Gurgaon-based Labstreet, which helps consumers with pathology tests, has been acquired by Niramaya PathLabs in a cash and stock deal.
The healthcare startup was founded by IIT-Delhi alumni Lalit Mittal and Ujjwal Chaudhry in 2015. Post-acquisition, the founders will not be joining Niramaya but will continue in advisory roles and remain stakeholders in the company.
The founders are now planning to lay the foundation for a new venture but have not disclosed any details on that front.
Labstreet will continue to operate under the same brand name, but the possibility of a merger in the near future cannot be ruled out, said Ujjwal in a call to Yourstory.
"This acquisition will help both the businesses to work in more efficient manner both in terms of operations and marketing. This will lead to better quality and customer experience which is the key to getting ahead in healthcare industry," said Lalit Mittal.
Labstreet aimed to solve the pain point of tedious test processes and become a single-point solution for the customer, from test requirement gathering to the dispatch of the report to the customer.
In an interaction with Yourstory last year, the company had said that it planned to scale and expand across 10 cities and expand the team size to 100 employees by February 2016.
The 30-member startup operational in the Delhi-NCR region, currently claims to serve 30,000 customers on a monthly basis. Commenting on the acquisition, Ujjwal said,
Niramaya had been associated with us from the very beginning. So, when they approached us, it seemed like a great idea, and the synergy will enhance the product. Both the companies have a very strong focus on technology and sharing the same vision was the reason we agreed on this deal.
Post-acquisition, the majority of the employees will join Niramaya Labs. However, three or four employees will not be joining Nirmaya due to the automation of the processes, which has removed the need for further human effort. Sanjeev Malhotra, MD of Niramaya PathLabs believes that this acquisition will provide Niramaya with the technology infrastructure for deep integration with multiple online platforms in diagnostics space. He said,
It will enhance our home collection and logistics capabilities while creating a seamless experience for the end customer. Niramaya is looking to expand its presence in 4 more cities in the next 5-6 months.
The healthcare market, which has been sluggish in adapting advanced technology, is expected tohave tremendous scope and opportunity in the coming years. The diagnostics market alone is a $4 billion opportunity in India, and it’s growing with a 27.5 percent CAGR while the overall healthcare segment is growing by 15 percent.
Till last year, the Department of Industry Policy and Promotion shows that FDI in hospitals and diagnostic centres totalled $3.21 billion. According to IBEF, the healthcare market in India was worth close to $100 billion as of 2015 and is expected to touch $280 billion by 2020, clocking a CAGR of 22.9 percent. Of the overall market, the healthcare delivery sub-segment accounts for 65 per cent.
Funding and consolidations
The rules of funding in the Indian startup ecosystem have surely changed and now its mostly the early-stage startups that are being backed by investors as well as HNIs and deals are being closed. Labstreet had also raised Rs 1 crore funding from multiple investors.
With the slowdown in funding, more consolidations and acquisitions are likely to follow this year. Some of the major acquisitions from the startup world include Portea acquiring Health Mantra and PSTakeCare, Myntra acquiring Jabong and Quickr buying out Hiree, among others.