, has currently incubated 651 startups, including 44 initial public offerings (IPOs) and 35 acquisitions. Since its establishment, The Foundry incubator has successfully incubated and established more than 23 healthcare companies, with over 70% of them being acquired or going public. In the past two years, the GCMI incubator has incubated 174 startups in the medical field and provided 2,874 jobs in the medical technology industry.

This is no easy feat, given that the failure rate for startups in the U.S. healthcare sector is as high as 90%. Therefore, these incubators must have done many things right.

What exactly did they do right? What are the similarities and differences among these incubators? Can domestic healthcare incubators, currently in their growth phase, replicate their success? To answer these questions, VCBeat’s Orange Fruit Bureau has systematically reviewed the incubation pathways of the world’s seven leading healthcare incubators.

In 1959, the world’s first business incubator, named the “Batavia Industrial Center,” emerged in New York, USA, with its primary function being to alleviate the high unemployment rate prevalent in American society at the time.

Thereafter, Americans have continually reinvented the concept of “incubators.”

In the mid-to-late 1980s, incubators were regarded as a novel tool conducive to economic development, primarily characterized by the U.S. government’s provision of incubation support to enterprises. In the early 1990s, venture capital began to extend its reach into this sector, shifting the operational focus of incubators from merely nurturing startups to identifying market opportunities for establishing new ventures. From the late 1990s to the present, the revolutionary aspect of incubators lies in addressing two fundamental issues: first, possessing independent investment capabilities, and second, attracting high-caliber managerial talent.

Currently, the global community is accelerating the development of medical incubators, with deep involvement from governments, research institutions, medical centers, enterprises, and investment firms. This trend is primarily driven by the substantial industrial opportunities inherent in the early-stage healthcare market.

Yet behind these opportunities lie pressing challenges that must be addressed at this stage. Particularly as a growing number of scientists venture into the healthcare industry, the support they require is both specific and formidable.

The primary challenge lies in cognition. This can be divided into two aspects: one is the understanding of their own projects, and the other is the awareness of their own identity, specifically how to transition from being a scientist to becoming an entrepreneur. These are areas where incubators can provide support. They have professional technical teams that can systematically analyze scientists' innovative projects and outline reasonable growth paths. In addition, incubators offer corresponding training courses to help scientists quickly advance and develop into competent entrepreneurs.

Next is the issue of technical research. This also carries two implications: the first refers to “hardware,” namely laboratory space and equipment; the second refers to “software,” meaning support provided for technological R&D. The incubator offers comprehensive solutions on both fronts. In terms of “hardware,” it is equipped with state-of-the-art shared laboratories; in terms of “software,” it supports scientists at the technical level by building or connecting them with research resources.

Finally, there is the issue of commercialization. This concept is straightforward: it involves bringing laboratory achievements to market. However, determining how to navigate this transition requires multidimensional solutions, such as securing funding, building teams, and establishing market linkages. While the preceding steps are crucial, effective commercialization is often the core mandate of an incubator.

Incubators are inevitably in demand within the early-stage healthcare market; however, they are also diverse. On the core issue of how to better incubate enterprises, different incubators offer vastly different answers.

What Does “No Strings Attached” Mean? JLABS defines it as neither requiring equity stakes in incubated companies nor demanding rights of first refusal for investment. As a corporate-run incubator, JLABS is committed to empowering the translation of innovations in the life sciences industry. To this end, JLABS has perfected three key aspects of its company incubation model.

The first point is “entry barriers.” JLABS selects innovative companies for residency based on four criteria: whether the invention is transformative, whether it addresses significant unmet market needs, whether the team has financial solvency, and whether it aligns with Johnson & Johnson’s strategic areas of interest or adjacent fields.

The second point is “internal guidance.” Upon becoming an incubated company, JLABS assigns relevant experts from Johnson & Johnson to each incubatee to provide internal guidance. Additionally, it offers startups access to subject-matter experts in health technology-related fields, enabling interdisciplinary professional mentorship.

The third point is “Securing Funding.” During the financing stage, JLABS leverages its operational strengths to facilitate communication between incubated companies and over 100 investment funds through JJDC, Johnson & Johnson’s strategic venture capital arm, thereby providing incubated companies with potential investment opportunities.

