Agents of Impact | September 30, 2012

SevaMob: Convertible Loan to Replicate Health Care Model

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Shelley Saxena used capital and intellectual property from his Atlanta-based tech startup to bootstrap the launch of SevaMob, which is building a distribution system for low-cost preventive health services in Lucknow, the Uttar Pradesh district where he was born.

Now the Cornell MBA has taken his first outside investment, a $50,000 convertible note from Village Capital, to accelerate SevaMob’s expansion to other districts in India and even to Africa. It is in discussions with a potential franchisee in Liberia.

“We have proven it out in one district so the faster we can expand, the better for not only us but people who need the service,” Saxena says.

The deal reflects Village Capital’s efforts to develop new financing structures that protect both entrepreneurs and investors. The note will convert to equity if SevaMob closes a financing round of at least $500,000 within two years. If not, it would be treated as an 8 percent loan for that two year period, after which the interest rate would go up. After five years, SevaMob would have to pay back $100,000.

“We’ve done this to align expectations on the exit strategy,” Ross Baird, executive director of Village Capital, told Impact IQ. SevaMob won financing through Village Capital’s unusual peer-review selection process in Atlanta. SevaMob, formerly called SmartGaon, is also based in Atlanta.

Saxena, who was raised in Lucknow, recognized a need for primary health services among the region’s mostly poor, rural population. He had learned how to deliver mobile services as founder of SaasMob, which provides information to U.S. farmers. But he had to adapt the model for India’s low-income communities, where smartphone adoption and even literacy rates are low.

SevaMob deploys homeopathic, ayurvedic and other well-trained but low-cost health professionals to provide monthly checkups, who make referrals to remote specialists via mobile “trouble tickets.” Insurance plans cost $2 to $3 per month and cover primary care, dental checkups, specialist referrals and emergency care. For all plans, the amount of health and accident coverage is dependent on the subscription duration. SevaMob is able to offer its most extensive coverage in a 6-month premium plan that is government subsidized.

Since it launched last year, SevaMob has signed up 700 subscribers covering 1,300 individuals and claims a 92 percent monthly retention rate. Now it is selling bulk subscriptions to schools, employers, women’s organizations and labor unions. The company generates roughly $1,000 per month from subscription revenues and brings in an additional 20 percent through customer referral fees paid by local health clinics and specialists. Saxena said SevaMob has 15 employees and expects to break even in the first quarter of 2013.

Saxena says Sevamob’s ultimate value will be in the data it collects, fresh every month. “We know their medical history, who has arthritis, their income level, what crops they plant and what animals they have,” he says. If a pharmaceutical company wants to introduce a new product, “We can tell them where to launch that drug.”