This VC firm invested in Pharmeasy when it was valued at just $10 million – here’s why it promises to invest in every round even after an IPO

• Pharmeasy’s parent company’s API Holdings’ $1.5 billion valuation made it the first healthtech company to be a unicorn in India.
• Rehan Yar Khan at Orios Ventures was the man who handed one of the first cheques to API Holdings.
• In an interview with Business Insider, Khan and Siddharth Shah, co-founder and chief executive officer of API Holdings share their journey so far.
• Shah also shares why Pharmeasy won’t just be restricted to being an ‘online pharmacy’.

Pharmeasy was one of the startups that got a billion dollar valuation in the unicorn frenzy, where India saw six unicorns emerge in just a week. Pharmeasy’s parent company’s API Holdings’ $1.5 billion valuation made it the first healthtech company to be a unicorn in India. And smiling behind the scenes of it all, was the man who handed one of the first cheques to API Holdings – Rehan Yar Khan at Orios Ventures.

Business Insider caught up with Khan and Siddharth Shah, co-founder and chief executive officer of API Holdings as they reminisce the journey so far and why they are excited about the space even more now.

The startup, which was founded in 2014, recently raised $350 million from new investors Prosus Ventures and TPG Growth. Its existing investors Temasek, CDPQ, LGT Lightrock, Eight Roads and Think Investments, too, participated in the round.

The beginnings

Khan isn’t disclosing the total investment in Pharmeasy, but he said that his firm has pitched in for every round raised by the startup. “When we first invested, their valuation was $10 million, today it’s $1.5 billion,” Khan told Business Insider.

Meanwhile, Shah shares another unknown fact about their business and investments. “My dad is actually one of the biggest backers of our startup. He is a reputed doctor and owned a hospital in Ghatkopar (Mumbai), he mortgaged that and put the entire money on the startup. Except our home at that time, if the family net worth was ₹50 crore, ₹47 crore was pumped into this business,” said Shah, and laughed to say, “He’s the sixth co-founder.”

Shah shared that it often became a joke in the company and family, “I couldn’t go to him with vanity metrics, it wasn’t someone else’s money I was blowing up,” he said.

What made Orios cut the first cheque

When Pharmeasy was picking up pieces of the puzzle, there were multiple other players in the market like NetMeds (now acquired by Reliance), 1mg among others. But Shah, who admits that they have gone through multiple pivots to finally arrive at Pharmeasy, said that supply chain was their strength and it helped them become big.

And that had impressed Khan at Orios. “We have a big thesis around e-commerce and pharmaceutical is a large part of it. We understood this business was intensely dependent on the supply side and we saw their work on it. Even if they weren’t the first movers, we felt they were the first people with know-how in this space,” said Khan.

Long way to go

Khan believes that they are going to continue to bet on the company. “One of the reasons why we keep investing is because it’s still very early in the online pharmacy industry. It’s not just about doubling or tripling our investment because that happens when you are a part of something large. We will continue to invest round after round, probably even after they go for an initial public offering (IPO),” he said.

Shah quickly clarifies that while an IPO is one of the aims, it’s not a goal right now.

Shah shares that the e-pharmacy market share is just 3% in India, which gives them a massive headroom for growth. “Our ambitions aren’t limited to pharma, we want to expand and become an outpatient healthcare partner. We want to do everything from information, diagnostics to working with hospitals,” he said.

Pharmeasy’s funding comes at a time when the space is heating up with the bigwigs entering the arena. Mukesh Ambani-led Reliance had recently acquired NetMeds, Amazon had launched its own pharmacy vertical, while Tata Group is in talks to acquire 1mg.

But Shah brushes off the talk of competition and says that their competition existed even when they started. “We didn’t think of competition and we aren’t thinking about it now. There is room for more than one company to survive and thrive. We have a very deep approach in the healthcare ecosystem, which sets us apart from competition,” he said.

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