Mumbai: Venture capital investment in home-grown health-tech startups in 2018 is at an all-time high with continuing investor interest, data from Tracxn Technologies shows. So far, $510 million has been invested across 80 health-tech startups, led by medicine ordering website PharmEasy, which raised $115 million across three rounds this year. Other significant funding rounds include fitness startup Curefit raising $100 million from IDG Ventures, and online pharmacy Netmeds securing a $35 million round led by Cambodian investor DPC Group.
Investments in health-tech startups have been rising steadily with 2016 and 2017 recording $163 million and $343 million, respectively, but the number of rounds fell from 135 in 2016 and 130 in 2017 to 80 so far this year.
Health-tech is broadly defined as use of technologies, such as analytics, internet of things, mobile and wearable devices, among others, to improve delivery of healthcare services.
According to investors, increased funding in health-tech startups is a factor of sectoral tailwinds such as increased internet penetration, rise in digital payments and big-ticket government initiatives.
“Health-tech did not see such traction earlier because companies were still catering to the first 60 million, or tier 1 consumers. After Reliance Jio’s launch, which multiplied internet penetration, access to the next 300 million users became an even bigger priority," said Anup Jain, managing partner, Orios Venture Partners.
In March, Orios was one of the investors to participate in a $30-million funding round in PharmEasy. It had earlier invested twice in the firm. Its portfolio also includes LetsMD, which provides healthcare financing options.
“Healthcare is also an acutely understood issue in India today, and enabling it with technology is very important. Start-ups, as well as investors, understand that," he added.
Demonetisation and the subsequent surge in digital payments also helped health-tech startups, said Anil Joshi, managing partner, Unicorn India Ventures, an early-stage venture capital firm. “While investors say healthcare is a core sector, creating money-making business models and making customers pay is often the issue. The push towards digital payments somewhat helped overcome this hurdle and improved market access."
Health-tech startups, especially online medicine delivery platforms, are focusing on customers with chronic ailments, enabling repeat orders, which resulted in increased business, added Joshi.
Unicorn India Ventures has invested about $2.5 million across two health-tech startups, including NeuroEquilibirum, which develops diagnostics for vertigo, and Pharmarack, which provides automated order processing and management for pharmaceutical retailers and distributors.
Healthcare schemes, such as Ayushman Bharat, have also put the spotlight on healthcare, leading to positive sentiments even among startups, said Amit Varma, managing partner, Quadria Capital, a healthcare-focused private equity fund. “Start-ups are trying to solve the key issue of last-mile connectivity. No one wants to go 400 km for better healthcare. And in this, technology is the differentiator."