For a long time, tech and innovation went hand-in-hand with visions of Silicon Valley and New York City. But new hubs of health-focused startups are emerging, as digital health companies lay roots in mid-sized metro areas.
According to the Kauffman Index of Entrepreneurship, healthcare is ranked No. 4 in terms of U.S. industries with the largest share of high-growth companies in 2016. Within that sector, Nashville, Tenn., has the most high-growth company density among healthcare companies, meaning it has the most private companies that have achieved at least 20 percent annualized growth over a three-year period with at least $2 million in revenue. This can be seen in the growing amount of venture capital invested in the area, which stems from the city’s reputation as a hotspot for healthcare activity in general.
Other health IT hubs like Miami are still in the early stages of maturation, but entrepreneurs and innovators are priming the city for growth. One newly launched accelerator is harnessing Miami’s diversity, demographics and geographic location to test products that could eventually be scaled nationwide.
Startups and incubators are clustering in these and other mid-sized cities, forgoing the reputation afforded by Silicon Valley and other big tech cities and capitalizing instead on other factors.
When new companies look at where to set up shop, one of the biggest influencers is nothing more than where the founders live, according to E.J. Reedy, a senior fellow at Kauffman Foundation who helped author the Index of Entrepreneurship. While that sometimes may be in larger, more tech-focused areas like Silicon Valley — especially if a new company is spun out of an existing one — it also lends rise to places like Madison, Wis., home of Epic Systems.
Judy Faulkner had recently graduated from University of Wisconsin when she founded her company in 1979. Epic was originally headquartered in Madison before moving about 10 miles west to Verona, Wis., in 2005 when it outgrew its initial space.
Though geographically established by happenstance, Epic now serves as an economic anchor in the greater Madison area. At the Wisconsin Early Stage Symposium in 2015, a gathering of new companies, entrepreneurs, investors and business leaders, Peter Christman, an associate with seed stage tech investor Chicago Ventures, reiterated this idea, speaking of “the burgeoning, dynamic ecosystem that revolves around Epic here in town,” he said, according to The Capital Times.
In fact, the Greater Madison Chamber of Commerce has harnessed this idea and launched a formalized marketing campaign to deem Madison as “the world-class leader for health technology” called the HealthTech Capitol initiative.
In Nashville, Healthcare Corporation of America is the anchor drawing talent and companies to the area. Hayley Hovious, president of the Nashville Health Care Council, says HCA’s establishment in 1968 as one of the first — and now largest — hospital companies helped drive the entrepreneurial activity and spirit that persists today. HCA operates 169 hospitals and 116 surgery centers throughout the United States and the United Kingdom, so even though it’s headquartered in a mid-size city, it has a global reach.
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