HOW TO RAISE FUNDS FOR MEDICAL START-UPS IN INDIA

When the global pandemic hit in 2019 the world felt a sudden urgent need for medical infrastructure to combat it.  The medical infrastructure available at that moment was not competent to face the challenge at hand.

Before that, the world's primary health care was in a ridiculous state where on the face of it, it seemed like we were prepared for whatever comes but the entire world collapsed and stopped as it was not prepared for what the pandemic came with.

The gap between accessibility and affordability was so vast that it seemed impossible to fill it but the medical startups filled those gaps by providing healthcare facilities in the remotest areas where there was an acute shortage of doctors, nurses, medical equipment and medications.

These startups grew rapidly around the world including India to combat the urgent need of the market. These start-ups had their own means and ways to fund and function and survive here we will see what are the means available today to get funding for Medical Startups in India.   

1)      GOVERNMENT GRANTS AND SCHEMES

The Indian government offers a variety of grants, initiatives policies aimed at empowering medical infrastructure. By funding groundbreaking research initiatives, and simplifying regulatory processes, the government is providing fertile soil for these startups to grow. Some ways and means by which the government is aiding these start-ups can be as follows

v  Department of Biotechnology (DBT)

Biotechnology Industry Research Assistance Council (BIRAC).  An initiative of (DBT) offers multiple schemes for funding healthcare start-ups such as

§  Biotechnology Ignition Grant (BIG) provides a sum of Rs 50 lakh at the ideation stage.

§  Small Business Innovation Research Initiative (SBIRI) helps startups by providing high-risk, early-stage innovation and focusing on medical devices and biometrics.

§  BioNEST (Bio incubators) The DBT has set up several bio-incubators under the BioNEST program to provide startups with state-of-the-art-laboratories, shared equipment, and mentorship like the C-CAMP in Bengaluru and IKP Knowledge Park in Hyderabad.

§  PACE (Promoting Academic Research Conversion to Enterprise) fills the gap between startups and academia by supporting ideas with potential commercialisation.

§  Regulatory Support is also provided by DBT helping and guiding on biosafety, obtaining certifications and running clinical trials.

v  National Health Authority (NHA)

§  Ayushman Bharat Digital Mission (ABDM)

ABDM is a flagship program of the Health Ministry aimed at creating a digital ecosystem for healthcare delivery in India. It aids the start-ups in creating solutions in digital health records, telemedicine and patient management.

§  Public -Private Partnerships (PPPs)

NHA nurtures PPPs to encourage innovation in healthcare. Startups gain opportunities to partner with governments to deploy their products at a scale. Also, access funding opportunities that are aligned with NHA’s goals.

Practo and 1mg are some start-ups that have benefitted from the NHAs push towards integrating teleconsultation and e-pharmacy solutions into the broader healthcare system.

To know more about this you can follow the link below:

v  Startup India Initiative

It provides funding through the Fund of Funds for Startups (FFS), with benefits such as tax exemptions, easier compliance, and access to a dedicated startup portal for grants and mentorship.

v  MSME Schemes

Small and medium healthcare businesses can benefit from innovation grants, credit guarantees, and subsidies by registering through the Udyam Portal

v  Make in India

For startups focused on manufacturing medical devices, the Make In India initiative offers subsidies, incentives and support for innovation in manufacturing.

2)      ANGEL INVESTORS

Angle investors not only join hands with medical startups to aid them financially they also support by providing valuable mentorship, industry insights, and connections to help startups thrive in the competitive healthcare sector. Some common Angel Investors and /or networks focusing on Medical Startups in India are

v  Indian Angel Network (IAN)

It is one of the largest angel networks in India, in the healthcare sector it focuses on health tech, Diagnostics, medical devices, and telemedicine.

Notable Investment: Pregbuddy, a health tech platform for expecting mothers.  

v  Mumbai Angels Network

It is a prominent angel investment group in India with a focus on early-stage healthcare startups and medical technology.

Notable Investment: Dozee. A contactless health monitor startup.

v  Health Quad

It focuses on early-stage investments in healthcare startups transforming healthcare businesses in India leveraging technology and innovative business models to address healthcare challenges

Notable Investments : BeatO: A full-stack integrated platform focused on diabetes care. Medikabazaar: Provides a marketplace for medical supplies with a comprehensive supply chain solution for healthcare stakeholders.

3)      VENTURE CAPITAL INVESTORS

Venture Capital (VC) firms play a crucial role in nurturing healthcare startups by providing capital, mentorship, and access to a network of industry experts. Some of the VC investors actively supporting medical startups in India are

v  Acel Partners
It was, established in 1983, and is a leading global venture capital firm with a strong presence in India. It has made investments in innovative medical startups in India like: Portea Medical- A home health care startup providing services like physiotherapy, nursing, and doctor consultations.      

v  Sequoia Capital Industries

Sequoia Capital India focuses on partnering with startups that have the potential to transform industries and improve lives. Their approach includes providing capital, strategic guidance, and leveraging a vast network to help startups scale and succeed.

v  Chirate Ventures (Formerly IDG Ventures) established in 2007 by Sudhir Sethi and TCM Sundaram, is an early-stage venture capital firm focusing on Indian startups across various sectors, including healthcare.

Notable Investment : Onco: A Bengaluru-based health tech company offering a patient-centric cancer care management platform, connecting patients with oncologists, hospitals, and diagnostic centres.

·         Matrix Partners India is a venture capital firm with its specialisation in early-stage investments across various sectors, including healthcare.

Notable Investment : Practo: A health tech company providing a platform for online doctor consultations and appointment bookings.

·         Blume Ventures is a prominent venture capital firm in India that actively invests in early-stage startups across various sectors, including healthcare.

Notable Investments : HealthifyMe: A leading health and fitness app offering personalized diet and fitness plans.

Ultrahuman: A health-tech company specializing in metabolic fitness, offering products like the Ultrahuman Ring and continuous glucose monitoring systems to help users optimize their metabolic health.

4)      CORPORATE VENTURE ARMS AND PARTNERSHIPS

Many large pharmaceutical and healthcare companies have venture capital arms or corporate innovation programs that fund startups in the healthcare space.

• Johnson & Johnson Innovation (JLABS): Provides funding and resources for early-stage medical startups and has a presence in India.
• Medtronic Labs: Focuses on healthcare innovations, especially in medical devices, and can partner with startups developing novel technologies.
• GE Healthcare: Has been known to support innovations in medical devices and healthcare solutions.

5)       Healthcare and Technology Accelerators

Joining accelerators and incubators specific to healthcare can provide both funding and mentorship:

·         Tata Trusts’ Innovation Fund: Provides funding to healthcare startups in India, especially those targeting underserved populations.

·         Indian Institute of Technology (IIT) Incubators: IITs have a number of incubators that support medical technology startups, with access to funding, mentoring, and resources.

Key Takeaways:

• Focus on government schemes, angel investors, and VC firms with a healthcare focus in India.
• Demonstrate your regulatory and clinical strategy clearly, as investors in India are vigilant the complexities of healthcare products.
• Leverage accelerators and incubators that provide funding, mentorship, and resources.
• Build a compelling pitch with market data, a clear financial model, and a strategy to scale in the Indian context.