Some national business publications have begun to recognize Madison, WI, as a market for software professionals that punches above its weight. One example was Forbes ranking the city fifth on the magazine’s 2014 list of “Cities Winning The Battle For Information Jobs.”
Healthcare IT stands out as a particular strength of the area, thanks in large part to Epic Systems, the patient records software giant based in Verona, WI.
A pattern has emerged of hundreds of workers, many in their twenties, joining and leaving Epic each year. Zach Brandon, president of the Greater Madison Chamber of Commerce, said that as Epic’s headcount approaches 10,000, he’s seeing a new wave of product-focused healthtech startups forming around the area.
The first wave of spinoffs was characterized by new companies that provide consulting services to hospitals and clinics that use health records software developed by Epic and other vendors, Brandon said. Among these consultancies, some founded by former Epic employees, are Nordic, BlueTree Network, and Vonlay, which was acquired in 2014.
Now comes the second wave, said Brandon. It includes startups that have health records at their core, such as Catalyze, Moxe Health, and Redox. All three focus on health data “integration,” a broad category encompassing things like interoperability and helping third-party software developers get information into and out of health records systems.
But there’s much more to the healthtech sector than patient records, a fact that’s increasingly reflected in Madison’s early-stage business community. Leaders from two medical device startups based there joined a health IT-focused investor on a panel Monday, where the three discussed some of their experiences inside—and views of—Madison’s healthtech cluster.
The event was one of more than 40 being held as part of Forward Festival, a yearly entrepreneurship conference in Wisconsin’s capital city. The session spotlighted HealthTech Capitol, a consortium and website managed by Madison’s chamber of commerce that’s aimed at turning the city into a hub for healthcare innovation.
Both entrepreneurs on the panel, Sarah Sandock of Dock Technologies and Behold.ai’s Jeet Raut, help lead companies whose products are considered medical devices, which must go through the FDA’s regulatory process before they can enter the market.
Sandock said the work her team has done to obtain regulatory clearance for Dock’s system—which comprises wearables for nurses and other clinicians, plus complementary software—has been easier than she expected. One reason might be that the system is considered a Class I device, the lowest-risk category for devices, she said.
That’s not the case for Behold.ai, which is developing software that uses machine learning algorithms to look for abnormalities in medical images, said Raut. His startup, which he said has been around for less a year and graduated from Gener8tor’s three-month accelerator program in May, hopes to get FDA clearance for its Class II device by early 2017.
Ryne Natzke, a senior director at HealthX Ventures, said technologies that require regulatory approval carry some additional risk from an investor’s perspective.
“It’s another thing to add to the timeline of getting something to market,” Natzke said.
However, large firms like IBM and Apple may help pave a regulatory path that smaller ones can follow, said Natzke, whose Madison-based fund mostly invests in seed-stage healthcare software companies.
Sandock said that compared to larger markets, such as Boston—where last year Dock participated in MassChallenge, a nonprofit, equity-free accelerator—it’s likely less difficult in Madison to find healthcare organizations willing to be partners for studies and pilots. One example of this that Xconomy has reported on involves EnsoData, which
