There’s an economic crisis, but that won’t stop Latin American (LatAm) healthtech startups finding new ways to innovate. A recent McKinsey & Company survey found that this has been hugely accelerated by the pandemic, and that the healthcare sector across the region is expected to see continued disruptive change.
Innovations across the healthtech startup ecosystem can have a-far-reaching impact that enable prevention, diagnostics, treatment, rehabilitation and care. Even information technology solutions like cloud computing, internet services, and social mobility are improving LatAm health and wellness. For example, the McKinsey survey found that physicians across five countries support telehealth as their preferred strategy to improving patient access; 75% of these already offer telehealth services.
To fully realize these benefits, a focused and strategic approach to early-stage fundraising will be required to secure investment. Let’s explore some ways that LatAm’s healthtech founders are making this happen in 2022 and beyond.
A Realistic Path to Profitability
Demonstrating a safe and clear path to profitability is not always simple, but it’s essential for any healthtech startup looking to gain the trust of investors during an economic downturn. One of Newtopia’s portfolio companies, Argentine startup Yerbo, achieved this.
Yerbo is a mental well-being tool for high growth companies. Founded by CEO Marcos Sponton, it provides mental well-being management best-practices for tech companies. Over 200,000 people have used their tools and they are helping companies such as Nubank and GitLab fight rising turnover costs due to burnout and other mental health issues.
During the early-stage funding process, Marcos learnt that providing investors with a transparent business strategy was critical. Laying out manageable short-term objectives for the company attracted $455k in pre-seed funding from Newtopia, and Angels from companies including Twilio, Gitlab and Nubank.
As the startup now prepares to raise a seed round, they have outlined a realistic objective to prospective investors: to grow their team from 12 to 25 people by the end of 2023. This will enable them to double Yerbo’s B2B customer count, and launch 20 managerial partnerships with thought leaders and top creators.
By clarifying these precise short-term targets, Marcos and the Yerbo team are demonstrating that they understand the difficult economic situation and should not strategize too far ahead. Establishing new goals each quarter, as opposed to each year, helps to show realistic steps for business growth. Little by little, these will amount to profitability.
This clear approach thereby deeply enhances investor confidence, and makes fundraising much easier.
Efficiency for Growth
LatAm startups have a great opportunity to build their products and teams at the moment. Even with markets elsewhere, the costs of running a business in Latin America are much less than in other continents. But efficiency is essential from day one.
We believe that entrepreneur efficiency comes from having the bootstrapping mindset. Retaining this is very hard for entrepreneurs who receive funding – as they must watch every dollar and remember it’s not theirs; they are actually taking on a debt. And a commitment. The bootstrapper mindset is very important, even if you have money in the bank.
To keep a close eye on finances, it can be really helpful to find a CFO from Series B (a financial co-founder). Startups rarely do this, but they need an experienced professional to be aware of the costs and help navigate the tumultuous economic landscape. Weekly conversations with the CFO and rest of the team are key.
The Argentine startup, CHOIZ, was founded in 2020 by Franco Lacrampette and Ignacio D’Anunzio, two entrepreneurs with extensive experience in creating B2C products in LatAm. CHOIZ provide greater access to high quality, convenient and affordable care. Their goal is to be the first stop in people’s journey to accessing treatment or products for hundreds of conditions.
They raised a $1.5M seed round in July 2022, to continue their expansion into Mexico and to start developing master formulations. That is, creating a personalized medication for each specific client. They expect to serve more than 50,000 patients by 2023 and reach estimated revenues of USD $7M. But managing this level of finance requires experience – that’s why being held accountable by a Series B CFO is integral for any business to remain efficient.
Partnerships for New Market Potential
Finally, building partnerships helps you to reach new markets. It’s very important to outsource parts of your healthtech business rather than keeping all operations as your own. Learning from and networking with can provide great opportunities in new markets. There’s no need to limit these connections to big tech companies either. Smaller tech, emerging companies, peers, universities, and different venture portfolios offer a wealth of opportunities.
Academic conferences, newsletters, podcasts, and social media are a great way to stay current and find new inspiration – not just in health tech, but in tech more generally. Look out for cutting-edge tech developments in various global industries. As healthcare and technology evolve, entrepreneurs must look outside of the norms and reimagine the possibilities, meeting immediate targets while keeping an eye on the future.
Revai, founded by Roger Zaldivar and Diego Cerutti, is just one startup looking towards other markets. It is a collaborative platform for doctors, patients and the healthcare industry. Through partnerships with other companies in differing markets, Roger and Diego hope to achieve their goal of creating an ecosystem where they can all enhance data generation and classification. They intend to make anonymized data available for open research, while prompting citizens to become the ultimate controllers of their health information.
This type of collaboration with companies in other markets legitimizes a startup, and diffuses investor doubts. It’s an integral part of any entrepreneur’s early-stage fundraising journey.
So, by presenting a clear and transparent path to profitability, seeking support from experienced CFOs to remain efficient, and looking out for partnerships in other markets – health tech startups will continue to find finance even in difficult economic circumstances.
For more startup insights from the Newtopia Community, check out our blog here.