The fresh fund infusion of $55 million led by Tencent has reaffirmed investor confidence in healthcare firm Practo. According to estimates, the latest round of funding puts the company's valuation well past $600 million.
The Series D funding round announced on Tuesday also saw the participation of three new investors â€“ Russian venture capital (VC) firm ru-Net, Japan's Recruit Holdings' investment arm RSI Fund and US-based Thrive Capital. Practo's founder Shashank ND said the company, founded in 2008, will also enter the health insurance segment as an aggregator, besides expanding its international business, which has become an important part of its growth ambitions. In an interaction with TechCircle.in, Shashank spoke about the company's future plans and why the five-fold increase in losses at this stage should not be a bother. Edited excerpts:
Practo's loss for FY2013-14 was Rs 9 crore, in FY2014-15 it was Rs 12 crore and in FY2015-16 it was Rs 64 crore. What were the reasons? How are you trying to reduce it?
We are still in the growth phase on the consumer and enterprise side. The industry is still very nascent. We expanded only in the last two years. We intend to enter many more geographies. There is a huge opportunity to build a really good health tech platform and for this investments are required. That is why a good set of investors have backed us. We hope this platform continues to do well.
What are the investors telling you? How long will the losses go on?
The fact that all of them participated in the round indicates that there is good support from our investors. But we have also been scaling up our efforts of monetisation. From both ends, we are in sync with our investors. We are on a trajectory of growth.
Can you elaborate on Practo's international expansion plans?
We looked at developing markets where out-of-pocket spends are high, where insurance penetration is low and the healthcare industry is dominated by private players. We wanted to be focused on specific regions like the Middle East, Latin America and South East Asia. Markets like Indonesia and Brazil also have a large population. Technology adoption is higher in these markets than even in India. Brazil's per capita income is higher than India's and the healthcare market is twice that of India and is growing. All our products are in local languages. Revenue from the international [market] is growing faster than India's and might become bigger than India's in some time.
You have done five acquisitions in the last nine years. Are you looking at more this year?
We don't have targets, but when we can choose between build and buy, we opt for the latter more often. We have also opened up our application programming interface (API) for other companies to build products on top of our platform. Acquisition is only one way of working with other startups. They can be in a revenue-sharing partnership with us.
What has been your experience in small cities and towns?
We get around 20% of our traffic from non-metro cities. It has been difficult to go deeper. While smaller cities and towns have access to mobile phones, the markets are not big enough to make large investments. We still need to devise a new robust model in terms of cost. The awareness about Practo is still low even in the big cities and there is headroom for growth there. Right now, we see more opportunity in the international markets, especially since there are no competing products there.
Where does Practo incur most of its expenses?
In a high-tech company majority of the costs are people. You are nothing but the people you have. It is all human capital.