Investment Opportunity in the African Healthcare Sector: Sven Hermans Presents Ponea’s Marketplace

Interview with Sven Hermans, Board Member at Ponea Health

What is Ponea’s concept?

There are two main aspects about Ponea. The big idea is a marketplace. It is comparable to an Airbnb, Uber, or airline industry, where there is a marketplace that brings together the people that pay, consume, and provide services. At Ponea, the marketplace opportunity is related to healthcare. In Kenya and Africa as a whole, where Ponea is currently focusing, there still are big issues around access to healthcare, related to the timing of being able to access care, affordability and quality. So Ponea’s idea is to build a marketplace which creates better, more timely and affordable access to care.

Why did you choose the Netherlands?

If you are in healthcare and you are looking for financial partners, you want to fulfill the highest standards of compliance and transparency. We chose the Netherlands to adhere and also put ourselves to the test in terms of financial, transparency and compliance standards, because that can give our partners and potential investors, even more confidence in Ponea, how we want to do business, build and scale our company. Furthermore, our mission is to democratize access to healthcare. We started delivering on that mission in Kenya, but this is a model that is highly scalable, and we want to roll it out in many more markets. If you want to roll out, then you also want to create a hub that can enable this scaling up and the transportation or the scalability from one market to another, and also centrally deliver the support to those markets. That is why we chose a central location which is the Netherlands.

What is your competitive advantage?

The first type of competition is the status quo – we want to challenge the current model and drive towards a new situation where there is a significantly higher access to care and better health outcomes. In the current healthcare system, there are a couple of items that require attention, including ensuring a quality healthcare infrastructure, sufficient funding for the healthcare system and sufficient, trained healthcare personnel. With a digital platform, we can address these issues in an efficient and effective way. The team behind Ponea also brings together a lot of experience in digital technology in healthcare in Africa and other industries, and that makes a big difference.

Number two is advantage versus our competitors, which is related to the essence of the platform itself. It has been built from scratch and it does not need to deal with legacy. It is built on a future-proof and scalable platform, which also includes the use of micro-services. So we can relatively quickly scale beyond one market and that makes it a very flexible platform that does not only address the retail side, be it direct-to consumer or via B2B2C, it brings together the FinTech side, insurance, payments, grants and funding. It also brings together the provider side, so it helps providers integrate with the marketplace and run their practice and their entrepreneurship much more efficiently. The competition versus other players in this environment would be around the flexibility and the scalability of the platform, but also the integrated functionality that it offers.

Thirdly, if you look at what is at stake here or what can be realized in democratizing access to care, I would rather talk about co-opetition. To make success in Africa, more parties should be bringing digitization into healthcare, because that will bring the market, the patients and the providers to the next step. In that sense it is less of a competition, because the penetration of digitization in healthcare is still relatively low, and more about jointly realizing the future of healthcare in Africa.

What can Africa bring to this concept?

At the moment, the traditional big powers and the big markets are shifting, and that positions Africa for investors, but also for growth and investment. Growth rates in Eastern African markets are at 2 to 3 times what is currently in the United States or Europe. So, from a growth perspective, that is exciting. In the US and Europe markets, there are low population growth rates, while in the Eastern African markets, there is a 15% or 20% growth rate and a population that is young, talented, and digitally-savvy. So, from a talent and growth perspective, that makes it a very exciting market where you could leapfrog from to a future-proof, digitally enabled ecosystem for healthcare, whilst many markets in Europe and the US are dealing with a lot of legacy and need to go through different stages. We can immediately make the step from where the country is today, or the markets are today, to a fully digitally enabled situation. Besides, in markets like Europe or the US, close to 100% of the people are insured. In Africa, that number is somewhere around 10 to 20%, which means that 8 out of 10 people are not insured for unexpected healthcare expenses. And that is either because they chose not to take insurance or because they cannot afford it. From a marketplace perspective, that creates a lot of opportunity for improvement, because all these people are spending money from their pockets on healthcare on a regular basis, and being able to use a platform to do that efficiently and get the best quality is of course a big opportunity.

What have you achieved so far in terms of investments?

