Kendall Ananyi – Investing in a Y Combinator Top Company – My Reliance Health Story
Reliance Health started life as Kangpe, a telemedicine startup. I first heard about them when Tizeti provided free wifi to livestream Oo Nwoye’s event for Hiro Mashita who I was co-invested with in Paystack (https://www.tizeti.com/techcircle-meetup-event-with-hiro-mashita-june-282016/). Kangpe won the $2,500 prize.
A month later, Y Combinator (YC) core CEO Michael Seibel visited Nigeria and I reached out to Oo again to find out how Tizeti can support entrepreneurs at the YC event. Tizeti provided Wifi and helped sponsor the event at the Lagos Business School. It afforded me the opportunity to pitch directly to Michael Seibel right after the event. He had asked what Tizeti revenue was….. I remember not feeling comfortable blurting it out loud because I was surrounded by a number of people waiting to pitch to him. I looked up and saw these 3 founders so close by that I wished they could move away so I can talk freely 🙂 and I didn’t think too much of it at the time but later on I found out they were the founders of Reliance Health (then Kangpe).
Tizeti, Reliance Health and 3 other Nigerian startups got accepted into Y Combinator. We spent 3 months in Silicon Valley and started a tradition where each company took turn to host dinners for all our African batch mates. At the dinner at Tizeti’s place in Menlo Park, a friend of mine who had spent considerable time consulting for insurance companies in Africa as Management Service lead for Health and Public service group at Accenture was visiting. He shared insights into insurance which was an area Kangpe was thinking about entering in the future.
We completed YC, kept in touch and shared updates on our progress at subsequent dinners. A few months later, Ope told me they were pivoting to Health Insurance.
A startup pivot occurs when a company shifts its business strategy to accommodate changes in its industry, customer preferences, or any other factor that impacts its bottom line.
It’s a really difficult and risky endeavour, since you’ll might be foregoing some of the progress you have made with the initial idea. The Reliance team worked on pivoting to health insurance and months later they were ready to launch.
Super Platinum Plan
Tizeti was one of Reliance Health’s first customers. We analyzed their health insurance offering and were shocked that we had almost 20% savings by switching to Reliance’s health insurance plan. My team negotiated and we got a really good deal compared to the market leader at the time. I realized that if a new startup can undercut a market leader just like Tizeti was doing then they are on a path to building a really great company. The Reliance team delighted our employees when they presented the benefits of health insurance plans at Tizeti’s monthly townhall. I subsequently always referred to it in future discussions with the Reliance founders as the “Super Platinum” plan since we got more for less. The health insurance plan is an amazing perk for employees and is highly recommended for your employees if you are running a business.
Conviction to Invest
I reached out to the founders 2 weeks, and just like I had done with Paystack I decided to invest my little token in the company to support their effort. I became their smallest investor and biggest cheerleader.
The next week I met up with the founders at the US Consulate residence off the high of investing into the latest healthcare hammer 🙂 .
The relationship with Reliance Health has been symbiotic as they were an early user of our enterprise service and they utilize Wificall’s API. I also provide support/advice when I can and gave timely advice on the need to get regulatory clearance early on for a startup like Tizeti did even though regulation lags innovation. This year there has been a lot of startups dealing with those kinds of issues.
Last year I invited their CEO to speak at Tizeti’s 1st Next Gen event on their partnership with WifiCall.
Investing in Africa Startups
In my Paystack story I shared a framework for investing in African startups and I revisit it here with Reliance Health
- Invest what you can afford to lose. Correct… small investment in Kangpe
- Invest alongside great firms or in companies who have been through an accelerator if you are just starting out as it’s a great signal .. Invested in Reliance health who have been through YC
- You are actually investing in the founders, so ensure you carry out your due diligence on the founders prior to make making an investment in an early stage company. … ex-Goldman Sachs
- Stay away from founders who have not achieved anything outside of being a Founder/Ceo Founders interned at Goldman Sachs in London in circa 2009/2010 from a Nigerian University.
- If you do make the investment. Provide the maximum support you can especially when they are challenges or the company is struggling. Put them in touch with my friend, was an early customer etc
- Even though the bet is on the founders, invest in companies with large addressable market and whose customers love the product & are acquiring paid customers early with no real marketing. Tizeti staff loved the health plans and health insurance is still a large untapped market across emerging markets
- Stay away from companies whose early traction is as a result of paid marketing or a function of freebies. They don’t have a moat and there will always be a new entrant doing the same thing. Reliance Health generated revenue from from Day 1 even from us their earliest customers
- Make quick decisions, pace yourself and aim for one investment a year when you fully understand it. Reached out quickly with no back and forth and agreed to wire in a month
- Double down on the company in future funding rounds as it becomes less riskier with time. Definitely if the opportunity opens up
Reliance Health is now a YC top company. People against investing in Africa always cite the lack of exits but I have been blessed to have a number of exits in African startups. I have now had 5 secondary transactions making me one of the luckiest Angel investors. Coincidentally I am invested in every Nigerian company in the YC top companies list apart from Nomba. I have achieved this by being bullish about African startups & the value they can create on the continent and more importantly paying-it-forward by supporting African entrepreneurs and making it easier for them as best I can. I guess giving out free wi-fi does take you places.
I will end by quoting Jay Z’s verse of “God DID”…..make sure you are at the cap table where the splits is. I wish the Reliance Health team the best, as they continue to work to use technology to make quality health care accessible and affordable in emerging markets.