In this blog post, Ashutosh Mundhada, a student pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the top 10 healthcare investors in India.
- India, with a population of 1.2 billion people, is the second most populous country in the world. Almost 80 years since Independence, India is still considered a developing nation. We have not been able to reach 100% sanitation and completely get rid of open defecation.
- In spite of producing 50,000 M.B.B.S doctors, which is one of the highest in the world, one of the highest number of nurses and trained professionals along with FDA approved devices & medicines, we still have a long way to go.
- With a doctor-patient ratio of 1 doctor for every 1700 patients against the WHO minimum requirement of 1 for every 1000, disruption is the only way to go ahead.
- This sector is predominantly privatized with government playing a key role only in the education of doctors. Almost 75 to 80 percent of hospitals currently in the country are managed by the private sector.
Types of Healthcare Startups
The disruptions will come from startups in all aspects of healthcare.
- Hospital services: There is a need for an additional 600,000 to 700,000 beds in India over the next five to six years.
- Diagnostic services: The rise of chains such as Lal Pathlabs, Thyrocare is largely due to the availability of Venture Capital Money in the country.
- Diagnostic products: Low-cost point-of-care devices are being built to bring health-care solutions to the patients.
- Medical devices: Not limited to monitoring & evaluation of a patient’s health, latest medical devices are making healthcare more objective and accurate.
- Medical technology: Information Technology in the form of Hospital Information System (HIS) and other Digital Recordkeeping systems makes documentation of a lot of existing data possible.
- e-Health service: Telemedicine or Tele-Health as you say is the way to go ahead in a nation where only 30% population lives in the cities, however, 70% of the healthcare services are concentrated in the cities. e-Health services help us to reach the last mile.
Healthcare Investments Trends
In the last 15 years, from 2000-2015, a total of $3.21 billion Foreign Direct Investment (FDI) has been received by Hospitals & Diagnostic Centres (as per Department of Industry Policy and Promotion – DIPP).
According to Indian Brand Equity Foundation (IBEF), the healthcare market in India is expected to touch $280 billion by the end of this decade, clocking a CAGR of 22.9 percent from $100 billion as of 2015.
The healthcare delivery sub-segment accounts for 65% of the whole market. From 22 deals worth $91 million in 2014, healthcare has seen an increase to 57 deals worth $267 million dollars in 2015. Analyzing the data of the Top 20 investments made in 2015, there is a clear inclination towards preventive care & startups that increase the convenience of care.
Healthcare Investors Classification
The amount of Healthcare investments depends on the stage the Healthcare investor is investing in the startup. There are various funds that invest in Healthcare with varying focus groups and at different stages such as seed round, angel round, pre-series round and series rounds (A, B, C, etc)
There is no one way we can make a list of the “Top 10” as some are more focused on the Impact while others focus on the people they Affect and then there are the conventional Healthcare investors focusing only on the Return-on-Investment (ROI).
To compute with the list of these Top 10 healthcare investors (in no particular order), we analyzed the data of the 933 deals that have taken place in the first 11 months of 2016 (1st January 2016 to 28th November 2016) of which, 23 were in the healthcare investments. Similarly, we also analyzed the top 20 deals of 2015 in the Healthcare space.
Sequoia Capital: Sequoia’s website says that they have 16 Healthcare investments, some of which include the likes of CloudNine Hospitals & Vasan EyeCare. It’s worth noting that they do not count the likes of Practo & 1mg as one of their healthcare investments, rather in the technology sector.
Overall, Sequoia Capital has invested in 34 healthcare & health-tech companies. In 2015, of the top 5 Healthcare investments, Sequoia was a part of 4 of them, investing twice in Series B & Series C in Practo.
Matrix Partners: With 8 portfolio companies, Matrix Partners is one of the important Healthcare investors in the Healthcare Space. Matrix seems to have an eye at Unit specialty centre as it has invested in ophthalmology chain like – Centre for Sight, Orthopedic company Mewar Orthopedic, Maternity & Childcare company CloudNine Hospitals.
Matrix also co-invested in both the Series B & Series C rounds of Practo in 2015 along with Sequoia Capital.
Accel Partners: The Palo Alto headquartered Venture Capital claims itself to be the first partner to the most innovate technology entrepreneurs globally. Accel has invested in 15 healthcare companies including some front runners in the space of home-care such as Portea Medical of which it was involved in the Series A as well as Series B.
