Accenture Report: 51% of Digital Health Startups Expected to Fail Within Two Years

Amid the booming development of internet healthcare, startups are emerging in large numbers. Among these numerous ventures, how many will quietly fade away after a period of time, and how many will break through the intense competition to achieve success?According to a recent survey and analysis report by Accenture on 900 U.S. healthcare IT startups, it is predicted that approximately half of these startups will go bankrupt within two years of their establishment.

(Note: Accenture’s research primarily relies on historical funding data to predict the future bankruptcy risk of digital health startups, rather than being a retrospective study.)

Another report from the Bureau of Labor Statistics is available for reference: it shows that between 1994 and 2009, 20%–26% of startups (across all sectors) declared bankruptcy before reaching the two-year milestone.

Accenture also found that,900 startups collectively hold 1,700 patents; internet healthcare startups teetering on the brink of bankruptcy, dubbed “zombies,” raised nearly $4 billion between 2008 and 2013. The report explains that these startups are often “acqui-hired” for their top talent, patents, and technology.A cohort of “vulture investors” seized the opportunity to harvest the ideas and talent of startups.

“For investors, rather than writing off the capital already invested in startups, it is better to acquire these companies to fully extract the value of their top talent and technology, thereby reviving them from a zombie-like state,” said Kaveh Safavi, Global Managing Director of Accenture’s Health practice, in a statement. “Many internet startups struggling on the brink of bankruptcy or facing escalating crises are actively developing solutions for traditional and non-traditional healthcare companies to help them achieve their objectives.”

Accenture predicts that over the next two years, investors will inject an additional $2.5 billion into digital health startups, with nearly 30% of these funds allocated to infrastructure development, 25% to patient engagement, 25% to treatment, and 21% to diagnostics.