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It’s been sometime since I have been working in digital healthcare industry. Just like many others in the town, even I try to analyse arcane equation between investors and startups.
After studying more than 30 companies and startups in healthcare space in India, I found out some interesting facts and these observations were truly eye-opening for many who dream of building a startup or taking their startup to the next level but still trying to figure out the secret sauce that can woo investors. I thought to share the findings with everyone.
Before revealing the myths, let me share few case studies of startups, their business models, founding teams and funding status.
Funds: $1 Mn
Investors: Times Group and SPA Capital Group founder – Sandeep Parwal, Organic Wellness’ founder – Krishan Gupta, Former Ranbaxy executives – Anil Khandelwal and Arun Purohit
What they do?: The startup provide home care services. Business model is similar to Portea.
Product/Business status: Zoctor doesn’t has a Android or iOS app. Website is also in early stage. Most likely, the way Zoctor is operating as of now is through direct call.
Number of employees: 12
Founder: Nidhi Saxena, a SPJain alumna who has more than a decade of experience in healthcare.
Launched In: 2013
My Observation: Nearly all pre-series A investors look for a good prototype and early signs of decent traction of the product. In Zoctr’s case, despite of absence of mobile app and a beta website (a. In Dec, 2015 website was almost non-functional b. Current country rank – 418071, Source : Similarweb), company has been able to fetch funds with their operational presence across multiple cities. Most likely, readiness of product and traction is not a necessary criteria for raising funds.
Funds: $1 Mn
Investors : IDG Ventures, m &s partners and Powerhouse Ventures
What they do?: Pluss is a hyperlocal drug/healthcare products delivery startup
Product/Business Status: Pluss has an iOS and Android app. Their current install base can be anywhere between 3K-6K.
Operations: NCR & Hyderabad
Founders: Techies from BITS and IITB
Launched In: 2015
Number of employees: 20
My Observation: Another validation that investors are inclined on betting on proven business models. Delivering goods such as food, grocery, medicine is not very innovative concept, it’s market size opportunity and possibility of industry aggregation which is making such deals attractive to investors. Startups that have a unique business model or innovative product that has not seen traction, yet find it extremely difficult to raise funds on their terms.
Funds: $300K (approx.)
Investors: Ram Kumar Kakani (Professor, XLRI), Pradeep K Jaisingh (Chairman, Healthstart), Sunil T V (Co-founder, IVFA), Vijay Ghadge (COO, Gojavas), Hemant Kaul (ex-CEO & MD, Bajaj Allianz General Insurance) and Gurmeet Chahal (SVP & Head-Healthcare, HCL Technologies)
What they do?: It offers localised listing of doctors
Product/Business status: Local listing of doctors and hospitals. User experience is not mapped-based, listing is based on lat-long of device.
Number of employees: 7-10
Founders: XLRI Alumni
Launched In: 2014
What they want to do with funds: Build same app for iOS and to expand listing to other cities.
My Observation: Apparently, uniqueness of business model or product is not a necessary criteria. There are multiple players that are offering similar solutions, such as Practo, Lybrate, etc. I think the startup’s secret sauce which is building a revenue stream for them, this along with founder’s experience in top product companies must have given confidence to investors.
Funds: $1 Mn
Investors: Mumbai Angels, Contrarian Vriddhi Fund and High Networth Individuals (HNIs)
What they do?: Ecommerce portal that sells products related to healthy living – baby care, home care, supplements, organic stuff, etc.
Product/Business status: 170K visitors per month, 95% customers are Indians. For last six month, MoM growth rate in terms of visitors fluctuated between 25-100%
Number of employees: 20
Founders: Alumni from IIT, INSEAD, IIM-A
Launched In: 2013
My Observation: As per wikipedia, 1,06,086 ecommerce websites are registered daily and more than 25% are for niche businesses. Success of this startup marks excellent selling skills of founders. Selling a cliched ‘niche ecommerce’ business model is getting increasingly tough to investors, JoysbyNature sets another example that startups can promise rapid growth and superior exit option can fetch funds.
Funds: $1.15 Mn
Investors: Accel Partners India
What they do?: Health Content Platform
Product/Business status: An example of pure global content platform. Although their focus is on ayurveda, yoga and diet but TA is global. Group of experts also has a good mix of Indian and foreign nationals. Company is headquartered in California but most of the team members seem to be operating out of Bengaluru.
