Reliance Health, a Nigerian healthtech startup, has raised $40 million in funding led by General Atlantic

There’s no denying that the pandemic has fueled global growth in healthtech over the last three years.

The event has accelerated the use of telemedicine, virtual care, and drug delivery, which has piqued the interest of investors in the sector.

Large sums of money have also been invested in growth-stage startups in Africa. Reliance Health, a digital healthcare provider based in Lagos and Texas, is the latest beneficiary, and it is doing so in grand style, raising $40 million. The Series B round is the largest in African healthtech history.

According to reports, healthtech in Africa will have a market value of more than US$11 billion by 2025, and Reliance Health intends to play a key role in the continent’s capitalization.

Femi Kuti, Opeyemi Olumekun, and Matthew Mayaki founded the company in 2016. It provides health insurance and telemedicine through partnerships with hospitals and healthcare facilities using an integrated process.

“Our mission is extremely simple. “I mean, the definition is simple, but the execution is sometimes more difficult,” said CEO Kuti on a conference call with TechCrunch. “Essentially, we’re attempting to use technology to make quality health care accessible and affordable in emerging markets.”

Kuti’s remarks highlight two critical issues in Nigerian healthcare: accessibility and affordability. People in Nigeria and other emerging markets frequently take healthcare for granted.

Because there are no metrics in place to guarantee the optimality of healthcare when it is used, people tend to accept whatever healthcare is available.

In terms of pricing, hospitals have yet to find a way to charge patients not at the lowest possible fee, but at a price point that the general public can comfortably afford.

Reliance Health has combined both critical concepts so that users can subscribe to an integrated suite of healthcare products. Reliance Health provides some of that healthcare directly through its telemedicine platform, drug delivery system, and two clinics in Lagos, Nigeria. Others are provided by third-party provider partners, such as hospitals, diagnostic centers, and pharmaceutical companies.

Kangpe, a telemedicine-focused startup in Nigeria with the slogan “doctor in your pocket,” was founded in 2015 by the three co-founders. However, after a year of running the business and realizing how early the market was as well as the systemic follow-up gaps and processes that existed, they shifted to Reliance.

“For example, back then, if a patient talks with this doctor and he recommends an x-ray checkup or, later, surgery, what happens next?” He inquired. “We weren’t able to manage all of those [end-to-end] processes, which necessitated a soft pivot from the whole telemedicine focus thing to this integrated healthcare provider thing that we’re doing now.”

Reliance Health operates on both a business-to-business and a business-to-customer basis. RelianceHMO is the company’s health insurance plan for both groups of customers, with monthly, quarterly, or yearly health plans ranging from $3,500 ($7.00) to $297.00. Businesses, on the other hand, can make subscriptions on behalf of their employees, which Kuti claims are slightly cheaper than retail customers’ plans.

Reliance Health is used by over 200,000 people across both models. However, the platform’s business customers have proven to be the most loyal. According to Kuti, the platform serves 600 of them, including Biersdorf Nivea, Jumia, and PwC, while maintaining an attributable intention rate of 99 percent.

These customers can use an app to chat with a doctor, find healthcare providers near them to visit or get medications from, and manage the delivery of their medications. According to Femi, based on frequent usage, Reliance, for example, could recommend lifestyle changes if a customer was diagnosed with diabetes and make hospital referrals if a user spent hours on the phone during his last visit to the clinic.

“Essentially, what we try to do is guide people to the best option in terms of care that we can receive,” he explained. “And, whether that option is provided by a third-party partner or by us, we are more concerned with how we work with the customer to guide them to the best option when it comes to accessing healthcare data.”

The six-year-old startup reported 3.5x year-over-year revenue growth in 2016. This continued growth will be fueled by a new round of funding led by General Atlantic.

It is the firm’s first investment in Africa, joining a growing list of first-time investors who have led growth rounds in the last two years, including FTX, Avenir, SVB Capital, and Fidelity.

“General Atlantic is thrilled to announce our first technology investment in Africa in Reliance Health, backing a team focused on improving healthcare quality for millions of patients in Nigeria and around the world,” said Chris Caulkin, General Atlantic’s managing director and head of EMEA Technology, in a statement.

“Femi and Ope have consistently impressed us, exemplifying the entrepreneurialism and innovation that we see across the African continent.”

Partech, Picus Capital, Tencent Exploration, Africa Healthcare Master Fund, P1 Ventures, Laerdal Million Lives Fund, and M3 Inc. are among the other investors in the round.

This investment comes two years after the company’s $6 million Series A, which took place in January 2020. Reliance previously raised a $2 million seed round in 2017, months after graduating from YC. Partech, Y Combinator, Golden Palm Investments, Ventures Platform, Lofty Inc– as well as Tencent and Picus– were among the investors in both rounds, which totaled $48 million.

According to the CEO, Reliance Health intends to use a portion of the funding to construct two more clinic facilities in two Nigerian cities, Abuja and Port Harcourt. Reliance Health also plans to hire talent and launch new product lines, particularly for Nigerians living in the diaspora.

The healthtech firm will enter new markets. Egypt is at the top of that list, with Reliance Health already hiring a country manager in preparation for a mid-year launch. Kuti adds that the company plans to enter two or three new markets before the end of the year.

Following years of government and donor-supported funding initiatives, venture capital in African healthtech is increasing.

According to the CEO, Reliance Health intends to use a portion of the funding to construct two more clinic facilities in two Nigerian cities, Abuja and Port Harcourt. Reliance Health also plans to hire talent and launch new product lines, particularly for Nigerians living in the diaspora.

The healthtech firm will enter new markets. Egypt is at the top of that list, with Reliance Health already hiring a country manager in preparation for a mid-year launch. Kuti adds that the company plans to enter two or three new markets before the end of the year.

Following years of government and donor-supported funding initiatives, venture capital in African healthtech is increasing.

In 2020, healthtech startups across the continent raised less than $100 million, but that number increased to $370 million last year, according to reports on the African VC landscape.

While the sector still makes up less than 10% of total funding, big rounds over the last two years from startups such as Vezeeta, Helium Health, 54gene, mPharma, Africa Health Holdings and now Reliance Health mean African healthtech is coming of age buoyed by market drivers such as the pandemic, population size, data analytics, and consumer-centricity.