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The Ecosystem: Romania’s backing for health start-ups shows signs of success

The Ecosystem: Romania’s backing for health start-ups shows signs of success
Ecosystems

With targeted programmes of support and a new accelerator, Romania aims to build a deeper ecosystem for healthcare start-ups.

Romania is working hard to build an ecosystem for health start-ups, taking advantage of the support offered by the European Institute of Innovation and Technology (EIT) and the country’s abundance of IT talent. And within the EIT Health community, the country’s start-ups are showing signs of success.

A benchmarking survey published in April, which covered all of the Widening countries, found that Romanian participants in EIT Health programmes are performing above average in external grants received, in valuation, and in the percentage of market entry start-ups. Where they lag compared to peers, is in the amount of external funds raised.

Romania also stood out as the country with the most respondents to the survey, which the study says indicates a certain level of success in community building. That is to the credit of FreshBlood, a non-profit based in Cluj that has represented EIT Health in the country since 2018.

“When I started working with EIT Health, Romania was a blank space on the map. Now it is becoming visible,” said Ion-Gheorghe Petrovai, the organisation’s co-founder and director of innovation.

Ștefan Rusu, an innovation expert at the Northwest Regional Development Agency, agrees. “Slowly but surely the medical field in Romania is starting to pick up, and to become more open to innovation and making people’s lives better.” This year the agency launched LevelUP, Romania’s first start-up accelerator dedicated to health and life sciences.

The Romanian ecosystem features a broad range of healthcare start-ups, but they rarely address major medical challenges. “They are often complementary to the healthcare system, but these complementary technologies can sometimes make a big difference,” Petrovai said.

Rehabilitation is a good example. “This is one of the gaps in the Romanian healthcare system: we have doctors who can fix your leg, but the rehabilitation is not well supported or structured,” he said.

Petrovai, a medical doctor with long experience in the pharmaceutical industry, was inspired to create FreshBlood in 2016 in response to the barriers holding back Romania’s healthcare start-ups. “I met a lot of smart tech people who wanted to do things in healthcare, but couldn’t understand why they were not getting through,” he said. “They didn’t have the right understanding, the right context, or the right way of approaching people in the healthcare field.”

Romania’s main asset in forming healthcare companies is a large digital talent pool, and a common origin story for Romanian healthcare start-ups is a chance meeting between technical knowhow and personal experience. It might be friends or family struggling with a particular health condition, or simply a realisation that there is a medical problem that the founders know how to resolve.

“They see the power of digital technology in other domains, such as fintech and retail, and when they encounter a healthcare problem, they decide to fix it with the skills that they already have,” Petrovai said.

The same goes for more experienced entrepreneurs who see a problem in the healthcare market and decide to apply their knowhow, tackle the problem and at the same time build a business.

This was the case for Bucharest-based Parol, which was inspired when a group of journalists heard from doctors in their circle of friends how much time they spent writing up their notes. “On average, a doctor spends almost two hours out of an eight-hour day just writing consultation reports. We thought, we have a solution for that,” said Claudiu Pândaru, the company’s chief executive.

That was based on their experience setting up the online media platform Republica, which involved building a voice assistant so that readers could interact with the site. This gave them a good grounding in natural language processing systems. “So, together with the people we had worked with before, we started Parol.”

The Parol system records the conversation between doctor and patient, generating a synchronised transcript in real time. This is then processed by AI to produce a consultation report. Once signed off by the doctor, it can be fed directly into a hospital’s records.

The product was completed in April this year, and work is now underway with potential customers in Parol’s target markets of Romania, Israel, Turkey and the US. “First of all, we want to succeed in Romanian and in English, so it is natural to target countries where there are a lot of clinics where English is spoken,” Pândaru said.

For the future, Pândaru sees potential to develop the system further. “We are mapping a part of the medical industry that is not mapped: the consultation between the doctor and the patient. That data can be harnessed a lot better for the doctor and the patient.” For example, further modules might be added to the system that would support clinical decision-making.

There are also founders from Romania who have returned home from abroad to start companies. Dragoș Dușe had the idea for Synaptiq while working on AI algorithms for cancer diagnosis at the German Cancer Research Centre in Heidelberg. He became interested in the subsequent treatment pathways, and in particular the bottlenecks that limit access to radiotherapy. One that stood out was the lack of doctors’ availability able to deliver the treatment, in particular because of the time they spend manually analysing patient images.

“So I started to investigate how that problem could be solved with the same kind of AI algorithms I was using for analysing histology images,” Dușe said. The more he worked on this idea in his spare time, the more interesting it became. Eventually he put off plans to begin PhD, or look for a job in industry, in order to take the idea further.

The decision to move back to Romania to start up was partly pragmatic, in order to make his resources go further, but also because the ecosystem was more welcoming. “Speaking the same language, having the same culture, it was easier for me to find people such as potential investors who connected with my vision,” he said.