Launched In: October, 2013
Number of employees: 25
Observation: Producing fresh and useful content everyday is tedious and grinding. You need a team to create content and grow the user base, problem is more complex because it’s very difficult to come up with a revenue model apart from advertising. Consider history and current state of mdhil.com as an example. However, if you are an aggregator you offer a stronger case e.g. Youtube, In shorts etc. Curejoy has accomplished a feat by raising funds for a pure niche content platform. Focus on niche, selling skills of founders and CEO’s track record of tenacity may have done the trick for Curejoy apart from other vanity metrics.
Funds: $1 Mn
Investors: Round Glass Partners
What they do?: Game and activity-based fitness app. They sell their product to organisations where employees can engage themselves in competitive healthy activities.
Product/Business status: Already being used by employees of few big MNCs. Total App downloads are below 5K. Current installs can be anywhere around 400-1000.
Number of employees: 13
Founders: IIM B Alumni
Launched In: 2012
My Observation: Mentors’ mojo seem to have worked in founders’ favour. Ravishankar B (Chief People Officer, Mindtree) and Suresh Bhagavatula (Assistant Prof. IIM B, Co-founder Headstart) have been mentoring the startup since beginning. Mentors must have helped in finding big early adopters (MindTree, Pantaloons, NEN etc.). These reference customers play a huge role in drawing investors’ interest. Zoojoo.be has B2BC model and charges companies on per user basis(YS). Clocking revenue in early years is noteworthy.
Funds: $2.4 Mn
Investors: Flipkart founders, Ranbaxy and Fortis promoters
What they do?: Innovators. Team has created a portable product which can test haemoglobin count from one drop of a blood. They have been nominated under 35 innovators in MIT Review.
Product/Business status: Device has 99% accuracy and lowest price in the industry. 4000 devices have been sold to state governments and to few private hospitals.
Number of employees: 13
Founders: IIT-D alumni with educational background in biochemical engineering
Launched In: 2009.
My Observation: Product innovation (& Intellectual properties) is one of the safest bet among investors. Investors are ready to bet big on companies building IP in some industry. TrueHB (Wrig Nanosystems Pvt. Ltd.) have a patent pending for the underlying technology (Ambar’s Linkedin Profile). In medical device industry, established companies keep looking for strategic targets to acquire in order to have a stronger foothold. Avg. medical device patent has a NPV of 200k USD. (MDDIOnline)
Funds: $1 Mn
Investors: Exfinity Venture Partners
What they do?: Helps find fitness options e.g. Gyms, Yoga, Zumba and Cross fitness centres.
Product/Business status: Offers services in Mumbai, Pune, Delhi, Bangalore and Gurgaon. 80K visitors per month. No Mobile app. Avg. Session time is impressive – 3.4 minutes.
Number of employees: 37
Founders/Top level execs: Fairly young team with 4-5 years of experience. No fancy Ivy league tags here.
Launched In: 2013
My Observation: Experience and alma mater of founders also don’t seem to matter a lot. Founders of fitternity are not from so called top colleges of India or abroad. Fitternity’s current accomplishments reinforces the belief that motivation and hard work overpowers talent. Secondly, aggregation of services is still in vogue among investors. Recently, a lot of aggregator-cum-marketplaces have raised million $ funds, e.g. GoodBox, Localoye, etc.
Funds: $1.1 Mn
Investors: Aarti Grover MD – CMS Computers, Rajan Anandan MD- Google India, Arihant Patni –Managing Director at Hive Technologies and Satveer Singh Thakral – CEO of Singapore Angel Network among others
What they do?: Genome analysis. They collect DNA from customer’s saliva, etc. and prepare person’s genome profile that indicates his susceptibility towards certain genetic diseases – Cancer, Cognitive diseases, etc.
Product/Business status: Flagship product is GenomePatri. Price varies from 12K to 25K INR depending on customisations.
Number of employees: 31
Founders: IIT Kharagpur alumni
Launched In: January 2013
My Observation: In west, there are a handful of companies (e.g. www.23andme.com ) offering similar solutions, so this concept has already been tested in other markets. Marry this fact with a) the opportunity that India’s preventive healthcare sector will have in coming years. India’s healthcare sector witnesses close to 50 percent spend on in-patient beds for lifestyle diseases (Deloitte), and b) a seasoned CEO. Now, we have one of the validated equations to receive funding.
Funds: $1.05 Mn
Investors: Ronnie Screwvala’s Unilazer Ventures, India Quotient, Aaavishkaar and Accion Venture Lab.
What they do?: Provide answers of health queries on a WhatsApp like chat.
Product/Business status: Claims 200K downloads. One query per month is free, subsequent queries in the same month cost 150 INR per query.
Number of employees: 35
How old is the company: 5 years
Founders: Doctor and a serial Entrepreneur with a decade of experience.