Since its establishment in 1998, The Foundry has incubated and founded 23 healthcare companies over the past 23 years. While this volume is not particularly large, the quality of these ventures is exceptionally high. Reportedly, excluding the startups that have just gotten off the ground in the last three years, more than 70% of the 20 companies founded by The Foundry between 1998 and 2018 have either been acquired or gone public.

This is, of course, inseparable from its incubation model of “lifelong companionship.”

First, it is about generating strong conceptual ideas. When interest arises in a particular project, The Foundry conducts comprehensive analytical research: evaluating the feasibility of clinical implementation, assessing the product’s future commercialization prospects, and examining factors such as technological barriers, intellectual property, and legal and regulatory compliance to determine project viability and identify optimal solutions.

Secondly, it provides end-to-end incubation services. Once a project is deemed worthy of pursuit and has the potential to grow into a high-potential startup, The Foundry will leverage its extensive industry experience and resources to support the enterprise. This includes intellectual property analysis, patent applications, proof of concept, identification of technical partners and suppliers, registration guidance, and market development planning, ensuring the smooth commercialization of products.

Finally, the goal is to help incubated companies achieve long-term success. Even after these companies begin operating independently, The Foundry continues to provide meaningful support—leveraging its own operational expertise and industry resources to help them succeed in the long run. This sets The Foundry apart from most other incubators and reaffirms its guiding principle: “Anything worth doing, is worth doing right.”

To accelerate the translation of in-hospital medical innovations and enable faster application of cutting-edge technologies for hospitals and patients, Cedars-Sinai Medical Center has established the Cedars-Sinai Accelerator, a key engine for medical development built with the support of the professional incubator TechStars.

By the end of 2019, Cedars-Sinai had conducted five cohorts of its accelerator program, with a total of 147 startups participating. These startups collectively secured over $2 billion in investment, including from tech giants such as Google and Amazon. More than 80% of the startups remain active, having created approximately 4,000 jobs.

To achieve these milestones, the Cedars-Sinai Accelerator has developed a detailed incubation program for startups, which is divided into three phases:

Phase 1: Assign the most suitable mentor to each startup based on its objectives. Mentors are drawn from a pool of over 300 individuals, including Cedars-Sinai affiliates and industry experts. These mentors will meet with startup teams weekly, leveraging their experience and professional networks to provide assistance, offer product feedback, refine product design, and guide startups on better integrating their products into healthcare systems.

Phase II: Intensive Product Development and Market Positioning Coaching. During this phase, the accelerator will provide startups with feedback on their business models, value propositions, and market fit, helping them understand their product’s market positioning, explore business models, and develop pricing and marketing strategies.

Phase III: Inviting venture capital firms and investors to meet with startups for fundraising. On the final day of the program, all startups will present their products to investors, potential customers, mentors, and the media in a centralized roadshow.

To successfully incubate an innovative technology, GCMI often starts from “0” and accompanies the technology all the way to “10,” or even through the full “100” steps. Specifically, GCMI’s incubation pathway can be divided into five stages: formulating early-stage product strategy, generating design history files, focusing on clinical input and review, adjusting project management, and integrating biomedical and mechanical engineering.

Step 1 is to formulate an early-stage product strategy. The GCMI team will conduct a comprehensive analysis of the feasibility of technology development. For each selected technology, scientists must confirm and agree upon the clinical needs, intellectual property (IP) security, market assessment, and proof of concept.

Step 2: Design of Historical Document Generation. Leveraging extensive experience in the product development process, GCMI will assist scientists in selecting an optimal design strategy and anticipating hidden “pitfalls,” thereby charting a more direct and cost-effective pathway for regulatory submission, manufacturing, and commercialization.

Step 3 focuses on clinical input and review. GCMI will assign a Medical Affairs Liaison to provide preclinical testing services at the laboratory, helping scientists gather initial customer feedback during the early stages of the project and offering additional guidance and insights in later stages.

