'PE funding has helped Eye Q take eye care to the masses'

Rajat Goel, CEO and Co-Founder, Eye Q tells Sarika Malhotra how private equity funding took the healthcare provider from one eyecare facility in a small dusty town of Rewari in Haryana to 28 in cities such as Rothak, Hissar, Meerut, Surat, Jhansi among others.

Q.Why did you opt for PE funding? What was the stage of the company?

A. Being first generation entrepreneurs, the initial years were challenging. Our motive was to start a venture to provide affordable eye care at the smaller towns where world class eye care was a big question. We started with internal accruals as banks did not lend without collateral. In a high growth business like ours, capital is very critical and PE is the most optimal route. We therefore reached out to PE partners who had a common goal of enhancing the healthcare conditions in the country, a partner who could have helped us in creating a socially driven yet a financially viable business model.

In May 2010, Eye Q received 'Series A' investment by SONG Investment Advisors.  Subsequently we raised two more rounds of funding. The second round of Rs 45 crore from Helion and Nexus Venture Partners in 2011. The third round was by the same set of investors in April 2013 was 25crore.  This helped the company to grow from 6 hospitals to 28 in a short span of three years and encouraged by the success of the business model, the company has set a target of having 100 eye hospitals in the country by the year 2020.

Q. How would you compare PE with other financing options...?

A. Private equity not only helps with capital, but also in drawing good quality talent, cross learning with companies and strong board governance with relevant experience. We work very closely with our with the PE partners as they bring in a lot of experience and networking opportunities on board. Moreover, private equity and venture capital firms realize the huge opportunity offered by the healthcare sector and therefore it becomes an equally viable association for them. The initial investment in the hospitals and their operating expenses are not as high as those in the metros especially in centres that offer only day surgeries is not high like ours.

Q. Given that you have had multiple rounds of funding how would you rate the experience?

A. Overall my experience has been excellent. PE brings lots of value to the business which is extremely critical in the growth phase. PE partners provide excellent support and act as patient listeners to concerns of founders in the initial phase. With similar experiences they are able to guide and push back at the right time. We began operations in 2007 with 1 hospital and are now a successful chain of 28 centres across the country. The success and expansion has largely been the result of the funding and cooperation provided by global private equity and venture capital firms. Timely funding by PE partners and venture capitalists has helped Eye Q in delivering the much needed benefits of sophisticated technology and experienced doctors to the patients while maintaining high levels of ethics and transparency in medical practices.

Q. What does PE funding bring to the table?

A. Apart from the finances offered they bring in corporate governance, improve focus and negotiate the transformations, integrity, due diligence and fund terms consistent with best market practices.

Q. What plans do you have to give PE players an exit?

A. The exit can be through the IPO route or strategic sales or other partners buying their stake.

Q. Will you be considering more rounds of PE funding? And by when?

A. In a high growth business like ours, fund deployment will be very critical and we will opt for another round as and when the need arises. Eye Q aims to open 100 hospitals by 2020 .It will be through internal accruals, money in hand and equity, which means a mix of debt and equity. Since the market behavior is volatile, bank borrowings and PE funds would be ideal for proposed expansion.