RWANDA— U.S.-based Y Combinator (YC), a startup accelerator, has announced Rwanda e-health startup, Eden Care will be part of its ongoing summer batch and receive US$500,000 in funding.
The Startup accelerator has been behind more than 2,000 companies since 2003 and some of its most successful companies are Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Quora, PagerDuty, Reddit, Stripe, and Twitch.
The health-focused insurance technology, Eden Care is the first Rwandan company to join YC.
Eden Care will, however, have two other African startups in the batch, one from Nigeria and another from the Democratic Republic of Congo, DRC.
Moreover, the Y Combinator will invest in only six African startups, via its biannual accelerator, this year, the lowest record since 2018.
This decision could be based on the announcement in March by Garry Tan, YC’s president disclosed that the accelerator is shutting down its US$700 million Continuity Fund.
The fund from YC was targeted at growth-stage startups describing it as a distraction from the Y Combinator’s core mission and the slash affected 20% of its employees.
Why Eden Care?
YC acknowledges that Eden Care leverages artificial intelligence and machine learning to deliver hassle-free, affordable health insurance solutions.
Eden Care is the first health underwriter built around a full-stack technology platform and a relentless focus on serving its members.
Moreover, through these technologies, the company empowers Rwandan organizations with the resources they need to support their employees and their dependent’s healthcare needs.
Moses Mukundi, Founder and CEO of Eden Care said, “Being accepted into Y Combinator is an extraordinary validation of the hard work and dedication our team has invested in our vision and to be part of changing the narrative on start-ups in Africa.”
Mukundi expressed that Eden Care was excited to utilize the opportunity to further optimize its technology and accelerate its mission of revolutionizing health insurance across Africa.
With the backing of Y Combinator, Eden Care intends to amplify its efforts and commitment to redefining health insurance in Africa, aiming to extend its footprint beyond Rwanda.
Mukundi adds that the genesis of Eden Care was to create the kind of health underwriter we would want for ourselves.
Additionally, Eden Care helps seamlessly navigate the healthcare system and thus delivers a superior member experience, reduces systemic waste, lowers cost, deliver value, and optimizes health outcomes.
Tshepo Machele, Chief Growth Officer at Eden Care, recognized that being accepted into Y Combinator would be the catalytic force that fuels its growth, enabling them to revolutionize digital health insurance in Rwanda and beyond.
“It’s not just about securing investment; it’s about tapping into a wellspring of unparalleled knowledge, global connections, and the collective wisdom of an entrepreneurial community committed to redefining what’s possible,” Machele added.
YC half a million-dollar investment
In 2022, Y Combinator increased its standard deal to $500,000, though the funding is divided into two; US$125,000 on a post-money safe in return for 7% and the new US$375,000 on an uncapped safe with a most favoured nation (MFN) provision.
Additionally, both are not contingent on any milestones by the recipient company.
YC announced that the US$125,000 safe and the MFN safe will each convert into preferred shares when your company raises money by selling preferred shares in a priced equity round.
Moreover, the beforementioned often referred to as “Safe Conversion Financing” which typically is raised during “Series A” or “Series Seed” financing, whichever happens first.
Only 20% of the companies backed by Y Combinator have failed in the course of backing startups for over 15 years which is an excellent number per industry standards.
With the introduction of the new standard deal, YC hopes that it will encourage more founders of any age and from every demographic group and geographic location to take the leap into the startup world, apply to YC, and build their own successful startup.
Even though the new deal might sound like so much money, some rival investors and accelerators have argued that small angel investors and funds might not want to invest in YC-backed companies.
“This will just kill seed-stage funds in emerging markets, thus making YC, a silicon valley-based fund without in-depth knowledge of emerging markets, the arbiter of all international ecosystem growth”, Claire Díaz-Ortiz, a venture capitalist tweeted.
On the flip side, YC will create more time for some founders to focus on building their products instead of fundraising.
Geoff Ralston, the President of Y Combinator stated that this was the type of deal that we have wanted to offer YC founders for years, and with the recent success of YC companies, including ten IPOs in 2021 and more to come in 202e.
“This sum will enable founders to focus on launching, building, and scaling their company. It will remove the immediate pressure to fundraise and accept less than favorable terms”, Ralston said.
In 2021, the Silicon Valley-based accelerator published a list of its top investments and the list included 130 startups with a minimum valuation of US$150 million.
The combined valuation of all companies on the list stood at over US$300 billion and the list included companies from all over the world such as Nigeria’s tech startup, Flutterwave.
As of 2020, Y Combinator had invested in 40 African startups, including 22 from Nigeria.
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