Launched In: 2010
My Observation: Their initial model (IndianExpress) was a phone health service (tele-medicine). MeraDoctor also tried out offering insurance and medical discounts, all these services were chargeable from beginning (Source). In current version, they offer “WhatsApp with Doctors”. Persistence, focus on solving one problem at a time, traction and brand recognition built over last few years and experience of founders must have helped fetch funds.
Myth 1
You can’t raise money in absence of a team with proven track record.
Myth 2
You can’t raise funds without decent traction. (In some cases, startups were able to raise even without a working model.)
Myth 3
You need a unique business model or product. (Proven models in india or in other similar markets have better chance to get funded.)
So what really matters ?
Hustle noun | verb | something that works in startups
Ability to sell, relentless focus and sense of urgency seem to be the most valuable traits of all founders who are able to fetch funds.
As a homework, let’s try to see future of few companies that are bootstrapped so far. This study is not complete yet, let’s keep a watch on these startups and observe their moves closely before they zoom like sports cars of the race. They have something unique to offer and their accomplishments are unmatched because they have achieved their current state through unflinching doggedness and ability to hustle in frugal ways. Why?
What do they do?: Provides FREE video answers of health queries from doctors of top hospitals – Manipal, Columbia Asia , Apollo, etc. through their App.
Product/Business status: 200+ paying customers. Partnership with top hospitals. 100K+ users. 700+ hours videos watched every week. They are also Get-In-The-Ring India winner, organised by Nasscom.
Number of employees: 25
How old is the company: 3 years
Founders: Doctor, a serial entrepreneur and a technologist with decades of experience. Leadership team is from IIMs & NITs.
My Observation: Doctors’ Circle offers appointment booking, answers health queries and has built a huge video content repository. They also conduct regular live webinars with doctors on health issues. Innovative business model with 150+ paying customers, promising organic traction and experience of leadership team is enticing a lot of interests from investors.
Funds: Bootstrapped
What they do?: HealthCare CRM- Appointment, Billing, Patient records mgmt, Practice mgmt, support for multi clinics & analytics.
Product/Business status: Indian and International customers. 3 years old product offers nearly all features of a Healthcare CRM.
Number of employees: 15
How old is the company: 3 years
Founders: Both founders have 20+ years of experience of working in India and USA. DocEngage is their second venture.
My Observation: Unflinching focus on building right product, vast experience of team in building technology products, industry experience, prior entrepreneurial experience, existing clientele and a comprehensive product out in the market for last 3 years, can generate a lot of curiosity among investors. (Sources- LinkedIn, Website, Similarweb, Media)
What do they do?: Digital Nurse – Tips, Alerts, Health records, prescriptions etc.
Product/Business status: 50k+ total downloads. Current user base can be anywhere in 5K-10K range.
Number of employees: 15
How old is the company: 3+ years
Founders: IIT D alumni with 15+ yrs of experience.
My Observation: Medyug has an ambitious plan to become everyone’s personal health assistant, catering to all type of patient profiles – Parenting, Pregnancy, General medicine and tracking health history. Such a solution can provide tremendous synergy to any big hospital chain to integrate it with their existing Hospital management system. Experience of founders and recently acquired traction can help them allure investors.
There are ways you can raise funds irrespective of the current state of your startup. You can raise less during early stage by giving away more equity to angel investors or you can invest your hard-earned money and wait to build traction, generate revenue to protect founders’ equity before you go for Series A, even acquisition is possible by this time. No one other than you can decide what’s the right time for raising funds.
Most useful finding from this study for all hustlers is – if lack of funds is worrying you, think out of the box to save and build your startup, you don’t have to compromise on your terms, search globally for right investor and hustle! Need example? BookDoc raised funds from royal family of Brunei.
Disclaimers / Assumptions / Constraints
- Facts are procured from publicly available information. You should verify authenticity of sources.
- Inferences drawn are my personal views and I may be wrong in other’s opinion. Apply your own discretion while sharing / citing / drawing the conclusions.
- This article considered progress of companies till 25th Jan, 2015.
- For this study, Companies are chosen only from digital healthcare space. However, similar patterns can be observed in other industries as well.
- Please feel free to point out any fact/data which is not correct.
- Sources: Websites of companies, LinkedIn , Mobile apps available in playstore, Online Media – YS, BS, ET, VC, Inc42, Crunchbase, etc, Talking and listening to top management of respective companies
- Data & Insights – Unpaid web and mobile data research websites, Company’s Social media pages.
Disclaimer: The views expressed here are solely those of the author in his personal capacity not of Inc42 and the editor(s).
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