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SA venture capital (VC) fund Knife Capital announced today that it has made an undisclosed investment in Cape Town based healthtech firm 5nines Technologies to help grow its pharmaceutical temperature monitoring solution PharmaScout.
Knife Capital said in a statement today that while the three-year old healthtech company has been angel-funded to date (from Hlanganani Capital director Rowan Smith), the Series A funding round will help accelerate the product’s rollout to pharmacies, medical practitioners and pharmaceutical warehouses.
The funding will also help cover new product development for the international market.
The VC said PharmaScout has already gained “significant traction” with blue-chip customers such as Clicks and Alpha Pharm, while conducting pilots with local hospital groups.
The company has also commenced research and development (R&D) into the provision of provide cold chain management products applicable to the retail, restaurant and hospitality industries.
Knife Capital’s investment in Cape Town based healthtech firm 5nines Technologies to help grow its pharmaceutical temperature monitoring solution PharmaScout
The solution will help pharmacies and others meet legal requirements introduced three years ago SA Pharmacy Act that pertain to the storage of pharmaceutical products.
In 2015 the act was amended to require that anyone storing, distributing or administering thermolabile pharmaceutical products must use appropriate storage facilities, electronic temperature monitoring instruments and conduct regular checks.
Most domestic fridges fail to meet storage standards, while specially designed laboratory fridges are impractical for small medical practices.
To address this 5nines Technologies in 2015 introduced PharmaScout addresses this with a recently launched range of refrigerators designed for storing pharmaceutical products in a compliant way.
The PharmaScout solution contains appropriate hardware and software elements, temperature mapping of storage areas including refrigerators, periodic calibration of the temperature measuring equipment and continuous monitoring that includes alarms, notifications, data storage and daily reporting.
These capabilities open up local and international growth opportunities and partnership channels in different cold chain verticals.
In the same statement Doug Siepman, CEO and co-founder of 5nines, said he is “delighted” to partner with Knife Capital. Siepman founded the business with Greg Daus in 2015.
“The team brings a wealth of experience and market access networks to the business that we are already starting to tap,” said Siepman.
Knife Capital partner Keet van Zyl called PharmaScout an “exciting investment opportunity” for Knife Capital. “It contains all the elements that we look for in a portfolio company,” he said.
“There is a compelling investment case underpinned by recurring revenue, great people with execution abilities resulting in proven traction and intellectual property elements that make the technology scalable.
“Macro factors in the industry such as increased legislation and auditable but affordable medical compliance standards also play in PharmaScout’s favour,” said Van Zyl.
In a subsequent email to Ventureburn, Van Zyl said while Knife Capital does not typically disclose funding amounts in any of our investments, the VC took a “significant minority stake” by way of growth equity.
Van Zyl said the business’s two co-founders themselves funded the business initially, and that an angel investor (who he did not name) with significant structured finance experience invested in the business last year to bankroll pilot projects. Clicks and Alphapharm came on board as clients earlier this year, he added.