Exclusive: Bill & Melinda Gates Foundation Invests In 1MG

Gurugram-headquartered healthtech startup 1MG has now added yet another global investor to its cap table with fresh funds and offering intellectual property.

According to the Ministry of Corporate Affairs filings accessed by Inc42, the company on Thursday (January 30) received an infusion of INR 71 Cr ($9.9 Mn) from Bill & Melinda Gates Foundation.

The company offered 20,629 class 5 preference shares at a nominal value of INR 100 with a premium of INR 34,317.87 per share. However, it noted that the fair market value of each share is INR 22,008.81 per share.

However, the company had floated an offer for INR 73 Cr to raise $10 Mn and had said that share value may vary based on RBI’s fluctuating dollar-INR rate.

The company said that this is a part of the shareholder agreement signed in June 2019 between the investors and the company, when it had raised Series D funding. The agreement has since been amended and reinstated with the Bill & Melinda Gates Foundation’s mention.

1MG has noted in the filings that the fresh funds are required for the operational needs of the business and “its investors intend to infuse capital to enable the company to meet its existing and future operational requirements”.

Further, one of the interesting parts of this deal is that the company has signed transaction documents with the investors. It had sought board approval to “undertake these transactions, which include the grant and transfer of the intellectual copyrights developed by the company by using funds from BMGF, as per the Letter agreement.”

Inc42‘s queries on the matter didn’t elicit any response till the time of publication.

1MG was launched in April 2015, after Healthkart — founded by Prashant Tandon, Gaurav Agarwal, and Vikas Chauhan — separated its generic drug search business, HealthkartPlus, and rebranded it to 1MG. The company has three business verticals — Pharmaceuticals, Labs, and Doctors.

In terms of financial performance, as a standalone company, 1MG reported a revenue of INR 54.16 Cr in FY19, a jump of 35.7% from INR 39.89 Cr in FY18. At the same time, the expenses jumped 64%  to INR 210.34 Cr in FY19 from INR 128.2 Cr in FY18.

As a result, the company’s losses have jumped 76% reaching INR 156.17 Cr from INR 88.31 Cr in FY18. Examining the company’s revenues, we noted that over 76.75% of its operational revenue came in from epharmacy business. Further, 1MG earned INR 39.7 Cr via epharmacy business, a 71% Y-o-Y growth from INR 23.23 Cr in FY18.

According to DataLabs by Inc42, in 2019, the total market size of the healthcare industry in India is projected to be $202 Bn. This is a growth of 84% from the $110 Bn market size in the year 2016. According to DataLabs by Inc42, healthtech startups raised $512 Mn across 62 deals in 2019.

DataLabs by Inc42 in its Annual Indian Tech Startup Funding report 2019 noted that the policy uncertainty towards epharmacy played a crucial role in depleting the investor confidence towards this sector. “The online pharmacy was also a major sub-sector in this domain spearheading the growth of the overall sector. Although the overall funding capital inflow in this subsector surged almost 2.7x in 2019, compared to the previous year. This was primarily due to high-value funding rounds in established names like 1MG and Medlife.”