The total amount of money that has been invested to date has been raised mainly from the founders and angel investors. That is between 4.5 to 5 millions. We have also been developing the platform and proof-of-concept. Phase two, which we are going to start in H1 2023, is the commercialization based on the proof-of-concept learning. Thirdly, the goal would be to scale up in other markets and replicate the model. The platform that we have developed is the marketplace. It is a scalable technology platform with the 4 dimensions we addressed earlier. So number one, the B2B and the B2C retail engine, where the consumer can engage with healthcare services. Number two is the FinTech side, which is banks, telecoms and insurance grants, as well as a platform part that enables interaction with these services and parties. Number three is a pharmaceutical brand platform where providers of pharmaceutical services can market their propositions and products. And then, finally, the healthcare providers side, such as doctors and health entrepreneurs, where we allow them to run their business, including patient management and patient records.

In the proof-of-concept phase we have served around 20,000 consumers with health services and those consumers interacted with around 1,000 providers of healthcare services to generate 1.5 million USD in revenue. That is what has been achieved so far and a lot of lessons have been learned, which will now be used to move from the proof-of-concept into the commercialization phase.

Did you have investors recently?

To date, we have only raised money from angel investors. We are having a variety of dialogues with potential new investors. As we move from the proof-of-concept phase into the commercialization and scaling up phase, we would like to start shifting our investor base from angels to more impact and more corporate VC types of investors. In Q4 2022, we did have dialogues with our existing investors, looking at the current environment in investment venture capital, to gauge whether they wanted to invest additional funding into the company, to continue Ponea’s work around proof-of-concept and create funding runway. That was more a reach out to existing angel investors than on-boarding of bigger types of investors. It also allowed us to conclude the proof-of-concept phase and demonstrate proof-of-impact, which of course creates a stronger and more robust base for dialogues with new investors.

What sort of new investors are you looking for?

We are looking for investors who will not just bring money, but who are passionate and fully on-board with the mission and the vision we are aiming to deliver, i.e. improving access to care for underserved populations. Secondly, we are looking at what they can contribute to commercialization and scaling. Do they bring experience or go-to market capabilities in certain markets? Do they bring complementary experience with FinTech? Do they bring specific experience with digital marketplaces in the healthcare domain? Those dimensions are similar and go “beyond the money”. That is why we are looking at impact investors and having a variety of dialogues in Europe and the US to attract them.

Corporate investors are interesting, especially if they have a similar view on what the opportunity is and how to best unlock it. Access to care in Africa is a very specific area. So we need to make sure that we think about those things it in the same way.

Finally, venture capitalists that have been investing in this domain before would also fit. As said however, the most important part is shifting from the angel investors to a different type of investors, which would of course also help us create a further step up in our governance and board structure, because that too is what we would expect from some of these investors.

What other aspects could also be interesting for investors?

As mentioned, Africa has a young population that is also very digitally-savvy. From a mobile penetration perspective, markets like the US and Europe are quite far advanced because they have had decades to build that up, but Africa has been able to catch up very fast. However, in terms of mobile payments and use of mobile payments, it is ahead of Europe and the US. So, from a FinTech perspective, it is a very interesting opportunity to learn and invest in a market where we expect to see a lot of advances happen in the next 3 to 5 years in terms of business models, payment models, but also how services get consumed and delivered. So that would be an extra opportunity or extra interesting aspect.

Furthermore, healthcare is a basic right and need. There will be a big investment and a big step up in healthcare as a part of the development of the markets that we are operating in. And that in itself is a very attractive investment opportunity for investors. It is a basic need and it is typically government supported. It is something that is resilient and does not disappear when there is a downturn. These are services and products that need to get consumed and delivered at all moments. So that makes it an attractive growth area.

What is Ponea’s vision for the next few years?

We want to grow, and, 5 years from now, we will be talking about hundreds of millions or billions of revenue for Ponea Health, as well as attractive margins in multiple countries. That is the financial perspective.

What is even more important is the mission and vision regarding what this company can do for Africa and the people there. And that goes back to the point of democratizing access to care for almost a billion of health consumers across the health continuum.

We measure that via the number of lives we touch and the number of people we help to get access to timely, affordable, and quality care. Also, how many life years we can add for the populations that we serve? We help ensuring better access to care. So, do people live longer and better based on improved access to care? This is also about health literacy – a big role of platforms like Ponea is helping people consume insights and content about health, how to live a healthy life, and educate themselves on the topic. Finally, looking more at the provider side, we also want to create reach and business for healthcare entrepreneurs on the continent.

For Ponea, this mission and vision is very important. This is what gets people out of bed in the morning: make the world a better place. This will also get our investors something beyond a pure financial return. It will help them make Africa a better place, with better health outcomes and, ultimately, a healthier population!

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