Backing African healthcare startups: Insights from Kenya-based investor

Wilfred Njagi, CEO of Villgro Africa

Based in Nairobi, Kenya, Villgro Africa is an incubator that offers funding and technical assistance primarily to healthcare startups across the African continent. Over the past eight years, the organisation has disbursed more than US$2.8 million in blended funding. Jeanette Clark speaks to co-founder and CEO Wilfred Njagi about investment opportunities within the healthcare sector, specifically in areas such as AI, supply chain, and medical diagnostic devices.

Villgro Africa is an incubator focused on the healthcare sector in Africa. How was the company founded?

Villgro has a long history in India, where it was founded in 2001. I was lucky to do a one-year fellowship in India in 2013, whereafter I got the opportunity to replicate the tried and tested incubation model in Africa with my two co-founders, Rob Beyer and Robert Karanja.

Why do you focus on healthcare?

Villgro Africa could have picked any sector, but as we launched, we were approached by different healthcare funders who were familiar with the work of the parent company in India. They had trust in that specific incubation model and wanted to fund healthcare on the African continent.

Based on these requests we ended up with our current focus.

The Villgro Africa office was set up with funding from the Lemelson Foundation and Grand Challenges Canada. Later on, we got funding from USAID’s Partnering to Accelerate Entrepreneurship Initiative to do seed grants in addition to providing technical assistance.

Which areas within the healthcare sector do you focus on?

There are many different subsectors within healthcare. For example, screening and diagnostics, telemedicine and virtual care, nutrition, healthcare financing both for the patient and the facilities, supply chain, and maternal and child health.

What we have found to work is to do a thematic or focused call for applications. Our most recent thematic calls were around artificial intelligence (AI) and another on the supply chain. We received approximately 200 applications for each. We have a very healthy pipeline and are receiving close to 1,000 applications annually.

Where do you get most of your applications from?

We see applications from almost everywhere, but the concentration is quite high in Kenya, Uganda, Nigeria and Ghana. Support for healthcare startups in the Francophone [Africa] area is very limited, so we are trying to see what we can do about that.

How are African healthcare startups using AI in their businesses?

I think AI is no longer the shiny object that everyone wants to claim that they are using, but it is actually now changing how you deliver healthcare.

For example, AI can lower costs if used in pathology analysis, doing interpretations of pneumonia diagnoses, or interpreting X-rays. These are all super-skilled tasks and with the shortage of professionals we have, accessing these skills becomes cost-prohibitive or even totally inaccessible. In Kenya, we have only about 130 radiologists and 100 pathologists in the whole country.

What we’ve seen in practice is that AI and telemedicine can, hand-in-hand, help with this. An image can be taken locally and uploaded into the cloud, where AI can do the first quick scanning, to rule out false positives. Then the costly specialists can focus on the real cases that need attention. It reduces the sheer amount of time it takes to go through all these images, helping to increase the accuracy of fatigued and overworked specialists by lowering the workload.

AI can also be used to predict which cases these specialists are likely to see in the next three to five years, helping all stakeholders to plan better.

When it comes to healthcare financing, AI could help medical insurance companies streamline their claims management and verification processes, lowering costs, once again, which will benefit the patient.

Which AI healthcare companies have you backed?

We announced our AI for Health (AI4H) cohort earlier this year and it includes companies like The Pathology Network, Neural Labs, Vectorgram Health and Sophie Bot.

The Pathology Network is a Kenyan company that makes advanced lab tests available to patients regardless of their location. The platform is powered by AI and integrates this intelligence into early screening of, for example, cancer patients.

Neural Labs, a healthtech company operating in Kenya and Senegal, has developed NeuralSight, a technology that uses deep learning algorithms to detect potential abnormalities when it screens medical images for radiologists and hospitals in real time.

Vectorgram provides AI-powered tools for breast cancer screening in Kenya, using neural networks to speed up medical imaging.

Sophie Bot is an AI persona that can answer questions on sexual health, equipped with curated and verified information from the company’s partner UNFPA Kenya. The bot is available as an Android app or can interact with any users on Telegram, Messenger, WhatsApp and SMS.

AI needs data, and for that, you need diagnostic devices. Where do you see innovation in medical devices in Africa?

We have had some advances with locally made devices through the companies we support.

One of these companies is A-lite in Uganda. It manufactures a small device that uses infrared light to help health practitioners find veins in babies when they need to administer IV. It is very hard to find a vein on a neonate baby and nurses often end up having to prick the skin multiple times.

Another company in Ethiopia, Simbona, is building a phototherapy machine that treats the yellow pigmentation of jaundiced babies. It is the first of its kind made by a local entrepreneur and the company has already gone through the clinical trials and received the necessary regulatory approvals to use the device.

Mama Ope in Uganda has developed a pneumonia screening tool that improves the accuracy of pneumonia diagnosis and facilitates early treatment initiation. It looks at lung sounds and can use AI to quickly rule out false cases.

Another subsector you have mentioned is the healthcare supply chain – can you elaborate on some of the opportunities?

There are many. We have a company called Dawa Mkononi, in Tanzania, that streamlines the supply chain from manufacturers directly to pharmacies. The longer the chain, the higher the cost of medication at the counter in the pharmacies for a client. So Dawa Mkononi cuts out the middleman. It can do pool-purchasing at good discounts by aggregating orders from different pharmacies. The company is doing this very well in Tanzania and will soon expand to other countries like the Democratic Republic of Congo. The platform already has an impact; patients can buy medication at a more affordable price.

Benacare approaches the supply chain challenge from another angle. The company does home-based care in rural Kenya, working with patients with chronic ailments, or people who have been hospitalised for a long time and want to continue with care at home. Not only is it supplying medication and pharmaceutical supplies to patients, but it also provides healthcare services to this group.

A third company that is worth mentioning is Damu Sasa which looks at supplying blood. In Kenya, there are frequent stockouts of blood supply and no visibility on where you could find the right blood type in an emergency. A healthcare practitioner might be calling around for blood, yet a facility next door could have a surplus. Damu Sasa is creating a blood services information management platform where you can visualise the entire blood supply ecosystem. The company also uses its platform to do blood donation drives.

What does your funding model look like?

Our model is that we provide funding and technical assistance. Our funding is blended; in some cases, we provide grants and in others equity. In healthcare, you have to be very patient as you will perhaps only see an exit opportunity after seven or eight years.

Is getting regulatory approval for these solutions a challenge?

All areas in healthcare are heavily regulated, as they should be, but even more so when it comes to devices. In addition to proving that it works, you have to do several clinical trials to prove safety and efficacy.

A lot of the local regulatory frameworks for devices were developed with imported devices in mind. When we apply for approval, we find that they ask for USA FDA approval as a criterion, or CE mark approvals. If you are trying to build a device or tool from the ground up in Africa, you have to work closely with the regulators to help mark that pathway, it is not always very straightforward.

What we hope for is that harmonisation of regulatory approval across Africa can at least be improved. If you get approval in Tanzania, for example, it would be beneficial if that could apply to the entire East African market. If you are targeting the continent, re-applying for approval 54 times is just too cumbersome.