Startup Name: Kenko Health
Founded: 2019
Closed On: August 2024
Business Model:
Kenko Health operated a subscription-based health plan platform, offering users bundled healthcare services, including outpatient department (OPD) benefits, medicines, and healthcare products. The company targeted both individuals and families, aiming to provide affordable and accessible health coverage outside of traditional insurance. Kenko Health’s model relied on monthly subscription fees and partnerships with healthcare providers.
Reason for Closure:
Kenko Health shut down due to a combination of regulatory, financial, and operational challenges:
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The startup failed to secure a health insurance license from the Insurance Regulatory and Development Authority of India (IRDAI), which became its singular focus in its final year. Regulatory scrutiny on venture-funded insurtechs increased, and IRDAI required applicants to have a large domestic investor, further complicating Kenko’s prospects.
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Mounting financial losses: Despite impressive revenue growth (from ₹5 crore in FY22 to ₹85 crore in FY23), losses ballooned to ₹68 crore in the same period, overwhelming the company’s ability to operate.
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Cash crunch and failed fundraising: Kenko Health ran out of funds and was unable to secure new capital. A potential rescue investment was blocked by internal shareholder disputes over valuation and dilution, leading to a stalemate.
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Operational fallout: The company laid off staff, closed offices, and defaulted on employee salaries and debt obligations. It was subsequently taken to the National Company Law Tribunal (NCLT) by a debt fund over unpaid dues.
Learnings to Be Avoided by New Startups:
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Secure Regulatory Clearances Early: Especially in regulated sectors like healthtech and insurtech, ensure all necessary licenses and approvals are in place before scaling operations.
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Align Stakeholders on Funding and Strategy: Shareholder disputes and misalignment can derail critical fundraising and strategic pivots.
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Balance Growth with Profitability: Rapid revenue growth is not sustainable if accompanied by even faster-rising losses. Focus on unit economics and sustainable margins.
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Have Contingency Plans for Capital: Do not rely on a single funding source or last-minute rescue deals. Maintain financial discipline and plan for funding delays or denials.
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Communicate Transparently with Employees: Sudden shutdowns and unpaid salaries can damage reputation and morale. Open, timely communication is crucial, especially during crises.
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Adapt Quickly to Regulatory Changes: Monitor and respond proactively to changes in the regulatory environment, especially when new requirements or scrutiny arise.
Summary Table
| Aspect | Details |
|---|---|
| Startup Name | Kenko Health |
| Founded | 2019 |
| Closed On | August 2024 |
| Business Model | Subscription-based health plans (OPD, medicines, healthcare products) |
| Reason for Closure | Failed IRDAI license, mounting losses, cash crunch, internal shareholder disputes, failed fundraising |
| Key Learnings | Secure licenses early, align stakeholders, balance growth/profit, plan for capital, communicate, adapt fast |
Kenko Health’s journey highlights the critical importance of regulatory compliance, financial discipline, and stakeholder alignment for startups operating in highly regulated and capital-intensive sectors.