Ukrainian health care service Liki24.com closed its first investment round with $1 million in its coffers. Before this, a startup launched in 2017 had never raised funds from outside and was developing on its own without any media buzz. Once it did, it immediately found itself in the portfolio of one of the largest and most robust Ukrainian funds, TA Ventures. Genesis Investments, Mikhail Puzrakov, and other business angels also invested in Liki24.com.
AIN.UA talked with the co-founder of Liki24.com Anton Avrinsky about the service, its growth in the past one and a half years and how the team managed to accomplish such an ‘investment leap’.
We wrote about Liki24.com one and a half years ago. How has the service evolved since then?
The business model remains the same. We did not do any pivots. However, we have undergone a substantial expansion. We began as a service to help people order cheaper medicines — our delivery service collects orders from various pharmacies and delivers them to your door. In addition, it allowed people to save up to 40% on a single order even after paying for delivery.
Today we are a five-way marketplace. We have five areas of focus: end consumers (b2c), pharmacies and stores, insurance companies, doctors and pharmaceutical companies (b2b).
Explain each one briefly.
In b2c, that is, services for end users, we now have a new feature called “Customer pickup”. This is how it works: a customer selects products they need on our website. Then we offer them a choice: buy products at low prices with delivery, or show them the nearest pharmacies that have all the products they are looking for, so they can go there and pick up everything and get a discount.
For instance, the customer can opt to get their discounted order delivered to the door for 550 UAH, or they get the necessary products in a next-door pharmacy for 600 UAH, or they can get the products from a pharmacy that is two blocks away for the total of 500 UAH.
We also give them a discount. So, on top of showing pharmacies that have all the necessary products, we also help save money: if a customer visits a pharmacy alone, they would have to pay 800 UAH for the products they need, but we allow them to pick up the products only for 600 UAH. This is how our customer pickup option works.
Was it difficult to kick it off?
It was not easy. We had to set up integration with each and every of 3.5k pharmacies connected to the service in order to monitor their product prices and availability in real time. It takes a lot of work.
How do you work with insurance companies?
We help them save time and money. How does health insurance work? You pay for your insurance policy and when you get sick the insurance company covers your visit to the doctor. In addition, it covers the cost of medicines prescribed by your medical provider.
But that requires a specific sequence of actions to take place. Your medical provider calls the insurance company and tells them what medicines you need. After confirming your insurance policy, the insurance company begins looking for the medicines – they check the availability and prices. For that they send emails to pharmacies and the latter reply; then both agree on terms of delivery – in other words, this workflow consists of a myriad of steps. As a result, it takes the insurance company on average 30 minutes to process one claim. Needless to say that large insurance companies have to process somewhere between 500 to 1,000 claims per day.
We created software that reduces the time needed to process one claim from 30 minutes to just 3 minutes. At the same time, the insurance company saves from 5% to 15% on medicines (we are talking about huge amounts of money here, considering that their claims are usually up to 1,000 UAH).
Equipped with Liki24.com an employee of an insurance company is only one click away from checking the doctor’s prescription, eligible products, where to buy them, their prices and whether there is delivery service. Then this employee chooses the best offers, clicks and the order is booked pending delivery or customer pickup.
Are we talking about the internal market of health insurance or travel insurance too? What’s the state of affairs in this area in Ukraine?
So far we are talking only about health insurance in Ukraine. Health insurance for private individuals is a rare phenomenon. There are many companies in Ukraine that provide health insurance for their employees. And it’s a huge market.
For instance, Nova Poshta has all of its 30,000 employees insured. Personnel of Metinvest, DTEK, and Interpipe are also covered. We are talking millions of people who essentially become our clients by virtue of the insurance companies.
Today, our software is used by the largest insurance companies in Ukraine: Providna, Alfa Insurance, PZU, Krayina, and others. We work with 7 companies from the industry’s TOP 10. It is an enormous project for us.
What about your product involving doctors?
We have kicked off a demo project with Into-Sana chain of clinics. We have had them integrated into our system: now, when a doctor prescribes medicines to their patient during an appointment they select medicines right from our database. This solves the problem of when a medicine is pending reregistration and it is not available in pharmacies, but the doctor is not aware of it. As a result, the patient uselessly roams the pharmacies and gets frustrated.
