Quadria Capital-backed HealthQuad which recently announced the close of its second fund at $162 million, will be deploying over 50 per cent of the fund into Indian healthtech start-ups by May 2022 across preventive well-being, mental health, community care and healthcare financing. The VC fund had deployed $35 million in Fund I, realising 4.5 times returns for the investors, a senior executive of HealthQuad told BusinessLine.
The second fund has deployed $60 million across seven bets, including Medikabazaar, THB, Stanplus, Ekincare, Impactguru, Qure.ai, HealthifyMe, and will be investing in 10-15 start-ups of different sizes.
HealthQuad has been vouching for India’s potential as a global healthtech solutions provider. This has brought in several major global investors, including biopharmaceutical major MSD and other strategic institutions in pharma and healthcare, development financial institutions (DFI), funds of funds and large European conglomerates to invest in HealthQuad’s fund.
Speaking to BusinessLine, Charles-Antoine Janssen, Co-founder and Chief Investment Officer of HealthQuad said, “India has such high unmet medical needs, with close to 700 million people not having access to modern medicine yet and that has let to tremendous opportunities. With Indians being resilient and entrepreneurial it created companies which have brought solutions not only to India’s needs but are being recognised globally for being the best solutions for Africa, low-income Asia and low-income Latin America. There’s a global potential in Indian health tech and health innovation that can transform the quality of care of the $3 billion in planet needing better healthcare.”
Janssen wanted to enter India early, which led to the HealthQuad Fund-I being launched in 2016, with a targeted fund size of $10 million, that ended up closing at $35 million raising co-investment of another $25 million from LPs.
HealthQuad plans to stay invested in its portfolio companies for an average period of fives years, following a two-pronged strategy. It invests around $5-10 million in matured start-ups of ARR of around $1-5 million. The average ticket sizes could expand upto $30 million, if other LPs co-invest. For more developed start-ups having found right product-market fit, it invests around $12-15 million from its own fund.
“HealthQuad decided to set up a fund that will invest purely into healthcare innovations to increase access to healthcare for lower and middle income population and that’s what we have done in Fund I. That has been tremendously successful. First fund has generated 4.5X returns for investors, that is 37 per cent IRR and Fund-II is well on its way to do similar returns but it is in its early days,” he said.
Janssen added, “We invest in all companies which are catering to mid and low income population, but at the same time are growing fast so that there is no trade-off between financial and societal returns. The entire healthcare value chain is getting disrupted because it is getting digitised.”
Opportunities in India
HealthQuad believes that technology is the way ahead for the broken Indian healthcare system to transform faster, reduce costs and take off pressure on physicians and nurses. Nearly 30 per cent people living in the rural areas are still travelling around 30 km to access primary healthcare.
From an investment opportunities perspective too, things have started to change. Janssen said, “Historically, private equity investors were investing in large healthcare delivery companies serving the richest 30 per cent in India, they were focussing on bricks and mortar diagnostic companies and branded generics. It was impossible to make money in India if you were investing in preventive care, community care, primary care and health insurance. Claims ratio in India were rather high. With digitisation, all these sectors have opened up.”
HealthQuad is now betting on improved mental health solutions and accessibility. “There is a huge need for improved mental health in India, and digitisation can be a big answer to that. There’s no doubt that there’s a need with a combination of AI, mental health and facilitated digital distribution that allows the stigmas attached with mental health treatment to be lowered, there’s a clear benefit,” he said.
“Quality and access to primary care, medical info, drugs and physicians in rural and semi-rural areas is a big issue, tech can address diagnostics and supply chain issue and presents us a huge area to look into. So far it has been a slow evolution,” Janssen added.
Published on
April 18, 2022