Step 4 is to adjust project management. GCMI has tailored “adaptive project management” by balancing capital efficiency with the probability of product success. Its purpose is to make timely and effective adjustments to existing innovative products based on clinical feedback from the previous stage, while actively exploring alternative pathways, design strategies, suppliers, and other options.

Step 5: Biomedical and Mechanical Engineering. GCMI will equip the project with the most suitable internal expertise, engage external specialists as needed, and ultimately deliver practical prototypes, data-driven decision-making, and products designed for efficient manufacturing.

Located in the heart of Silicon Valley, USA, Fogarty, a globally renowned educational non-profit incubator, has developed a vertical incubation model that combines continuity with flexibility. Under this model, each innovator and their team, or enterprise, can apply to one of three vertically sequential incubation programs based on their goals or stage of development: the Invention Accelerator Program (IAP), the Company Accelerator Program (CAP), and the Company-in-Residence Program (CIR).

The “Innovation Accelerator Program” focuses on early-stage “concepts,” collaborating with clinicians, researchers, and university professors to assess the drivers and barriers to their development, and helping them transform ideas into mature, innovative inventions.

“The Corporate Accelerator Program” primarily targets small startups. Fogarty “incubates” these startups’ ideas through structured timelines and mentorship, such as optimizing their promotional platforms, clinical or regulatory pathways, or providing additional commercialization advice.

“The On-Site Program” is Fogarty Innovation’s flagship initiative and represents the most advanced stage of its incubation model. Participating companies work alongside designated Fogarty mentors and other executives in office and laboratory spaces provided by Fogarty, forming an accessible, representative senior management team that rigorously oversees and manages the company’s operations across R&D, intellectual property, quality systems, clinical and regulatory affairs, operations, finance, commercial strategy, and human resources management.

MATTER is a global healthcare startup incubator headquartered in Chicago, USA. Incubated by the City of Chicago and initially funded by the State of Illinois and regional enterprises, its core functions focus on providing workspace and basic infrastructure, equipping startups with essential business management capabilities, and acting as an agent for certain government functions.

To better incubate startups, MATTER has developed a “specific process,” which specifically comprises three steps:

First, MATTER aims to connect with healthcare startups across the United States at various stages and of varying sizes, requiring these startups to demonstrate “market persuasiveness”—that is, either possessing breakthrough precision in technology, significantly addressing clinical challenges, or featuring founders with exceptional multidisciplinary capabilities.

Secondly, startups that have been reviewed and approved by the MATTER review team will officially undergo “onboarding,” primarily aimed at strengthening their multidisciplinary capabilities through a series of courses. It is reported that MATTER has developed more than 100 core courses for incubated companies, focusing on guiding startup development, fundraising, and business building.

Finally, MATTER will establish financing channels for incubated enterprises, primarily by making targeted referrals to funding partners and organizing project roadshows, thereby providing incubated enterprises with greater exposure in the investment community.

M2D2 is an incubator jointly established by the University of Massachusetts Lowell (UML) and the University of Massachusetts Medical School (UMMS), with the aim of helping startups in Massachusetts cross the “Valley of Death.” Data shows that M2D2’s occupancy rate exceeded 90% in 2021.

Why Is M2D2 So Popular Among Startups? The Core Reason Is That M2D2 Has Built a Diversified and Comprehensive Innovation Service Chain for Startups.

First is the suitable “greenhouse,” namely the physical space provided by M2D2. M2D2’s laboratories are equipped with key instruments that support early-stage product development. More importantly, M2D2’s leadership conducts annual surveys of resident companies to understand startups’ needs for shared equipment types and resources, thereby guiding equipment upgrades and replacements. Statistics show that over the past year, M2D2 invested more than one million US dollars in equipment and upgrades.

Next is its strong capital and networking capabilities. Along this business line, M2D2 organizes targeted events such as the “M2D2 $200K Challenge” and the “Annual Pitch Day,” providing startups with exposure and access to funding channels, thereby helping them secure financing rapidly or tap into market resources.

Finally, there is government “endorsement.” As a government-operated incubator, M2D2 is backed by a powerful “think tank,” which includes a Board of Directors composed of leaders from each campus, an Executive Committee made up of experts from top research institutions across the United States, and an Advisory Committee consisting of senior executives from well-known companies such as Johnson & Johnson, Boston Scientific, and Amgen. Hailing from diverse business sectors, they provide comprehensive support to startups.

