Friday, August 12, 2016

In the Spotlight: Knok – Key lessons from a start-up in the healthcare sector

Knok is an early stage ‘Uber-style’ private health care platform currently based in Portugal, which enables patients to access on-demand and in-person medical support at their convenience. This start-up took part in the InvestHorizon Early Stage Camp & Investment Forum EBAN Annual Congress in Porto on 25th May 2016 and won the “most investable” start-up prize according to the Forum.

Knok’s vision is to change the world by providing top quality, personalised and affordable health care, to not only improve the satisfaction of patients but also to enhance health outcomes. Knok generates an extensive range of positive social outcomes, most notably the ability to enhance patient care for the most vulnerable members of society (i.e. from the very young to the aged population) by improving the speed and convenience of access to medical care, whilst increasing the attractiveness of a medical career through facilitating improved compensation for junior doctors.

Despite its success in Portugal, Knok’s co-founders were aware from the beginning that international expansion is key to the business’ long-term growth.

How to secure funding for internationalisation?

The key question was how to secure funding in order to internationalize. My co-founders and I wrongly assumed that we needed, first, to raise money locally, given the fact that we are a Portugal based company and do not have a track record of exiting successful start ups. We, then, understood that we should, first, prove the fit of our product in the market before raising funds. Furthermore, healthcare is a very specific area in which most Portuguese seeds and very early stage investors are inexperienced.

When we started to raise our seed-round of fund after our launch in December 2015, we spoke to quite a few potential investors and realised that having a product in the market helped a lot. However, we also needed strong traction indicators (e.g. over 20% weekly growth rate of app downloads and appointments) to be seen as attractive. It became clear to us that we needed to wait and bootstrap more our company.

We continued to talk to potential investors, and discovered the difference between “smart money” and “just money”. Despite entering in due diligence with 3 investors, one of them stood out by adding real value to our business. Working together enabled our product to evolve meaningfully from the initial offering of premium, to a more inclusive service at a highly competitive price point (when compared to both competitors and existing healthcare solutions). This transition has resulted in increasing growth rates by 350% growth in appointments, 310% growth in revenues and 190% growth in registered patients in four months.

We decided to move forward with this investor and other business angels who bring knowledge and valuable networking capabilities to Knok as we accelerated our growth in Portugal and abroad.

Knok is the first Portuguese start-up to receive foreign equity investment in the “impact investment” area, as announced on the 7th of July at the G8 Plenary on Impact Investment, and we now focus on growing and expanding internationally.

To sum-up, key lessons for a start-up:

  • Start by showing the fit of your product in the market
  • Highlight strong traction indicators to be more attractive for investors
  • Be patient: bootstrap your company
  • Leave your comfort zone: with strong traction indicators, you don’t have to raise locally
  • Distinguish between “simple money” and smart “money” and work with investors or business angels who brings knowledge and valuable networking capabilities to your company 

In conclusion, raising a seed-round is hard, but it’s a part of any start-up’s life. The same belief and resilience that are required to launch and grow a business are the keys to a successful funding round. You should not undersell yourself, so go for investment outside your comfort zone and look for the smart money.