Mumbai-based healthcare startup Kenko Health has shut down due to financial and operational difficulties, as reported by Moneycontrol. Despite raising a significant $13.7 million from prominent investors like Peak XV Partners, Orios Venture Partners, Sequoia Capital, and Beenext, the company faced a severe cash shortage and was unable to secure an insurance license, ultimately leading to its demise.
Founded in 2019 by Aniruddha Sen and Dhiraj Goel, Kenko Health rapidly gained popularity with its subscription-based health plans, covering outpatient department (OPD) benefits, medications, and healthcare products. The startup demonstrated impressive revenue growth, surging from INR 5 crore in FY22 to INR 85 crore in FY23. However, this financial success was offset by significant losses, which ballooned to INR 68 crore during the same period, ultimately undermining the company’s financial stability.
Kenko Health’s demise was largely due to its failure to obtain a vital insurance license from the Insurance Regulatory and Development Authority of India (Irdai), despite rigorous efforts to meet the regulatory body’s stringent requirements. The company’s inability to secure the necessary approval, combined with its failure to raise the required INR 220 crore in funding in 2023, exacerbated its financial woes, ultimately culminating in the company’s shutdown.
The situation took a turn for the worse when Kenko’s founders Sen and Goel informed employees via emails in July and August that the company had depleted its funds and was facing legal action from creditors. The report further revealed that a debt fund, which had provided a loan to Kenko, took the company to the National Company Law Tribunal (NCLT), signaling the beginning of the end for the embattled startup.
Kenko Health’s offices in Mumbai and Bengaluru were closed, leaving around 100 employees without pay, with some salaries overdue by over three months. Although the founders invested approximately INR 9 crore of their personal funds between October and December 2023 to cover salaries, the company’s financial struggles continued. The crisis led to legal actions from third-party administrators (TPAs) responsible for managing Kenko’s claims and coordinating hospital payments. One TPA filed a First Information Report (FIR) against the company for unpaid dues, while another firm is contemplating similar legal action.
As Kenko’s financial struggles intensified, numerous employees were compelled to explore new job opportunities. While some successfully transitioned to new roles, others remain in a state of uncertainty, still awaiting payment of their outstanding dues.
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