SUMMARY
- Kenko Health co-founder Aniruddha Sen attributes the startup’s failure to prolonged delays by IRDAI in granting an insurance license.
- Despite rapid revenue growth, the startup shut down in August after exhausting funds and facing regulatory obstacles.
- IRDAI’s evolving licensing policies reportedly hindered Kenko’s efforts to secure new investors and stabilize operations.
Mumbai-based healthtech startup Kenko Health, founded in 2019, aimed to revolutionize healthcare by offering subscription-based plans covering outpatient services, medicines, and healthcare products. Despite a surge in revenue from INR 5 crore in FY22 to INR 85 crore in FY23, the startup ultimately collapsed due to regulatory hurdles and funding shortfalls. Co-founder Aniruddha Sen has openly criticized the Insurance Regulatory and Development Authority of India (IRDAI), attributing Kenko’s downfall to prolonged delays and changing regulatory stances that he claims left the company in financial turmoil.
In a detailed blog post on Medium, Sen expressed frustration with IRDAI’s licensing process, which he described as a two-year “wild goose chase” that stymied Kenko’s progress and disillusioned its team. According to Sen, IRDAI chairman Debashish Panda initially encouraged startups like Kenko to pursue funding and apply for insurance licenses. However, regulatory changes later imposed stricter requirements, including the need for a large domestic investor, making it increasingly difficult for smaller, venture-backed firms to enter the insurance market.
Kenko Health, which quickly gained market traction, faced insurmountable financial pressures as losses swelled to INR 68 crore in FY23, despite its revenue growth. The company struggled to meet IRDAI’s evolving requirements and failed to secure the insurance license it needed to attract further investments and sustain operations. Tensions also reportedly arose between Kenko’s management and its investors when the startup sought a domestic lead investor to fulfill the regulatory criteria, further complicating its financial position.
Additional regulatory stipulations, such as the mandatory conversion of Kenko’s Compulsorily Convertible Preference Shares (CCPS) into equity, led to significant complications. This conversion triggered issues with bonus share issuance and short-term capital gains taxes from secondary sales, adding to the company’s mounting financial distress.
In August, Kenko Health ceased operations, citing an inability to raise further funds or acquire the necessary license. Shortly after, the company was taken to the National Company Law Tribunal (NCLT) by a debt fund to which it owed money. Sen’s account also highlights a troubling exchange with a senior IRDAI official, who reportedly labeled ambitious entrepreneurs as bringing “shame to the country” — a remark that Sen claims underscores the challenges faced by startups navigating India’s complex regulatory landscape.
IRDAI’s recent moves to scrutinize tech-based insurance applicants more closely follow rising concerns over financial irregularities within the sector. Although Kenko met the criteria outlined by IRDAI, securing the necessary approvals remained elusive, ultimately leading to the startup’s untimely closure.
