Come for the tool, stay for the network
Doctolib collects €500 million of venture funding and plans to expand its core appointment booking service with an Instant Messenger and a platform for medical documents. We took a closer look at the deal, with the goal of examining Doctolib's past and future.
A record-breaking funding round
Last week, it was announced that Doctolib raised €500 million. The valuation of the startup rose to €5.8 billion, making the French healthcare company not only the most valuable French startup, but also the most valuable healthcare company in Europe. The funding round was led by Eurazeo and reportedly included other existing backers such as Bpifrance and General Atlantic.
In the European HealthTech sector, there are only three startups with a valuation of more than €1 billion. Stockholm-based Kry (read our interview with the German General Manager Daniel Schneider), which offers video consultations with doctors, reached unicorn status last year and was last valued at $2 billion in April 2021. Another appointment booking platform provider, ZnanyLekarz, was valued at $1.8 billion in September after its Series F.
Doctolib is best known for its online medical appointment booking solution. The Corona pandemic in particular has given them a boost. In Germany, for example, almost 7 million people booked COVID-19 vaccination appointments via Doctolib last year.
This market activity was very likely also the reason for the new funding round. The money raised will be invested primarily in the startup’s German business, according to Dr. Ilias Tsimpoulis, Managing Director of the German subsidiary. Doctolib thinks the German market will eventually be larger than the French one. The numbers seem to prove him right. Of the 20,000 doctors currently using Doctolib across Germany, 11,000 have become customers since December 2020.
The latest funding is expected to add 3,500 new employees over the next five years (1,300 new positions to be filled in Germany alone). The company also plans to expand with new products in addition to their core service. Among them is an instant messaging service for medical professionals and a platform to centralize the data handling of medical documents. The startup will also focus on strengthening its data security efforts. In January, Doctolib acquired encryption startup Tanker.
Founding a startup per the Silicon Valley playbook
Doctolib was founded by Stan Niox-Chateau, who previously had a stake in a company that made restaurant reservations possible online. Niox-Chateau recognized similar patterns in doctors' offices: receptionists often still use pen and paper. After an epiphany in 2013, Niox-Chateau founded Doctolib to provide a service for arranging doctor's appointments. Basically, a Yellow Pages for doctors’ offices, complete with an appointment booking service.
Looking back, the founding story is surprisingly close to typical Silicon Valley growth strategies for marketplaces and transaction-based platforms.
As early as 2015, Chris Dixon (Partner at a16z) described that in digital, it is best to start with a clear solution to a problem. Then, once you have tied users to your service, you can and should expand it with additional value-added services. In the best case, you can even go on to network users with one another. He appropriately called the principle “Come for the tool, stay for the network.”
With “The Dentist Office Software Story,” Fred Wilson (founder of Union Square Ventures) describes a somewhat different dynamic. In the story, Wilson explains that software is a commodity. Nothing can stop anyone from copying your software features, making them more efficient, cheaper, or simply better. According to Wilson, it’s important to understand that a network of users, high transaction volume, and data ownership are the key to digital business models. These are the things that protect you from the competition’s commodification attacks.
The future of Doctolib
Doctolib didn't start out as a platform or network company. They simply wanted to solve the annoying problem of booking doctor’s appointments. But now that they have occupied the interface between medical practitioners and customers, they can leverage their network of medical professionals and patients.
Applying Wilson’s and Dixon's principles, it's easy to imagine that Doctolib, in addition to its heralded services, has the best chance of becoming a heavyweight in the telemedicine marketplace. Telemedicine technology building blocks are now almost commoditized. It should therefore be fairly seamless for Doctolib to expand their appointment service with an additional telemedicine service to further help under-digitized medical practices move their services to the cloud.
It will be interesting to see the direction in which Doctolib will expand their services. Although the startup is not yet in the black, it is well-equipped for the time being, particularly with the latest round of $500 million. We anticipate a lot of experimentation. Buckle up.