Young Turks: Mediangel on getting it right in e-healthcare

The Young Turks Dream Decade travels to meet the founders of Mediangel, Arbinder Singal and Debraj Shome. A venture started in January by 300 registered doctors with approximately 1,500 subscribers focused on distance diagnosis.

The doctor duo, Debraj Shome and Arbinder Singal, turned entrepreneurs to give healthcare delivery a dotcom twist. In 2011, they decided to quit their medical practice with corporate offices and invested Rs 2 crore from their savings to launch mediangels.com. This healthcare portal allows subscribers to consult doctors over live chats and e-mail. The company has a team of 300 doctors on its rolls from hospitals like Howard, Stanford and John Hopkins providing consultation over 85 super specialties.

The charges range from Rs 500 to Rs 4500 for these consultancies, and the venture has 60-40 revenue share model with its doctors. The portal has also tied up with 21,000 laboratories across India for on call diagnostic services. Mediangels even allows its subscribers to show medical records and documents on the website by using services like telephonic and video enabled consultations. Mediangels.com has raised Rs 3-4 crore in seat funding from HDFC Private Equity early this year

However, the duo wants to ensure that the business model does not get replicated. On CNBC-TV18's special show Young Turks, Veteran of e-commerce industry, Kanwaljit Singh of Helion Ventures shares his expertise with the owners of Mediangels on how to grow.

Below is the verbatim transcript of their exclusive interview. Also watch the accompanying video.

Q: Mediangels is creating a new kind of need and market in the space. The basic worry is that you start up something and some other big players comes in and actually makes it a bigger business out of it. So, how do you make against such kind of risks?

Singh: Typically, the speed of execution, automatically created ecosystem in a new startup becomes the barrier for entry. So, one of the most important question is bigger players may try to replicate business model as they have extravagant fund muscle. The priority of entering a new business venture, which may be the only business foray for a company, is still invariantly one the 50 things a big player may want to do. So, very often a free footedness of an entrepreneurial venture is why so many successful innovations come up from new startup companies rather than the bigger boys.

You have 300 doctors today. It becomes 500 then 1000. Now, you have 1000 customers, this would eventually become 5000-50,000 going ahead. This becomes a barrier to entry because then your credibility as the business in a new person wanting to say where should I go for a best e-consult. Why should he go for somebody else if you are providing? So the first move advantage will give you a tremendous amount of differentiation and protection.

Q: How does the business manage to keep on demonstrating value to an investor which has invested in them while making losses at the same time? So, how does someone go ahead and do that and demonstrate future value so that they can raise cash?

Singh: Firstly, as venture investors, we used to invest in businesses which are non profitable, or those that had limited revenues to start with. But, the end game has to be that you see the value. We are pursuing an idea which has the potential to become large. Can you keep taking losses for a long time and still continue to attract investors? The answer is very specific to the context and what you need to do is you have to get investors who participate with you along the journey and then look for their exit while you continue to build the business. So, the two are fairly congruent and it's not impossible.

Q: Sometimes you don't know how fast the traction is going to come because along with more customers and more traction coming in, the operations also needs scaling up and operation scaling up means you end up earnings cash in a bigger way and a faster way. So what kind of pressure does investor feeling the situation when you say what you are planning for 1.5 year is finished in one year's time?

Singh: We should keep him in confidence. So, if your business is doing well he will be more than happy that you are earning money faster because you are delivering the numbers. Therefore, how to raise next round of money or whether he will put more money, whether help you to get new investors and then it becomes a pleasurable task because you are on a good wicket, doing well, and so on and so forth.

The reverse is also true. If the business is slower to take-off as you said it's a new concept, nobody knows if things may work out or not. Some experiments will give results and some may not. The point is: first, the choice of the investor is very critical and, second, keeping him in loop is very critical.

So what happens is the confidence that the investors has in the entrepreneurs to do the right thing to take the right risk and be willing to accept what the mistakes are and learn from them gives him the confidence to, say, still believe in this business. Yes, we are all in this game of taking risk.

 It's an interesting idea and they are trying to solve a real problem, and it