The global growth in health tech over the past three years is undeniable thanks to the pandemic. The event has accelerated the deployment of telemedicine, virtual care and drug delivery, sparking investor interest in the sector.
Investment has also trickled into Africa, with big checks going to growth-stage startups. Digital healthcare provider from Lagos and Texas RelianceHealth is the latest beneficiary and is doing so in a big way, raising $40 million. The Series B round is the largest of its kind in African health tech.
Reportedly, healthcare technology in Africa should reach a market value of over US$11 billion by 2025, and Reliance Health aims to play a critical role on the continent to achieve that capitalization.
The company was founded in 2016 by Femi Kuti, Opeyemi Olumekun and Matthew Mayaki. It uses an integrated process to offer health insurance and telemedicine through partnerships with hospitals and healthcare facilities.
“Our mission is super simple. I mean, the definition is easy, but the execution is sometimes harder than that,” Chief Executive Kuti told TechCrunch on a call. “So essentially we’re trying to use technology to make quality healthcare accessible and affordable in emerging markets.”
Kuti’s comments highlight critical issues with healthcare in Nigeria: accessibility and affordability. In Nigeria and some emerging markets, it is common for people to take health care for granted. There are no metrics to guarantee optimal health care when it is used, so people tend to accept any health care available.
In terms of pricing, hospitals have not found a way to not necessarily charge patients the cheapest rate, but instead use rates that the general public can conveniently afford.
Reliance Health has combined both of these important concepts, giving users access to an integrated suite of healthcare products through subscriptions. Some of this healthcare is provided directly by Reliance Health – through its telemedicine platform, drug delivery system and two clinics in Lagos, Nigeria. Others are provided through third-party partners: hospitals, diagnostic centers, and pharmaceutical centers.
In 2015, the three co-founders founded Kangpe, a telemedicine-focused startup in Nigeria with the slogan “Doctor in your pocket”. But a year after running the company and realizing how early the market was and what the systemic tracking gaps and processes were, they switched to Reliance.
“For example, if a patient chats with this doctor back then and he recommends an X-ray check or an operation afterwards, what happens then?” he asked. “We couldn’t handle all of that [end-to-end] processes, and that required kind of a transition from the whole telemedicine focus thing to this integrated healthcare provider that we’re doing today.”
Reliance Health operates business-to-business and business-to-customer models. RelianceHMO is the company’s health insurance plan for both customer groups, allowing individuals to choose monthly, quarterly, or annual health plans ranging from ₦3,500 (~$7.00) to ₦148,500 (~$297.00). On the other hand, companies can take out subscriptions on behalf of their employees, which Kuti says are slightly cheaper than plans used by retail customers.
In total, more than 200,000 people from both models use Reliance Health. But the platform has experienced the most stickiness among its business customers. The platform serves 600 of them, including Biersdorf Nivea, Jumia and PwC, while maintaining an attributable intent rate of 99%, Kuti said.
With an app, these customers can chat with a doctor, find healthcare providers near them to visit or get medication, and manage the delivery of their medication. For example, based on usage, Femi said Reliance could suggest lifestyle changes if a customer was diagnosed with diabetes and make hospital referrals if a user spent hours on the line during their last visit to the clinic.
“Essentially, we’re trying to guide people to the best option in terms of care that we can get,” he said. “And whether that option is provided by a third party or by us, we’re more interested in how we work with the customer to guide them to the best option for accessing their health data.”
Photo credit: RelianceHealth
The six-year-old startup said it has seen an average 3.5x year-over-year revenue growth since 2016. The new round of funding led by General Atlantic will fuel this continued growth. It is the US-based growth equity investor’s first investment in Africa and joins the growing list of first-time investors who have led growth rounds such as FTX, Avenir, SVB Capital and Fidelity over the past two years.
“General Atlantic is pleased to announce our first technology investment in Africa in Reliance Health, which supports a team focused on improving healthcare for millions of patients in Nigeria and abroad,” said Chris Caulkin, General Atlantic’s chief executive officer and head of EMEA Technology in a statement.
“We are continually impressed by Femi and Ope, who exemplify the entrepreneurial spirit and innovation that we see across the African continent.”
Other investors involved in the round include Partech, Picus Capital, Tencent Exploration, Africa Healthcare Master Fund, P1 Ventures, Laerdal Million Lives Fund and M3 Inc.
This investment comes two years after the company’s $6 million Series A investment in January 2020. Reliance previously raised $2 million for its seed round of months after YC in 2017. Investors in both rounds include Partech, Y Combinator, Golden Palm Investments, Ventures Platform, Lofty Inc– as well as Tencent and Picus, who contributed a total of $48 million to the three rounds.
The chief executive said Reliance Health plans to use some of the funds to build two more clinical facilities in two Nigerian cities, Abuja and Port Harcourt. Reliance Health also intends to hire talent and scale new product lines, particularly for diaspora Nigerians.
The healthtech company will expand into new markets. Egypt is high on that list, and Reliance Health has already hired a country manager to start mid-year. Kuti adds that the company will enter two or three countries before the year is out.
After years of government and donor-backed funding initiatives, venture capital in African health technology is on the rise. In 2020, healthtech startups are springing up across the continent Raised less than $100 millionbut that number rose to $370 million last year, according to reports on the African VC landscape.
While the sector still accounts for less than 10% of total funding, large rounds of startups such as Vezeeta, helium health, 54 Gen, mPharma, Africa Health Holdings and now Reliance Health means that African health technology is coming of age, driven by market drivers such as the pandemic, population size, data analysis and consumer orientation.
