Sydney-based ASX-listed health-tech startup 1st Available has acquired a competitor using funds from a recent $6.35 million funding round.
Continuing its goal to become Australia’s leading online community for health services, the public company has bought OzDocsOnline for $150,000, following on from acquisitions of DocAppointments, Clinic Connect and GoBookings.
These purchases are part of an active effort to acquire small, complementary startups in the same space to make 1st Available a dominant player in Australia, managing director Klaus Bartosch says.
“We see an opportunity to role up the smaller players into our company and our platform,” Bartosch tells StartupSmart.
Swallowing the competition
The announcement follows a recent $6.35 million capital raise led by investor Anthony Tony Gandel, son of billionaire John Gandel.
OzDocsOnline is a small online booking service that generates revenue from prescription requests, access to pathology results, consultations, referrals, appointment reminders and secure messaging.
Bartosch says his company will be adding the IP under the 1st Available brand and combining its customer base to make their joint services and products available to more people.
“These small players struggle to compete with the likes of 1st Available,” he says.
At time of acquisition, OzDocsOnline had 130,000 registered patients and over 800 doctors across practices, but Bartosch says it would have struggled to continue growing had it not been acquired.
“The OzDocsOnline business is one that has been maintained through part-time resources,” he says.
In addition to new IP, customer databases and additional products and services, Bartosch says this acquisition approach helps them add value to their teams internally.
“We are always looking for new and good talent to bring into our community,” he says.
“We’re certainly the only player in the space who has been acquiring smaller competitors, there really aren’t that many left to be honest.”
Bartosch says he’ll also be looking to bring on businesses with complementary services to further accelerate the startup’s growth.
“Everything starts with the appointment being booked online but all the other things we do make it easier and more convenient to access [healthcare] services online,” he says.
“We know the things that we’re building and doing are making your life, my life and other consumers’ lives simpler in the way we access healthcare.
“Everything else in the world is moving quickly down the digital path, healthcare should be no different and we’re playing a pivotal role in leading that way.”
How to strike a good acquisition deal
When it comes to making a good acquisition deal, Bartosch says startups need to begin with identifying the reasons why not to do it.
“I’ve had experience in the past with acquisitions and see what can go well with them and what can go badly,” he says.
“People should go in looking for things that won’t go well and find excuses to not do the acquisition.”
Doing this helps identify the problems or gaps between the firms to assess whether these can be addressed and how well the companies fit with each other.
This includes the quality, values and culture of talent if they are to merge with the new company.
“They need to share the vision otherwise it won’t work,” he says.
Due diligence on the technical quality of the platform and its customer base is also crucial for a smooth and successful integration.
Before signing a deal, Bartosch says founders also assess whether or not the smaller player’s customer base will abandon ship if it’s taken over by another brand.
“The customer base needs to be sticky and loyal, and likely to see the benefit in the acquisition in relation to their investment with the product,” he says.