Among these top-tier incubators, there are inevitably certain commonalities, as well as stark differences.

Let’s start with the similarities.

One commonality lies in the screening of incubated enterprises. Given that any incubator has limited energy and financial resources, it is even more crucial to identify truly valuable startups. In this regard, these top-tier incubators have established stringent “admission systems” to conduct comprehensive “screening” of applicant companies from multiple dimensions.

The second commonality is a complete focus on incubated enterprises, providing targeted resources and services. Each startup project is a unique entity, with its own “highlights” and “pain points.” Therefore, throughout the incubation process, these top-tier incubators consistently adopt the perspective of the incubated enterprises, delivering customized resources and services based on their specific needs.

The third commonality is their deep market integration and application capabilities. Navigating the commercialization process is often the most significant pain point for startups, yet it precisely highlights the core competencies of incubators. These top-tier incubators demonstrate a high degree of market alignment, maintaining close ties with research institutions, investment firms, and corporate partners. Furthermore, they have established mature operational systems to effectively connect market resources with startups.

Although the experiences of “successful people” are often similar, there will also beIntrinsic Uniqueness, because they all come from different fields.

First, there are government-operated incubators. Incubators established with government investment typically possess robust technical hardware platforms and are better positioned to implement national and governmental preferential policies. As a result, this type of incubator enjoys higher visibility and serves as a prominent model, achieving high incubation success rates. However, it also suffers from the drawback of insufficiently tight links to industrialization.

Next are the operation-oriented incubators run by research institutions and universities. Incubators operated by universities or research institutes generally possess strong scientific research resources and innovation capabilities, enabling a certain degree of commercialization of laboratory-based technological achievements. Meanwhile, university-affiliated incubators are more supportive of faculty members and students with entrepreneurial aspirations, allowing them to fully leverage alumni networks and institutional resources. However, their drawbacks are also evident: as universities tend to prioritize technical innovation, these incubators often lack experience in industrial-scale and corporate-style operations.

Next are corporate-operated incubators. Such incubators typically provide more targeted and open technical support to resident enterprises, while boasting high-caliber management teams and strong professional advisors. They not only offer technical support for the conversion of major key achievements by startups but also allocate certain high-quality social resources, enabling these startups to operate along the development model of large medical device companies, thereby forming advantages in commercial value and a high degree of marketization. However, the pain point lies in the potential limitations on preferential policies and development funding.

Furthermore, there are medical center-operated incubators. Unlike the aforementioned models, the greatest advantage of medical center-operated incubators lies in their abundance of clinical application scenarios, which is crucial for startups. However, their drawbacks are similar to those of university-operated incubators; although one focuses on clinical innovation and the other excels in technological innovation, both suffer from a lack of experience in industrialization and corporate operations.

Finally, there are independently operated incubators. This type of incubator may not possess the strong “background” advantages described earlier; however, their founders are often experts from scientific research or healthcare industries who have transitioned into entrepreneurship. These professionals typically demonstrate superior operational capabilities and possess more abundant resources, resulting in a considerably high success rate for incubation. Yet, these strengths can also be weaknesses. Due to the lack of robust institutional backing, independently operated incubators are highly unstable and undergo rapid turnover.

Currently, with the rapid development of the entire healthcare industry, medical incubators in China are also advancing and growing rapidly. However, as they progress further, the challenges encountered tend to become more numerous and intractable.

This is because, for startups in the healthcare sector, we have moved beyond the phase of pursuing “quantity” and are increasingly focusing on “quality”—that is, identifying “emerging forces” that possess truly original innovative technologies, meet clinical needs, are backed by specialized founding teams, and have established robust commercialization strategies.

This is by no means an easy task. Although there are many “pioneers” on the global stage that have achieved tremendous success in their respective fields, this does not mean we can simply “copy” their models. After all, policies, markets, and industry stages differ. Therefore, even when “standing on the shoulders of giants,” we must “act according to our capabilities” and identify the optimal incubation path suited to our own development.