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WHY WE INVESTED

The startup democratizing healthcare for small businesses across India

Onsurity, a healthcare platform based in Bangalore, gives small businesses in India a way to offer their employees comprehensive health benefits and insurance

As a teenager, Yogesh Agarwal oversaw accounting for his family’s small trading business in Kolkata. When an employee got sick or needed medical treatment, his parents had to give the employee a medical loan because there was no way for a small business in India to offer healthcare to its employees. Fast forward more than a decade later to 2017, when Agarwal started his own actuarial consulting firm. His firm quickly grew to a team of 10 people based in Bombay and Bangalore. Having grown up seeing the risks and challenges of running a small business without employee healthcare and insurance, he knew he wanted to offer his employees healthcare benefits. But as was the case twelve years prior with his family’s business, accessible affordable healthcare simply didn’t exist for small businesses (SMBs) in India.

Agarwal found himself competing with big firms like EY and PwC when hiring employees, but unlike those players, he had no way to offer health benefits as part of his compensation package. Try as he might, he couldn’t find an insurance company willing to underwrite his small business. By 2019, he realized he had to take matters into his own hands. “If someone like me who worked for almost ten years in insurance can’t get their employees benefits, there is definitely some systematic problem that needs to be addressed,” says Agarwal.

There are 63 million SMBs across India, with a cumulative workforce of close to 330 million. Factor in workers’ family members and that number is closer to 655 million people across India who rely on income from a small business. 95% of them have no access to health insurance, says Agarwal. “The market potential is so big,” he says.

Exasperated that there was no alternative for small businesses, Agarwal set out to build one. He started speaking with SMBs across the country, trying to understand the unique problems they faced and what an insurance product that addresses those needs might look like. Agarwal identified different buckets of SMBs in India, each with their own challenges — retailers and wholesalers, franchise owners, tech startups, among others — and started developing a basic product, brainstorming what the platform dashboard might look like. At the start of 2020, he got affirmation he was onto something when he secured $2.5 million in seed funding.

Around that time Agarwal started talking about his idea with Kulin Shah, a friend he’d worked with a few years prior at an India-based insurance company, Acko. Shah was getting ready to take a sabbatical from his job as Vice President at Acko to spend time in New York where his sister lived. But as the COVID pandemic quickly spread and his plans were derailed, Agarwal — eager to find someone with a strong consumer background to partner with — convinced Shah to join as his co-founder instead.

By May, they had launched an alpha product that they tested on around two dozen SMBs, who provided valuable initial feedback. By July 2020, they had a beta launch of their platform, called Onsurity. Today, a little over a year later, they have more than 1,300 SMBs signed up on the platform, providing health insurance to more than 100,000 lives across India. “For 85% of these people, it’s their first time getting health insurance,” says Shah. “We are the only ones to create a micro healthcare product that is as simple as purchasing a monthly Netflix subscription.”

But while the platform itself offers users a seamless experience, getting it off the ground was no simple task. There’s a reason SMBs haven’t historically had access to health insurance in India. For one, servicing small businesses is very costly for insurance companies. The operational and acquisition costs to bring on each small business are not sustainable at scale. And for insurance companies, SMBs are seen as far riskier to work with than larger corporations. Coupled with a lack of industry automation, it seems an impossible task to reach SMBs at scale. “Every time you onboard an SME, if the service isn’t automated, you can’t reach a large base,” says Shah. “If you don’t have the right technology to reach and onboard them, it’s not a viable business. You need the technology.”

And so they set about building that technology. For Onsurity to work, they had to nail four key elements just right: low cost of distribution, data-driven portfolio selection of SMBs, a smooth customer experience, and an efficient use of capital. In particular, streamlining the process of purchasing employee health benefits was a crucial step. Traditionally, it takes anywhere from 28 to 50 days to establish an employee healthcare plan and onboard employees onto that plan. Onsurity had to automate that process to make it much faster. “Technology has been the biggest enabler for us,” says Shah. “It previously took a lot of manpower and a very long process to purchase employee health benefits. Using our technology and selection process reduces these 28 days to a couple of minutes.”

To do this, Onsurity figured out a way to use available data like SMB tax numbers (GSTIN), payroll systems, and G-Suite to automatically populate healthcare options available for each SMB. “Using their tax number, we were able to understand what kind of plan we needed to provide to that SMB,” says Shah. “Just like Netflix makes watch recommendations, we populate the healthcare options available to them.”

Onsurity developed a dashboard that integrates payroll systems and G-Suite to automatically update when someone new started working at a company. And they created a mobile app that allowed employees to purchase family plans on a monthly — rather than annual — basis, as is standard in India. Companies with as little as three employees can get their employees started with benefits on a monthly basis through Onsurity. “We disrupted the space by providing a monthly subscription-based product,” says Shah. “This kind of flexibility is not available in many countries, let alone India.”

Onsurity did all of this in the midst of a global pandemic, growing its team to 110 members. COVID, Shah says, helped drive home to consumers and companies just how crucial access to healthcare is. But launching mid-pandemic was challenging because so many small businesses were looking to conserve money to get through that uncertain time. That’s where Onsurity’s monthly subscription model became crucial. “A lot of companies tried to pitch the same idea on an annual basis and they failed,” says Shah. “We were able to conserve their company capital because of our monthly subscription.”

With a new $16 million Series A round of funding led by Quona Capital, Onsurity has plans to continue expanding and evolving its technology and product. Within the next 12 to 18 months, Onsurity plans to automate 80% of its current manual efforts to help further streamline the process, says Shah. Another major goal is to further develop local distribution models to help scale the product efficiently. And as the cost of employee healthcare rises each year, Onsurity is working to ensure their customers’ costs stay at a controlled level. “We want to make everything available at the click of a button,” says Shah. “We want to create that engagement with our consumers so we can start moving up in the value chain of preventative care.”

Disclaimer: Quona portfolio companies were selected for profiles based on objective, non-performance-based criteria for the purpose of illustrating the types of investment made by Quona funds and their impacts. These profiles are being provided for illustrative purposes only, in order to provide examples of the idea generation, research, and thought process of Quona investment teams. No representation is made as to whether or if the investment ideas represented in these profiles have been or will be profitable. It should not be assumed that Quona will be able to identify similar investment opportunities in the future, or that any such opportunities will be profitable. The above statements include the opinions of the Firm and are for illustrative purposes only. There is no assurance that any trends depicted or objectives described in Quona profiles will continue or become successful.

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Quona Capital

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Quona Capital is a venture firm specializing in financial technology for inclusion in emerging markets. Learn more at quona.com.