It also proved easier to find the necessary clinical partners to provide access to data, and validation and feedback on the product. “We rapidly got a partnership with a chain of four clinics in Romania. We also made enquiries in Germany, but the bureaucracy for a project like this was a barrier,” Dușe said.

The company raised €250,000 in pre-seed investment during its first year, then won a €158,000 grant from the Innovation Norway fund. This year it announced a further €700,000 funding round, and the results of a small clinical trial, which showed benefits in both speed and accuracy over traditional methods.

So far, the medical profession in Romania has been open to Synaptiq’s innovation. “Doctors are always the most excited about our system, because they understand the pain of performing this task manually,” Dușe said.

The clinics are sometimes harder to convince. “The clinic managers sometimes don’t see the process from the clinician’s perspective, so it’s harder for them to understand how life-changing this can be,” he said. “But when they realise they can treat more patients, and eventually increase revenues, they become more open.”

The next step for Synaptiq is European certification, which it expects to have before the end of the year. Where it needs most support going forward is in connecting with the healthcare system. “Our team is full of computer wizards who are young, with a lot of energy and ideas, but we don’t have an established name in healthcare or an extensive network,” Dușe said. “So business development is where we need the most help.”

Connecting start-ups to the healthcare system

Both FreshBlood and LevelUP see improving connections between start-ups and the health system as an important goal. “The public healthcare system is rather bureaucratic and it can be hard for a start-up to make contact with a hospital manager, for example. That is one of the many things our programme can help with,” said Rusu.

The LevelUP accelerator was created after the Northwest Regional Development Agency took part in EIT Health’s Drive programme, which provides incubator organisations with a deeper understanding of the untapped opportunities in their health innovation ecosystem.

The Digital Innovation Zone in Iași, in the north east of Romania, also took part in Drive last year, resulting in the creation of the Health Innovation Zone. This is a pre-validation programme for innovative solutions in the healthcare industry, which opened to applications this month.

The response to the first call for participants in LevelUP points to an improving ecosystem in Romania, but it could be moving faster. “We would like to see more openness and swiftness from all the actors in the ecosystem, and in particular for public institutions to accelerate their adoption of innovations,” Rusu said. Further support for internationalisation is also necessary.

Critical mass

But the fundamental need is for the sector to grow, in order to achieve critical mass. “We’ve met quite a few start-ups in healthcare and the life sciences, but we need to see more,” Rusu said.

Petrovai would like to see more resources and thinks government funding is both insufficient and inflexible. “One of the challenges we face is a lack of multi-annual budgeting and support in order to help people when they are interested in creating something,” he said.

Greater collaboration between the start-up ecosystem and the major players in Romania’s healthcare system would also be desirable. “EIT Health partners with major companies and universities at the European level, but what happens on the ground also matters,” Petrovai said. “So, it is important to have the involvement of major hospitals and healthcare companies in Romania that can share their perspective and provide relevant support.”

Pândaru is positive about starting up in Romania. “Romania right now is a very good place to start a start-up. We have a lot of talent, with very good, well-established programmers. And while we lack skills in project management, we are getting better every day.”

Access to capital has also improved. Romania now has a venture capital fund that specialises in health technology, Cleverage, and international investors increasingly look on the region as a whole. “VCs from central and south eastern Europe are looking into the markets here without minding too much about the borders between countries, but focusing on the team and the potential of the business,” Pândaru said.

The contribution of Romanian-born unicorn UiPath has also been considerable. Parol is a direct beneficiary, since three UiPath alumni contributed as angel investors to its €450,000 pre-seed financing round last year. But the money is only part of the story.

“The knowledge you get from people who have been part of a unicorn is of immeasurable help,” Pândaru said. “Right now, a lot of them are working with different start-ups and reinvesting their money, and that has helped the entire start-up ecosystem in Romania.”

Elsewhere in the Ecosystem…

• Sweden and Germany are the most productive innovators in the EU, according to the latest Innovation Output Indicator Report, published by the European Commission’s Joint Research Centre. The indicators are intended to offer an output-oriented measure of innovation performance, and to measure capacity to derive economic benefits from innovation. Next in the ranking are Finland, Ireland and Belgium. The lowest performers among EU states are Romania, Latvia and Bulgaria.

• The European Institute of Innovation and Technology EIT Food has announced two new start-up investments. First, it is putting €400,000 into the Israeli start-up Meala, which develops functional ingredients from plant-based proteins using naturally occurring biocatalysts. Second, it will invest €500,000 in Green Spot Technologies, a French start-up producing fermented flours made from fruit, vegetable and cereal by-products. Both start-ups are alumni of the EIT’s Food accelerator network programme.

• An analysis of UK academic spin-outs carried out by the Royal Academy of Engineering has revealed rapidly growing clusters outside Oxford, Cambridge and London. Manchester and Bristol have the highest growth, while Edinburgh continues to attract companies spun out of universities from other locations in the UK. The study identified 1,166 active spin-outs in the UK, with just over half still at the seed stage.

Originally published in Science Business
Article by Ian Mundell

Photo credit: EIT Health / Startups&thecit

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