Kenko Health Co-founder Claims Regulatory Roadblocks Led to Startup’s Collapse

Aniruddha Sen, Co-founder of health insurtech startup Kenko Health, which shuttered operations in August 2024 due to financial constraints, has pointed to regulatory hurdles as the primary cause for the company’s downfall. In a LinkedIn post, Sen criticized the Insurance Regulatory and Development Authority of India (IRDAI) for allegedly obstructive practices, citing difficulties in securing an insurance license that prevented the startup from scaling its operations and innovating in the sector.

Sen shared that he and Co-founder Dhiraj Goel faced a two-year struggle with the IRDAI, describing it as a “wild goose chase” in hopes of obtaining the necessary license. He recounted that the journey began after IRDAI’s chairman publicly encouraged startups to apply for insurance licenses, promising support for capital raising and growth. Sen described how the team, initially optimistic, met with repeated bureaucratic challenges.

“For two years, Dhiraj and I went on a wild goose chase with folks at the IRDAI in the hope of securing an insurance licence. The journey started with a public call from the chairman for startups to step forward, raise capital and apply for a licence. Against better judgement and hindsight of past experience, we did so, only to face an onslaught of obstacles that culminated in the destruction of our company, our employees’ livelihoods, and our collective dreams,” Sen wrote.

Sen further alleged that he encountered officials who were openly unsupportive of entrepreneurial initiatives. He recalled a senior official from the finance department expressing disdain, even stating that Kenko Health and similar ventures “bring shame to the country.”

He explained, “During one meeting, she said outright that we ‘bring shame to the country,’” suggesting that IRDAI’s approach seemed to discourage private enterprise and innovation, favoring large government-run companies and wealthy investors over startups.

Sen also highlighted the specific regulatory demands that exacerbated the situation. “We had to convert our Compulsorily Convertible Preference Shares (CCPS) into equity, which led to a host of complications, including issuing bonus shares and incurring short-term capital gains taxes due to secondary sales,” he shared. Despite meeting these requirements, Sen claimed that the IRDAI left Kenko Health without a definitive response on the status of its license application.

According to Sen, the agency eventually informed them unofficially that they “don’t fit the profile” for Indian financial services promoters. “He told us, in no uncertain terms, that we ‘don’t fit the profile’ of promoters for an Indian financial services company. He dismissed us, saying that only wealthy, well-connected individuals were suited for such roles,” Sen wrote, calling this attitude “dismissive and condescending.”

Sen criticized the IRDAI for resisting change and stifling innovation, contrasting it with more progressive regulatory bodies such as SEBI and the RBI. “The insurance sector, in particular, remains stagnant, filled with outdated practices and run by individuals who have no understanding of modern consumer needs, let alone technology,” he added.

Concluding his statement, Sen called for reforms within the IRDAI and appealed to government officials, including Vivek Joshi from the Department of Financial Services, to address issues in regulatory transparency and support for startups. He closed with a call for accountability: “They destroyed my company, my livelihood, and the hopes of everyone involved. And someone must pay for that.”

Founded in 2019, Kenko Health offered a subscription-based model with health plans covering outpatient benefits, medicines, and healthcare products. The company had raised $12 million in its Series A round in February 2022, led by Sequoia Capital India, with contributions from Beenext, Orios, 9Unicorns, and Waveform Ventures.

 

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