healthtech

Kenko Health Shuts Down Amid Financial Crisis After Failing to Secure Insurance Licence

• ByStartupStory     |    August 24, 2024

Kenko Health, a Mumbai-based healthcare startup, has officially ceased operations after encountering severe financial and operational difficulties. The once-promising company, backed by well-known investors such as Peak XV Partners, Orios Venture Partners, and Beenext, was forced to shut down after failing to secure additional funding and an essential insurance licence, according to a report by Moneycontrol.

Founded in 2019, Kenko Health rapidly gained traction in the healthcare sector by offering subscription-based health plans that included outpatient department (OPD) benefits, medicines, and healthcare products. The company experienced substantial growth, with its revenue soaring from Rs 5 crore in the financial year 2021-22 (FY22) to Rs 85 crore in FY23. However, the rapid expansion was accompanied by significant losses, which rose to Rs 68 crore during the same period, ultimately overshadowing the revenue gains.

Kenko Health’s downfall can be traced back to its failure to obtain a crucial insurance licence from the Insurance Regulatory and Development Authority of India (Irdai). The startup’s efforts to meet the stringent regulatory requirements, including the mandate for domestic capital as the lead investor, were unsuccessful. This critical setback was compounded by the company’s inability to raise Rs 220 crore in 2023, further intensifying the financial pressures that eventually led to its shutdown.

The situation took a turn for the worse when Kenko’s founders, Aniruddha Sen and Dhiraj Goel, communicated the company’s dire circumstances to employees via emails in July and August. In the emails, they revealed that Kenko Health had “run out of funds” and was facing legal action from creditors. The company’s financial woes escalated when a debt fund that had extended a loan to Kenko took the firm to the National Company Law Tribunal (NCLT), marking the beginning of the end for the startup.

As the financial situation deteriorated, Kenko Health was forced to shut down its offices in Mumbai and Bengaluru, leaving around 100 employees grappling with unpaid salaries. Some employees reported that their salaries had been overdue for more than three months. Despite the founders’ efforts to inject approximately Rs 9 crore of their personal funds to cover salaries between October and December 2023, the company’s financial troubles persisted.

Kenko Health’s financial collapse also sparked legal actions from third-party administrators (TPAs) responsible for managing the company’s claims and coordinating payments with hospitals. One TPA filed an FIR against Kenko over unpaid dues, while another firm is reportedly considering similar legal steps.

With the company’s closure, many Kenko employees were forced to seek new employment. While some have managed to move on, others remain in limbo, still awaiting their unpaid dues.

 

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