Investing in Healthtech Innovation
At HAVAÍC, we invest in real world technology businesses that provide local and international solutions that are must haves, as opposed to nice to haves. We focus on technology sectors where the local environment and skillset provide domain expertise and innovation at a level equal to, if not better than, international counterparts. Technology sectors where locals have a right to play and compete internationally, and have a track record illustrating this, include financial services, safety and security as well as health, to name a few. In this edition of Smart VC, we are focusing on the health sector, and more specifically Healthtech and why HAVAÍC invests in this sector. The combination of South Africa’s large private healthcare market, world class medical academic facilities and a public health system that is stretched by a lack of funding and a growing population, present an environment well suited for solutions to be found and funded. Innovation in the local health sector dates back to 1967 when Christiaan Barnard performed the first human heart transplant, in a medical equivalent of the space race against much larger and well-funded nations. Local innovations in the health sector, and more specifically in the Healthtech space, continues in the region, and HAVAÍC are a strong supporters of this. Two years ago, HAVAÍC co-hosted a Healthtech seminar in Cape Town where we explored emerging trends and opportunities in the African health sector. Apart from validating our high estimation of the quality of local medical professionals and entrepreneurs, we identified four main themes where we felt there was significant opportunity for innovation and growth. As reported at the time, these were:
Communication, particularly via mobile - patient to doctor, doctor to doctor, patient to doctor’s office, rural doctor to specialist and more;
Diagnostic support - utilization of technologies (mobile, encryption, big data, AI, blockchain) to assist in diagnosis;
Consumerisation - informed patients, increasing transparency and choice, ability to individually monitor patients and personalised accessible health records; and
Regulatory environment - POPI, compliance, potential liabilities of new technologies, use of data and underwriting implications.
Two years later, HAVAÍC’s portfolio consists of five Healthtech businesses, namely 3X4, hearX, RecoMed, Vula Mobile and BusyMed, each addressing the above themes, and solving real world problems underpinned by the use of technology. Whilst our Healthtech portfolio is mostly South African based, some are spreading internationally across the continent and to Europe and America. We are also finding and following very interesting solutions in both West and East Africa that leverage off and address specific local market health challenges. These include, inter alia, micro-medical insurance solutions, testing and diagnostic networks, pharma-distribution platforms and telemedicine technologies. Vula Mobile, a mobile communication and diagnostic tool, serves as an interesting case study illustrating how technology and specific local situations can come together to form successful, award winning and commercial solutions. The vast distances to travel in rural South Africa coupled with scarce specialist resources in the public sector led to an ophthalmologist creating an efficient, data rich, HIPAA compliant, telemedicine platform. Medical specialists at state and university hospitals can accurately diagnose and treat patients via primary care health workers with a mobile phone in rural or under-served areas. This technology in all likelihood would not have been developed in the UK with its comparatively well-funded NHS, higher number of specialists per capita and shorter distances to travel to reach medical services. Thus the experience and opportunity in South Africa has allowed for Vula to grow into12 plus specialities and it is now moving into other emerging markets. HearX, which capitalised on research at and spun out of the University of Pretoria (UP), serves as a useful illustration of how local expertise coupled with technology can compete and succeed on the international stage. With in-house audiology professors, former UP students and commercial management, hearX provides remote and low-touch hearing diagnostic tests and other hearing assistance technology. HearX is competing globally against established international players, has started rolling out facilities across American pharmaceutical chains, and has received investment from an MIT affiliated Venture Capital firm which is also a subsidiary of one of the top 3 global stereo and earphone companies. So we have hearX, a South African Healthtech company, producing a high tech solution that is shown to be as good if not better than the tech produced from one of the world's leading technology focused universities, and competing with the world's top brands. In terms of the current context, the Covid-19 crisis has resulted in, and will continue to bring, tremendous social and economic challenges locally and worldwide, bringing with it widespread and far reaching uncertainty and volatility. Amongst this uncertainty, one thing is for certain- the crisis has resulted in the acceleration of the adoption of technology in most sectors. This is not only video conferencing for you and streaming Disney for your children, but will be applied to real world needs such as universal access to treatment, the heightened awareness of personal health, preventative medicine, telemedicine, pharma-distribution, low touch medical treatment solutions and more. The acceptance and increased adoption of technology enabled health solutions, which were on the rise pre-crisis, are rightly expected to grow even more rapidly. With this crisis acting as a catalyst for investment into the health sector, we are fortunately well placed to benefit from and support our current HAVAÍC portfolio that we have grown over the last few years. However, we are mindful that Healthtech will most likely be the next ‘hot sector’ for investors, with large capital inflows as a result, and thus will continue to apply our measured investment principles. At HAVAÍC, we will look to continue investing in the sector, all the while applying our consistent investment criteria assessment, which ensures that our investments will help to solve real world problems that truly offer long term and sustainable returns for our investors, and are not simply investing into a nice to have or hot opportunities. Stay safe, and happy investing. Rob Heath HAVAÍC, Partner