Transcript
Avegen is a UK and Indian social business and digital healthcare. We are working towards a world where quality healthcare is available, accessible, and affordable for everyone. On the one hand, we have a software that supports healthcare providers to make care more personal, reduce their workload, and improve tracking of patients outside of the hospital. On the other hand, we have patients that have a mobile application that provides information that motivates them to improve their own health and that tracks the most important healthcare meters. This platform is used in chronic cardiovascular diseases, in maternal health care and in HIV in both developing countries such as India as well as in developed markets such as the United Kingdom.
We are a for-profit business, but that does not mean that all our activities are always at a profit rate or even at a cost rate. Dependent on the clients or the situation, we adapt to offering so we can make sure that our platform is at all times affordable. So this can mean that sometimes we offer a platform for free to an Indian NGO or that we receive grant funding to be able to offer a platform at cost to a community. In order to maintain this low profit margin side of the business, we also support European companies such as healthcare providers, pharmaceutical companies or insurers in their work in Europe. However, whatever we do, our goal is to improve health outcomes of individuals no matter where we work.
As a commercial director of Avegen, I’m part of the management team and I’m responsible for new business development, account management and all the partnerships. Besides that, I’m also responsible for our maternal health care arm of the company. This means that my job together with our team and my colleagues is to acquire new partners or new customers, make sure that they are reaching their goals and make sure that they stay happy through their periods that they’re with us.
I would like to highlight two [challenges]. The first one is not necessarily only for social businesses because I believe that also non-social businesses can face this, but maybe social businesses a bit more often because in a social business and especially in healthcare, the beneficiary of your product, so the one that actually uses your product, is often not the payer. And this causes quite a challenge in your business modelling because how do you earn money as a for-profit social business if you do not offer value to the one that is actually paying for your solution? And the short answer is you can’t. In the short term you can get grants or CSR funding or rely on the good hearts in our case of many doctors that also believe that improving health outcomes is important. But in the end you need to offer an interesting value proposition, otherwise they will not continue paying for the longterm. So this means that you do not only need to create an impactful solution for the people that actually need your help, but you also need to create one for your payer. You perhaps need to create a two sided value proposition. So in order to make your company sustainable in the long term, we need to create two different value propositions. So kind of like a platform model or perhaps you need to sell your product or service in one market and then in another market, where the beneficiary is actually the payer, you can charge more. And this is a hard thing to do as a startup because as you know, as a startup you have very minimal resources and timing. You need to focus, focus, focus. So how do you do that if you have to spread yourself so thin?
For example, in the case of Avegen, it meant that in India our beneficiary is, for example, a mother, a pregnant woman in a slum. She cannot pay for healthcare, let alone for our solution. So we did two things. On the one hand we let the hospitals pay, but that means we have to create a platform at the hospital side that reduces their workload and we have to train their healthcare workers, for example, on quality of care. We’re a tech company, it’s not really the core of our business, but we still had to because that was the value proposition in order to get a payer to benefit the mother. Similarly, we took the platform that we developed in India and we took it to Europe where the beneficiary of the products also could pay for it. So in that way we are able to sustain our business in India. That’s the first point, really look at: is the beneficiary of your product also the payer? And in social businesses that’s often not the case.
Secondly, you have to continuously adjust your pricing and your business model. And this is not only in the case of social businesses, also a normal entrepreneur face this problem on a large scale. I just think that social businesses might have the two extremes. The access that you work on is a little bit further and that really, really tears your, your business in two directions. So you always need to see, okay, the features that I’m developing right now or the product that I’m offering, does that work for all my different beneficiaries and my payers at the same time? Because in our case, what we developed for India might not always work for what we need in the UK. And similarly the pricing model also differ: what/how an NGO can pay for something and how a hospital in the Netherlands can pay for something is very different. So you really need to be flexible in how are my pricing models? Do I ask for a license fee or a fixed set of fee or do I have other different models in that? How far do I go with customizing features for different markets or audiences? And although you always need a certain level of flexibility, also need to be very careful when to say no. Because as a business, as a startup, you need to focus. And as a social business you can really be torn too thin or spread too thin across these different requirements.
So to summarize, as a commercial director, I see two core challenges in a social business. First of all, your payer and your beneficiary are not necessarily the same person and that means you need to spread your focus or widen your focus, which is very difficult in a startup. And similarly because of that, because you have different payers, you also need to continuously adapt your pricing model and your business model. And this again will defocus you from what you really have to do and you need to really watch out for that.
Number one, be very critical if your beneficiary can also be your payer and if not really look at how they’re different. And do you need to plan for this? Do you need additional products? Do you need to go to other markets? You really need to plan for this in terms of your resources and the time planning and the money that you need in your business plan.
Secondly, be realistic. Grants and CSR funding do not last forever. And grants and CSR funding are not easy to get by, especially if you want repeat grants. You need to have a sustainable business model in place.
Thirdly, test, test, test and keep on testing. Test your value proposition, test your business model, test your pricing model, test your delivery model. Your initial plan, even though it might work, might not be necessarily the best. You always have to keep reinventing what you’re doing and testing if it can be done better.
And lastly, kind of a bonus, which is not necessarily related to the commercial side but more about getting funding, is that from the beginning onwards, decide your theory of change. What is your impact strategy? How do you measure data? How do you collect your data in order to prove that you actually make impacts? Because you will need this for grant funding. You will need it to prove it to potential customers. And a lot of social businesses especially forget this part, which you really need to collect data to prove your impact with a very solid theory of change.