After the doctor has prescribed medicines, the patient receives a message in Viber with a list of medicines and locations where they can be bought at a low price through Liki24.com – and they can do so right from the messenger. This solves two problems at once: first, doctors often write illegible prescriptions by hand, second, you don’t need to run all over the city looking for the medicines – everything has already been found for you, you just need to pick up or order delivery to the door.
We are planning to launch similar functionality for doctors who do home visits.
We have also become an effective promotional platform for pharmaceutical companies. At Liki24.com they can promote their products directly to the end user. In June, Liki24.com traffic reached 400,000 unique users, which is very enticing for pharmaceutical manufacturers.
Does that mean that you simultaneously have 4 sources of monetization? What rates do you have for each area of your business?
Yes. Buyers pay for delivery. Insurance companies pay for our software – we get paid for each claim we process. Pharmacies pay a small percentage from their sales through our service. Pharmaceutical manufacturers pay for promotion of their products on our marketplace.
We cannot disclose the precise rates, but they are very individual and deserve a separate article to be written about them.
What is Liki24’s growth rate?
Cumulative turnover of orders processed via our marketplace has already reached $2 million a year.
We have more than 30,000 individual customers. We partner up with 7 insurance companies, 3,500+ pharmacies, the traffic is almost 400,000 unique users per month, and last week we had fulfilled more than 50,000 orders. And this is only as far as b2c is concerned.
Okay, we have heard enough about the service. Now let’s move on to the round. Is it your first investment? $1 million in investments from scratch is quite an accomplishment for Ukraine.
Actually, there were a few investments that stretched over time, and we decided to combine them in one round. Back in 2018, a business angel invested in us, but we did not immediately receive the full amount and closed that round only now with the participation of large Ukrainian funds: TA Ventures and Genesis Investments.
Intellias founder Mykhailo Puzrakov also invested in us.
How did you manage to entice that many reputable investors?
As a matter of fact, there were more offers, we even had to refuse. First, we didn’t want to spread too much and didn’t want to attract more money than we actually needed.
We were not originally engaged in finding investors. Because we are not building a startup – we are building a business.
It all started when we won a startup competition at IT Arena last year and received a grant to the tune of $10,000. It was incredible as there were 150 entrants.
After that, investors began reaching out to us. Also, there we met Puzrakov, who eventually invested in us.
How did you meet TA Ventures and Genesis? Have they reached out to you?
Last year, UNIT.City held a meetup with investors and we were there as winners of IT Arena. Our direct communication with investors began from there, and we can say that this round also stems from there. Because this is actually a very long process – we were audited, subjected to due diligence process, we negotiated, we drew up contracts… As a result, it stretched from October-November 2018 until the time of closing now.
Back then a few acquaintances introduced me to TA Ventures. I met Viktoria Tigipko and was very impressed with how energetic and vibrant she was with a global vision. We realized that we suited one another.
Then, Viktoria introduced us to Genesis Investments. We were won over by their international technical expertise because we are a high-tech platform, and for us, this facet is very important. In cooperation with them, money is less important, the main thing is the smart component: their marketing, technical and recruiting expertise, which we really need now.
What are your plans for the future? How are you going to develop the service?
We are growing by 10-25% month on month, and our current goal is to accelerate this growth. To do this, we want to strengthen the team with top employees – for this, we need investments in the first place. This is number one.
Secondly, we want to expand geography. Currently, we operate in Kyiv, Dnipro, Odesa, Kharkiv, and Lviv. In the future, we want to operate all over Ukraine and expand to other countries.
Thirdly, we want to further develop our system. Despite the fact that it was born from a seemingly simple problem – saving on medicines – today our platform is a complex technical product with AI elements that process and compares huge amounts of data. Make no mistake about it, we have about 30 million price and stock items that are updated every 5-10 minutes.
It is a kind of a mini ERP system, Viktoria calls it a CRM system for managing everything from deliveries to sales. We have already had several requests from large logistics companies to sell our platform to them. Therefore, we need to seriously streamline the development of our product in terms of technology.
Now we are actively working on a new UX / UI for our clients.
Are you going to license your system to others?
We will test run it. Currently, we do not want to spread ourselves thin and juggle multiple tasks at once, but we understand that this is potentially a huge market for us. It’s just currently it is not our priority.
