In developed markets, technology has enabled startups to utilize existing infrastructure and communal assets to disrupt traditional industries from mobility to hospitality. And many have applied this same thesis to other industries and countries, but not one size fits all, and any African investor will tell you that for free. An example of this is healthtech in Africa.


Africa is a high-risk investment with 54 countries and nearly 1.5 billion people with innumerable cultural differences across a landmass that could contain America and Europe easily. This market is defined by fragmentation and a lack of infrastructure; what matters most is getting to the customer first. It is why a Nairobi mom-and-pop trader can out-compete South Africa’s grocery giant Shoprite and why 15,000 community pharmacies have to try (and  fail to) provide quality primary care to 213 million Nigerians. Yet, these pharmacies are the population’s most accessible and affordable healthcare provider. 

Technology has been lauded as the answer to Africa’s fragmentation challenges, especially in healthcare, where the impact funders and DFI’s have seen China’s success in making healthcare more accessible and affordable by growing the number of online hospitals and providers. And while technology can digitize and aggregate across healthcare providers, reducing inefficiencies and increasing the effectiveness of existing healthcare spend, it is difficult to create trust and value if there is no existing infrastructure to leverage. Especially in East and West Africa, where the historical lack of quality care has created a patient base that is profoundly distrustful, one who prefers to transact with physical providers that have the community’s stamp of approval. 

Telemedicine startups have struggled to monetize in East and West Africa as patients typically prefer to purchase drugs and diagnostics from their trusted local pharmacy or hospital This is faster and cheaper than getting medicines delivered or samples collected given the region’s last-mile delivery challenges. 

While many funders in the health tech space went after the purely digital players, Newtown Partners invested in MDaaS, which was opening diagnostic centers to perform ultrasounds, x-rays, and basic blood tests – not your typical VC deal. 

MDaaS scaled centers to profitability within six months, despite most of its patients paying out-of-pocket and MDaaS having to take on equipment costs upfront. MDaaS did this by bringing affordable quality care closer to underserved patients and leveraging a volume business model to grow revenue 2x per annum with double-digit net profit margins in scaled-up centers. MDaaS, which has an infrastructure-first approach, has grown faster than other pure technology startups and has survived, while most telemedicine plays had to turn to unsustainable Covid-19 testing to fuel revenue growth. 

MDaaS has 15 diagnostic centers that can report on patient visits in near real-time. It has also built up an extensive base of referring clinicians and is working with Health Maintenance Organizations (HMOs) and corporates to provide diagnostics services in bulk to their employees or customers. MDaaS will continue to scale by digitizing the interfaces between its diagnostics centers, referring clinicians, HMOs, and corporates to make it easier to service a patient anywhere in Nigeria. 

While we at Newtown Partners are always looking for startups that are changing the basis of competition by leveraging technology, the lack of basic healthcare infrastructure prevalent in these markets reduces the usefulness of a pure technology play. We prefer to invest in health tech startups that build communities around patients and provide value to multiple stakeholders in the value chain to create trust. Technology alone is just not enough.