Some of the nation’s top healthcare-focused venture capital firms are banding together to form an advisory council with the technology security certification supplier HITRUST to develop best practices for data security for startups developing digital health technologies.
The discussions, led by the Nashville-based, healthcare-focused mutual fund Frist Cressey, were created to accelerate the adoption of digital technologies throughout the healthcare market by creating best-practices around information security that big healthcare companies require before embracing a new service.
” Our service or our software wish to be taken across the country and everybody tingles and that’s when you get in front of the chief gatekeeper’s workplace and they ask if you’re HITRUST-certified,” states Frist Cressey partner Chris Booker.
” It makes [startups] more marketable or more feasible,” says Daniel Nutkis, the president of HITRUST. “Organizations tend to be hesitant to deal with startups … [Our certification] gave endeavor capital firms a level of convenience and we saw it as a chance. Chris approached us to much better develop a program more targeted at early-stage companies … so that this ends up being an easier program and can make it more wide-scale.”
So far financiers Ascension Ventures, Bain Capital Ventures, Echo Health Ventures, Frist Cressey Ventures, Heritage Group, New Enterprise Associates and 7wire Ventures have all signed on to the equity capital advisory council.
For the firms, it’s just a matter of securing what is an increasing percentage of capital dedications. Financiers have actually put $50 billion into health care startups, according to data pulled from CB Insights, and almost $16 billion of those investments remained in digital health companies. Meanwhile, early-stage startups are significantly susceptible to information breaches and lax security practices– failures of oversight that can indicate the distinction between life and death for early-stage start-ups.
” Data breaches and privacy infractions … these things can destroy a business,” says Booker.