Healthcare startups chart big growth plans via VCs

By Sangeetha G Jun 30 2011

New entrants rely on low-cost model for affordable services

Healthcare startups have never been this confident about charting a quick growth strategy. Withventure capital funds increasingly getting interested in healthcare, startups too do not have to worry about scaling up operations. However, most of them keep themselves lean and capital-light.

Between January and June 2011, eight healthcare start-ups have raised $50 million, against five deals valued $19 million during the same period last year.

Within six months of 2011, healthcare companies have already raised $50 million against $60 million raised through 10 deals in entire 2010, as per the Venture Intelligence, a research service focused on private equity and M&A. The recent recipients of the funds include, Wellspring Healthcare, Jeevanti Healthcare and Vaatsalya Healthcare.

Bangalore-based Vaatsalya Healthcare raised $10 million in its third round of funding from Aquarius India Fund. The chain of low-cost hospitals in small towns of Karnataka and Andhra Pradesh wants to spread out to other states as well with the investment, said Raghavendra VS, head, finance, Vaatsalya Healthcare.

“Ours is a low-cost no-frill model in the primary and secondary healthcare space. Our hospitals took less than three years to break-even as we run on rented premises and cut all frills,” he said.

“There is a huge need for affordable healthcare in the country. The service has to be affordable, should use latest technology and should reach out to each and every corner of the country and not just the metros. Hospitals which work on this model will succeed,” said Mohan Kumar, partner of Norwest Venture Partners.

Vaatsalya profiled in Financial Chronicle Digitil Edition

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