In Consumer Health, the HAX Accelerator Can’t Get It Right

From its headquarters in Shenzhen China, the HAX Accelerator has built a name for itself investing in early-stage hardware startups. Ever since the establishment of the partnership with Johnson and Johnson Innovation, HAX has been rapidly expanding its consumer health portfolio. Since then, Lux has spoken with seven consumer health-focused HAX graduates, which together represent a third of the accelerator’s investments in this segment since 2015. Below, we visualized these companies on the Lux Innovation Grid (LIG), highlighting the technology value and business execution of each player.

What becomes evident from this analysis is that HAX’s consumer health startups rank poorly on both business execution and technical value across the board; six of the seven companies profiled received cautionary Lux Takes. Digging deeper, it becomes clear the companies have low technology scores because of weak IP positions and unclear value propositions for high price points. For example, VITALI Wear developed a smart bra capable of breath and posture monitoring – both of which are fairly unique functionalities for the bra form factor – but the price point is 1.5x higher than other smart bras and can only endure 30 wash cycles (OMsignals’ bra can withstand 60 wash cycles).  While consistently low business execution scores can be partially attributed to company maturity, they are also a result of small addressable markets and ill-equipped management teams. For example, my.Flow’s addressable market is extremely small, given that the company is solving a problem it is unable to put a dollar figure on.

More importantly, what the poor technology value and business execution of companies in the HAX Accelerator’s portfolio show is that a hardware-first approach may not be well-suited for consumer health, or wellness, products. In a time when digital-enabled wellness is dominated by the Apple Watch, Fitbits, and a less liberal definition of consumer health (the Apple Health Kit, for example, defines wellness as a collection of activity, mindfulness, nutrition, and sleep), solutions that require dedicated hardware and which aim to solve for niche challenges or define new aspects of wellness are not likely to find growth. Instead, more promising solutions looking to redefine wellness while also gaining adoption are those that look to grant new capabilities to existing hardware solutions. For example, Neutun Lab’s app-based seizure monitoring tool makes use of, or repurposes, existing component in the Apple watch. Readers should use the poor bets of the HAX accelerator’s on consumer health as a reminder that (1) the definition of wellness is still amorphous and has room to– and will likely– evolve, as well as (2) source of caution when investing in or considering building hardware-first wellness solutions that do not offer concrete hardware innovation.

By: Joe Sweeny