Kenko Health: Kenko Health shuts down; investors drag insurtech startup to NCLT

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Insuretech startup Kenko Health has officially shut down its operations after running out of funds, the company’s cofounder Aniruddha Sen told its employees in an internal email.

“Unfortunately, the company has run out of funds and we were unable to infuse equity capital in time due to various internal reasons,” he said.

ET has seen a copy of the mail.

Backed by Peak XV Partners, formerly Sequoia Capital India, and Orios Venture Partners, the company has been taken to the National Company Law Tribunal (NCLT) by a debt fund that had extended the startup a loan, Sen said in his email.

Due to a lack of funds, the startup has not paid salaries to its employees for the last few months. Last year, Kenko laid off 20% of its workforce, or 50-60 employees.

One of the employees told ET, “I haven’t received any salary for the last four to five months. The company never informed employees about this situation.”

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Addressing employee concerns, Sen in his email said, “The sole reason for the absence of any communication to all of you was that a resolution we expected to come through in a few weeks encountered various troubles and kept getting delayed beyond any reasonable timelines. We considered it best that if a deal went through, we would be in a better position to speak to each of you to resolve your concerns in the best possible manner.”Sen declined to comment on ET’s queries.

Shareholding Structure Kenko Health JUNE 2024 Graphic ETTECHETtech

In its June 12 edition, ET reported that Kenko Health was on the verge of shutdown, owing to a shareholder battle. The startup was in talks to raise funds from the Hero Group and had obtained a preliminary, non-binding agreement for the investment. However, some existing investors opposed the plan, claiming that the proposed valuation would cause a significant stake dilution for them, leading to a stalemate.

Founded in 2019, Kenko had applied for a health insurance licence and needed fresh funds after the Insurance Regulatory and Development Authority of India (IRDAI) increased the scrutiny of venture-funded insurtech startups.

“To comply with the regulatory framework, Kenko needed money, but the deal did not get all of the approvals from investors,” one person directly aware of the matter had told ET.

Following the stalemate, Kenko’s investors had started writing off the investment.

“I have written it off and so have others,” another person, an investor in the Bengaluru-based firm, had said.
As of January 31, 2024, Kenko founders Sen and Dhiraj Goel held more than a 36% stake in the company, followed by Peak XV at 23%, Beenext at 11% and Orios at 8%, according to Tracxn.

Kenko has raised a total of $13.7 million in funding to date. The startup provided a subscription-based service that covers healthcare expenses across outpatient departments and hospitalisation. As per data platform Tracxn, the company posted a net loss of $8.5 million on revenue of $10.9 million in fiscal 2023.



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