Sequoia Capital and Elevar Equity are making a co-investment in Glocal Healthcare Systems Pvt Ltd, a rural healthcare startup set up by a team of former bureaucrats. The funds will be used by the startup to set up its first set of hospitals that will come up at the block level in rural areas, sources familiar with the development told VCCircle.
The first round of venture financing in the company is in the region of Rs 15 crore ($3.26 million) with both investors committed to scale it up, going forward, given the capital intensive nature of the venture. Both venture capital firms will invest an equal amount in Glocal, which aims to become the largest rural healthcare provider in the country. The venture firms will get a minority interest in the startup.
Glocal is promoted by former SEBI chairman M. Damodaran and former secretary to Chief Minister of Tripura Sabahat S. Azim. While Damodaran is the chairman, Azim is the CEO of the Kolkata-based firm. Azim, a doctor himself, was also the CEO of SREI Sahaj E-Village Ltd, a public-private partnership between SREI Infrastructure Finance Ltd, Government of India and six state governments.
Glocal is setting up a 30-bed primary & secondary hospitals in rural India which will offer out-patient, in-patient, OT, emergency and obstetric services besides pathology, radiology, pharmacy & blood bank. Glocal will first set up eight such hospitals in West Bengal in the districts of Bankura, Birbhum, Burdhaman, East Medinipur, Nadia, Purulia and Musrhidabad.
The firm is looking at a capex of at least Rs 2 crore on each facility. Unlike a conventional brick-n-mortar facility, these are designed to be modular structures that can aid fast scaleup.
Talking to VCCircle, Sabahat Azim says, the first round will help them set up eight hospitals in 12-18 months after which they would be ready for the next round of funding.
The firm will raise another Rs 45 crore as debt for setting up these facilities.
Azim says, there is a very sound commercially viable model to the business. Explaining this further, he says, a rural Indian, on an average, spends close to Rs 1,115 on healthcare spending annually which comes to about Rs 15.5 crore in each block (consisting of a population of 1.4 lakh across a radius of 14 km). Glocal aims to get healthcare to the doorsteps of these people at costs that would be half their annual spend. This would be possible through technology support, economies of scale and supply chain efficiencies.
“We want to create an assembly line kind of approach,” Azim says. The firm has identified that 95% of the rural population suffer 42 diseases which these healthcare centres will essentially address. These hospitals will not have tertiary care facilities.
The firm also plans to provide financial products to healthcare service and equipment providers through Glocal Healthcare Financial Services, as per its site. Glocal plans to set up 2,000 hospitals of 30-bed across rural India in five years. Each of these hospitals is expected to serve a population of about 1,40,000, thus serving up to of 2.8 million people annually.
Glocal plans to use Rashtriya Swasthya Bima Yojana (RSBY), government’s special social health insurance scheme, for payment mechanism for its bottom of the pyramid clientele.
Viedea Capital, a Bangalore based venture capital advisory firm, has put together the financial transaction.