The making of a Sh2b healthcare start-up

At 21 years, Alex Musyoka left Kenya for Rwanda to find his pot of gold.

Ten years later, he’s part of Viebeg – a Sh2 billion health start-up redefining medical supplies procurement and making healthcare affordable across East Africa.

Musyoka’s story begins in the sprawling Kibra slums where he was born and raised. In hindsight, his entry into the healthcare industry was foreshadowed by the death of a close friend owing to a lack of medical care.

“Life back then was about survival, and healthcare was a secondary want,” he tells Enterprise.

Before Rwanda, Musyoka worked for a dental supplies firm, helping grow its market share. His grit cut him above the rest. Soon, he was poached by a medical supplies firm that offered him the option of going to strengthen business operations in Rwanda, Tanzania or Uganda. 

He picked Rwanda – a decision that transformed his life and fulfilled his entrepreneurial ambitions.

“I left for Rwanda in 2012 to head the firm’s dental unit. I worked there for five years until I met my business partner and decided to pursue entrepreneurship,” recalls Musyoka.

Musyoka met Tobias Reiter, an Austrian tech enthusiast, who he had assisted in some business and also played soccer with him during their free time. Shortly after, the two co-founded Viebeg. Musyoka is the chief commercial officer and Reiter is the chief executive.

They hoped to fix the broken medical supply chain, which suffers from structural weaknesses, poor inventory management and improper procurement.

“Sometimes, because of the broken supply chain, suppliers are unable to use data to procure equipment for hospitals,” he says.

The duo decided to capitalise on that gap and introduced medical supplies procurement software for hospitals and clinics to boost efficiency and transparency. The technology ensures hospitals get medical products efficiently and affordably. This is through linking manufacturers directly to hospitals and using Artificial Intelligence (AI) to predict supply shortages and epidemics ahead of time to prevent health crises. The firm now supplies over 500 healthcare providers in Rwanda, Burundi and the Democratic Republic of Congo (DRC). It has a network of 30 suppliers and hit a revenue of Sh110 million last year.

The software enables hospitals to log in, request products, get invoiced and then have the goods delivered. Musyoka and his partner are leveraging this to expand the business.

“It (software) enables us to collect data and use it to procure items. In future, we’ll be able to assist the medical fraternity in ensuring that they always have enough,” he explains.

The more data they collect, the more affordable they are able to make healthcare affordable.

“Kenya and DR Congo haven’t come into the picture yet, so we are looking forward to great revenues,” says Musyoka.  

This year, Viebag is set to expand operations into Kenya. He acknowledges that Kenya is a tough market to crack, citing steep competition and patronage as key challenges. He sees a lot of potential in DRC but admits the risks are high.

“Rwanda is a young nation that has learnt a lot from the past and is eager to become an icon in Africa in terms of ease of doing business. One of the main business challenges in Kenya is corruption and unfair competition,” says Musyoka.

“In Rwanda after six months, we had already gotten a contract from the Ministry of Defence that shows you that if you are doing everything right, such as business compliance, you’ll reach the heights you want,” he adds.

He, however, notes that Kenya still remains an extremely lucrative market for entrepreneurs if one is able to overcome the challenges.

“In DRC, we’re pursuing a business model where individuals procure, get the product and earn a commission, but the firm does the aftersale services,” says Musyoka. “When going into new markets, never assume everything is okay. A business has to take necessary measures to protect itself.”  

Being a start-up, he says they are not currently “too profit-obsessed,” with the core aim being to increase market share.

“If the firm breaks even and is able to meet costs, shareholders aren’t concerned with big dividends. Profits are reinvested into the business,” says Musyoka.

The business is currently doing a funding round targeting to raise $5 million (Sh575 million) for expansion. Musyoka says that Viebeg is valued at between Sh1.7 billion and Sh2 billion. In what is a capital intensive business, they had a great business idea but funding was a key challenge at the start.

“My business partner had to borrow the last coin from his father. I had the customer base and trusted suppliers in Kenya who could give me products on credit,” explains Musyoka.

Viebeg began with dental supplies and now supplies hospital furniture, medical consumables, oral care, lab and radiology equipment.

The Covid-19 pandemic - seen as a boon for medical supply companies - almost upended their business.

It was a moment of crisis for Musyoka as an entrepreneur, almost bringing operations to a halt. There was a payment challenge, and the private sector was also stuck as it was preserving liquidity.

“The pandemic even prompted us to kick-start our capital raising as a start-up,” he recalls

The firm wasn’t supplying personal protective equipment (PPE) but benefited when the Rwandan government ordered over 200 beds from them.

Shipping delays could have hampered the PPE business, he says.

The firm sources from China, Europe and India and selects companies based on reputation, quality and reference. Musyoka has no background in medicine and is currently pursuing an MBA in strategic management.

The business, which has over 50 employees, has, however, hired experts in the healthcare industry, including dental professionals, biomedical engineers and trained doctors.

“I have product knowledge based on my 13 years of experience in the healthcare industry. I can explain the benefits and side effects, but I never underestimate having experts in the business,” he says.

According to a report by Partech Partners, investors were already taking a shine to healthcare start-ups even before the pandemic struck.

In 2019, investments in healthcare start-ups across Africa stood at Sh20 billion, an increase of more than 900 per cent compared to 2018.

Kenya came second after Nigeria in the overall amount of funding, with the country only registering one start-up in the healthcare segment. 

Last year, Kenyan start-ups in the healthcare sector raised Sh12.4 billion in venture capital funding. The country was, however, fourth after healthcare start-ups in Egypt, Ghana and Nigeria that managed to raise Sh5.8 billion, Sh3.3 billion and Sh3.2 billion respectively.

Now there exists plenty of investors looking at Africa. Tech giants are also pitching tent on the continent, looking for the next big idea.

The Kigali International Financial Centre announced the entrance of a $250 million investment fund dubbed Virunga Africa Fund I last year, which will invest in sectors capable of driving economic growth and social transformation across Africa.

“Africa is opening up for start-ups; this is the time to start,” notes Musyoka.

However, at the start, he recalls moments of doubt when they did a lot of pitching for business without success.

“These were moments of doubt even being pushed to the corner, and I almost gave up because of frustrations. But when we got the first investor, everything changed, and we started believing in ourselves,” recalls Musyoka.

The firm also provides equipment financing where they give customers flexible payment terms, for example, six months or a year and is involved in constant product development to keep ahead.

Musyoka’s proudest moments have been seeing the happy faces of clients and the opening up of the medical supplies sector in Rwanda.

“When I went there, clinics developed, prices went down, and the dental fraternity expanded. I was the main sponsor for the first-ever dental association conference in Rwanda,” he says.

There are too many deals to count. Viebeg is currently installing dental chairs in one of the biggest hospitals in Rwanda.

The future, Musyoka notes, is about thinking about solutions and learning from the more developed markets.

He says the firm will continue helping in the digitalisation of the medical industry and is set to introduce a patient management system, having already partnered with a US firm to help roll it out.

As a business leader, he keeps himself updated by reading widely and attending medical exhibitions.