Sevamob provides primary healthcare via mobile clinics and a tele-health marketplace in India and South Africa.
Shelley Saxena launched Sevamob in 2012 with $46,000 of founder funding and a vision for bringing primary healthcare to India’s rural poor. “We began by testing door-to-door sales to individual patients, but the high cost of customer acquisition revealed an expensive and unsustainable model,” Saxena explains. He adds, “We experimented and ultimately developed a group-sales model that the market seemed to validate.” With that initial traction, Sevamob participated in Village Capital’s global health accelerator program later that year and was awarded one of two $50,000 convertible note investments through the program’s peer-selection process. “We were as impressed with Sevamob’s potential as Shelley’s cohort peers were. He had done a lot with limited resources, and we believed that flexible early-stage capital could create the right runway to build out the company’s new B2B model,” reports Victoria Fram, Managing Director of VilCap Investments.
Over the next year, Sevamob developed its suite of healthcare services, deploying teams of medical professionals to provide consultations, rapid tests, medication, dental, and vision services to patients at rural schools, NGO’s, and corporate offices. In 2014, Sevamob opened two lines of credit and raised a seed round, ultimately led by ADAP Capital. In reviewing investment opportunities, ADAP Capital’s Andy Lower explains,
“I ask myself three questions: One, can I trust this entrepreneur? Two, does this business model have a fighting chance of survival? And three, would I want this endeavor on my obituary? Global health investing is risky, but Shelley and Sevamob were resounding yeses to all three of these.”
Despite lots of interest, multiple investors backed down from their commitments and the deal seemed stalled until ADAP Capital stepped up to lead the round. Lower adds, “We were excited about Sevamob’s ability to generate revenue early on and its ultimate potential for scale, so we jumped in.” Others then followed to fill the round and put Sevamob in position to grow.
Sevamob’s seed round closed as a $285,000 convertible note and also offered a rare liquidity opportunity for initial investor VilCap Investments. “A redemption at this point felt good for a global health field where we’ve seen few exits, and it was good for my long-term relationship with investors like VilCap as well,” explains Saxena, adding, “I could show them that I’d work hard for success for the company and for investors over time.” That hard work and relationship building paid off, as Sevamob grew from one unit in one state to five units in five states in India and prepared for its first priced equity round the following year. Fram shares that VilCap Investments had “maintained our relationship with Shelley, and Sevamob was one of the very few companies actually outperforming its projections. Shelley had proven that he could drive the company with revenues and the most capital efficient model we’d seen.” VilCap Investments reinvested, teaming up with ADAP Advisory Services to help Sevamob bring in additional investors and close on a $425,000 round at a $3,000,000 pre-money valuation.
Combined with a $100,000 layer of non-dilutive grant funding from the Pfizer Foundation for expansion into a second market, this capital catapulted Sevamob into its next stage of growth reaching 18 units and six pilot customers in South Africa. “We’re iterating on the service costs to be competitive there, using our existing infrastructure and technology components to our advantage,” explains Saxena, adding that the next goal is to open the model up to reach more consumers directly so that Sevamob can really scale. This strategy is garnering attention from new investment sources – including profit-maximizing traditional venture capital firms in India – as well as existing investors, with Lower pointing out that Sevamob’s story shows its massive potential to get to scale. Better yet for investors, Fram adds, “If Sevamob can get the unit economics right in different international regions, the opportunity for geographic expansion is exciting and will put them on the radar for potential corporate hospital and pharmaceutical company acquirers.”
The research described above was produced as part of the Social Entrepreneurship Accelerator at Duke (SEAD), in collaboration with the Center for the Advancement of Social Entrepreneurship at Duke (CASE), Innovations in Healthcare, Investors’ Circle and funded by USAID.