Totohealth, the tech company that Felix heads, has two unique traits; 1. it operates in the sensitive maternal health space, and 2. It is capital intensive, at least in the initial stages. Still, not only has it grown to around 13 core team members in two countries , but has also been almost fearless in engaging different partners and stakeholders, which has seen it develop impressive partnerships in the last two years.
The last two years have been about testing the product. Now we are ready to scale. It could be we had hoped to get enough capital to hit 150 000 but, because we didn’t get the capital, we have not been able to achieve that. As we speak, our target is 100 000 parents by December. But we still do not have enough capital to reach that. We can push it, but if we do not find enough funds, obviously we may not reach our target. Normally we set those targets for ourselves so that we have something to work towards.
In the recent past, two people I know, had complicated births. One didn’t turn out so well, the mum passed away. And that is not the first experience I have had that made me think how child birth can be dangerous, especially in our country.
We have five hundred mothers dying for every 100,000 in Kenya.If you compare that to most developed countries,it is not good. For that reason, as a country, we are ranked among the most dangerous places for a mother to give birth. If you look at Mandera county for example, we lose 3792 mothers out of 100 thousand there. It is crazy that as a country we hold that statistic, we need to be able to reduce that.
Your company seems to be capital intensive. It could be said that a big part of your role as CEO is focused on raising capital. What has been your experience?
Raising capital in Kenya, I think Africa as whole, is a huge challenge. Essentially, it is easy to raise capital once you have a proven business. It is hard to raise capital when you do not have a business that is generating good revenues. That is more than $40,000 a month. When you have that, and your running costs are low, you easily raise money.
The problem with our space is it is too risky for investors because we do not have many examples of businesses that have exited. We talk about one or two, that are well known. I know there are some that happen but do not make it to the public domain, but the ones that we know are Wezatele, m-legder. But those valuations were still low. So, you do not find the big league investors willing to put in more money.
A very good example is this investor who recently put money into Totohealth, 50 000 dollars. To them, that is a small amount. From our end, it is a sizable amount. If you look at their portfolio, they are doing about 2-500 million. It just shows you that majority of investors are not comfortable putting huge sums of money into our space. You find that yes, you have four investors, but each of them is investing 50k dollars. Someone is like, okay, let me give you the 50k, see how things will go. It is a problem even for you to find 50k dollars.
The other challenge is that health as a sector is, by default, run mostly by NGOs and government. In our country, fully by the two. So, when you are trying to introduce a product that the end user actually pays for, it is a huge problem and it is hard to prove your business case with it. Some investors have a problem investing in a space where the government invests a lot, or NGOs, or there is a lot of donor funding.
There are also few Kenyan investors who want to invest in startups like these ones, where it is hard to see a tangible thing. An investor in Kenya would easily invest somewhere there is a solid thing they can touch other than a service that they can’t see.
There are many things at play. But at the end of the day, it is you to work hard as a startup, prove your business, get a few investors who believe in you early stage, then start growing slowly to make sure you get the guys in the big leagues to invest in you. That is where we are right now as Totohealth. We are proving our business case. The good thing is we already have a few investors who believe in us. We are mixing that with grants as well from different organisations to just make sure we grow to a point where we are profitable enough, and then now speak to the investors who have some good amounts of money to put in so that we can grow even faster.
But you guys are rockstars. Technically, you win every competition that you enter.
We win but then we have a huge team here that consumes a lot of money. But the team has achieved some good results for us as well. It is one of the things we are proud of. In majority of startups, you work as founders for a long time but as Totohealth we got a team from the beginning. We win competitions yes, but there are some that come with money, there are some that do not. There are some we enter for the sake of PR purposes and building our brand.
You work a lot with governments, both county and national, how has that experience been?
Working with government is hard. Any investor who has at least done something will tell you that working with government is hard. A county government is a little easier because, now it is devolved, the hierarchy is a little bit simple.
If you are working with the county government from a client- business perspective, the county being the client, it is a little hard. If you work as partners, that is when it is easy. We have been working as partners with the counties. They help us identify community volunteers who in turn register parents for us on the ground.
One thing that we tried before was to make the county pay us which has been really hard. We still pushing it. It is our hope that eventually that it will work.
Can you tell me about any interesting partnerships that you have?
We have interesting things happening right now. Recently we got awarded about 50 000 dollars by Safaricom Foundation. The plan is to grow to 18000 new parents with Safaricom in three selected counties; Siaya, Homabay and Migori. But our eventual aim is to grow out to the rest of the country with Safaricom.
We also partnered with GSMA last month. They are helping us with user experience for our messages, essentially speaking to the end users about our specific messages. Our eventual aim is to work with the government fully from the national level, and say every mother in our country needs to register with Totohealth. That will also give the government a platform to manage the maternal and child space which has been messy. It is a trial kind of partnership, we have GSMA helping us with user experience and partnerships then we have Safaricom helping us with marketing , then ourselves producing the product itself.
You got into Tanzania as well.
Tanzania is promising. We like it from the aspect that , first, we are learning the lessons that we need for us to expand to other countries. We want to reach as many countries as possible in Africa. So, Tanzania is a good case for us.
There are challenges though you will face as you move to any other country. The market is slow by itself. We are even thinking right now probably the messaging service won’t work for Tanzania. It is the packages that will work for Tanzania. We are two months into operation there, testing different things out.
The most outstanding thing you’ve learnt so far.
It doesn’t really matter how awesome your idea is, you have to work really hard for it. We had 90% acceptance rate for Totohealth from mothers, but then the other challenge was to make it stand as a business. It doesn’t matter how cool the idea is. You have to face the realities of the market; for you to market your product, for you to raise capital. Those are things that people need to understand from the beginning. Of course, the less interesting your idea is, the harder it becomes. But even those ones with really good ideas, it is really hard to run it.
The other thing that I have learned is there is nothing that you can do as a sole founder. You need a team to work with. The earlier you realize that, the better it becomes for you.