A few of these Healthcare investments though are in the USA, the others are in India. Another investment in CureJoy, a startup that focuses on expert advice on Cure, Fitness & Beauty is offbeat compared to conventional Healthcare investments.
Nexus Partners: This Venture Capital fund invests in startups in the United States or in India. Nexus Partners has invested in 5 companies in the healthcare space. Of these, Lybrate is one big name in the e-health services space which provides teleconsultations with specialists & super specialists.
Nexus Partners co-invested in the Series A round of Lybrate in 2015 along with Tiger Global and Ratan Tata. The only other Healthcare investment of Nexus Partners, which is headquartered in India is Eye-Q, which is a Gurgaon based startup focusing in the specialty of ophthalmology.
SAIF Partners: This VC firm has invested in a number of pharmaceutical manufacturing companies in China. Their only Indian investment in the pharmaceutical sector is IPCA, a market leader in anti-malarial with a fast-growing international presence.
Apart from these, SAIF Partners has led $ 1 Million pre-series A round in YourDost, a start-up providing emotional wellness expert to people, and also invested in Care24, a 24-hour healthcare service provider at home. Another investment of SAIF Partners, Qikwell, has been acquired by Practo last year.
Indian Angel Network: With the tagline of ‘For entrepreneurs, By Entrepreneurs’ Indian Angel Network (IAN) is the biggest group of Angel Healthcare Investors in the country.
It has invested in 6 healthcare companies in the country which are Neurosynaptic Communications, Transcell Biologics, Tattva Spa, Vittas Pharma, Consure Medical & Karmic Lifesciences. Amongst them, Neurosynaptic Communications has its presence not just in India, as the leading telemedicine and digital health solution provider but also operates in South Asia, South East Asia, Africa and the Middle East.
Unitus Seed Fund: This leading impact venture seed fund has launched its flagship healthcare initiative, StartHealth Program, in partnership with Pfizer, Narayana Health, Manipal Hospitals and others to accelerate the growth and development of startups providing affordable healthcare solutions to masses in India, through break-through technology.
Out of its five healthcare investments –
- 3 are seed-funding in Indian startups such as Smile Merchants, Welcare and Medypal.
- The fourth one is a series A venture in one-stop-shop pediatric primary healthcare services provider, AddressHealth, headquartered in Bengaluru.
Centre for Innovation Incubation and Entrepreneurship (CIIE): This startup incubation centre, based out of IIM-Ahmadabad, runs a special accelerator program for Healthcare startups along with The Dasra Girl Alliance. With the focus on Medical Devices, Healthcare IT & Biotech, Centre for Innovation Incubation and Entrepreneurship (CIIE) boasts of 7 portfolio companies and 10 accelerated startups.
IDG Ventures: This $3.6 billion dollar San Francisco-headquartered Venture Capital Fund has 6 healthcare companies in the IDG India Portfolio. IDG focusses on Health-tech companies and has participated in the $7 million series B round of Forus Health which has its innovative 3nethra ophthalmology diagnostic device.
The other portfolio companies are HealthifyMe, Axio Biosolutions, Perfint, Pluss which has now been rebranded to NetMeds and Zumutor Biologics Inc.
Blume Ventures: Positioning itself as a seed-stage venture fund that backs startups with both the funding as well as active mentorship, Blume Ventures is one of the most active Healthcare investors in the country. They have 3 investments in the healthcare space, namely HealtifyMe, Shantani & Tricog.
Blume participated in the $6 million dollar Series A round in HealthifyMe, an app based weight-loss coach.
Others: The biggest deal in 2016 was when Torrent Ltd, the holding company of the Torrent Group invested $37 million in PurO Wellness to acquire 75% stake in the company started by the former executive director of Torrent Group. PurO Wellness focuses on producing organic food ingredients and will soon launch its SoLite range of products.
Additional Read: These 8 startups are out to change home healthcare in India.
Though healthcare has been attracting heavy investments in the last few years, it requires great domain expertise to build a device, technology or even centers delivering this type of care.
This combined with the fact that there is an acute shortage of skilled doctors to treat the existing patients, building startups for a billion people really becomes a challenge. It is one of the biggest, most diverse and unorganized sectors at the moment and just as the startups want to create a disruption in this field, so are the investors who don’t want to lose out a share of the pie in this sector.
What do you think about Healthcare Investments in India? How is it helping to elevate the industry? Drop a comment & Share the article!!