Kenko Health shuts down as it runs out of cash after raising over $13 million: Report

Mumbai-based healthtech startup Kenko Health has reportedly shut down its operations after five years since its inception.

According to a Moneycontrol report, which first reported the development, the startup ran out of cash after raising over $13 million in the last three years from investors, including Peak XV (formerly Sequoia Capital), BEENEXT, and Orios Venture Partners. 

In August 2021, It raised $1.7 million in a pre-Series A funding round.

Employees didn't receive salaries

The report said that nearly 100 employees have not received their salaries for several months and that a debt fund has taken the company to the National Company Law Tribunal (NCLT) over unpaid dues.

“Unfortunately, the company has run out of funds, and we were unable to infuse equity capital in time due to various internal reasons. Our company has been taken to the NCLT by a debt fund that had extended a loan to us,” Co-founder Aniruddha Sen reportedly said in an email to employees.

Notably, the startup laid off around 60 employees last year and closed its offices in Bengaluru and Mumbai.

“The company ran out of capital a long time ago and since has had no ability to settle employee F&F’s. This is unfortunate but also the stark reality,” Sen wrote.

He also revealed that the founders personally invested approximately Rs 9 crore between October and December 2023 to cover salaries. "However, that wasn’t enough," he said.

Kenko Health offerings?

Founded in 2019 by Aniruddha Sen and Dhiraj Goel, Kenko Health specialised in offering subscription-based health plans that covered outpatient department (OPD) benefits, medicines, healthcare products etc.

What led to the failure?

The report added that Kenko's troubles began when it failed to secure an insurance licence from the Insurance Regulatory and Development Authority of India (IRDAI).

The startup also failed to raise new capital, and many investors started writing off their investments, further intensifying financial pressures.

While the founders claim many employees have moved on to new jobs, the employees previously faced a lack of communication from management.

“In these situations, we had no face to communicate or request any further extension of time from any of you while we attempted to resolve the ongoing crisis. While it is disheartening that things did not go as planned, we take pride in our beginnings and the achievements we made together,” they said.

According to Tracxn, as of January 31, 2024, Kenko founders Sen and Dhiraj Goel held a more than 36% stake in the company, followed by Peak XV (23%), Beenext (11%), and Orios (8%).

Kenko witnessed a notable increase in revenue, going from Rs 5 crore in the financial year 2021-22 (FY22) to Rs 85 crore in FY23. However, despite this growth, the startup faced growing financial losses, which jumped to Rs 68 crore during the same period.