1Mby1M Incubation Radar 2015: Ankota LLC, Waltham, MA

Billions of dollars are spent annually on avoidable hospital readmissions mainly for the chronically ill and elderly patients. This is primarily due to poorly managed transitional home care services. Ankota aims to remove this pain point through its software for managing care delivery for home care agencies.

Ankota LLC was founded in January 2014 by Ken Accardi after buying the assets of Ankota Inc where he used to work as the CTO. He has degrees in Engineering and Computer Science and an MBA. Prior to Ankota, he had served at GE as a Chief Information Officer for the Service Division of GE Healthcare. The inspiration for the venture came from a friend who died of cancer. Although she received excellent healthcare, her experience with home care givers was unsatisfactory. There was no proper system of appointment schedules, which resulted in a lot of wastage of time and resources, not to mention frustration for the patient.

At the time of the takeover, Ankota Inc was making approximately $170,000. There was excessive spending on department heads and they were unable to secure additional investment. After the takeover, Ken gave the company a new direction by aligning spending with revenue and focusing on the home care segment and generating recurring revenue. The company has now shifted from a “consulting model” with high levels of customization to a “product model” with clearly defined offerings that can be scaled across many customers.

Following the takeover, Ken took up an additional position and hired new staff. His technology leader was a junior developer who has emerged as a fantastic designer who is also fantastic with customers. His marketing lead was a filmmaker selling gym memberships and making very little money who has now become a guru in social media marketing and healthcare technology sales. His sales lead/COO is highly experienced and she’s betting on them.

The main value proposition of its home care management product is that it allows homecare agencies to work efficiently with a minimal administrative staff. It helps them streamline their operations and accelerate billing. The software manages scheduling, care documentation, billing, and payroll in a HIPAA-compliant web and mobile cloud solution.

One of Ankota’s earliest customers was a major teaching hospital in the mid-Atlantic. That relationship opened doors and enabled them to start growing their customer base. Today, over 500,000 patients have received care enabled by Ankota, home care aides transact 40,000 times a month, web visitors are about 4,000 per month with 60 or more leads. Over 1,000 health care organizations have collaborated with the software, most as referral sources. Customer acquisition is primarily via “inbound marketing” where prospects find their blog articles and other content and download white papers.

Ankota’s top target segments are the forward-looking home care agencies who see their potential in helping the elderly avoid hospitalization. Such pioneers are looking to collaborate with hospital discharge and primary care and break down a historically stove-piped system.

The home care software market is fragmented with a number of small players including Generations, Appointmate (acquired by Delta Health), ADLWare (acquired by Kinnser), August Systems, and HomeTrak. Although there are no huge players in their market, there are incumbents with name recognition. One relatively new player has raised $8 million in venture funding and is buying their way into the market. Ken says they don’t have these advantages, so they have to position very deliberately as the top choice for a market niche.

Their pricing is based on a monthly fee structure corresponding to the number of patients serviced by the customer. There are additional transaction fees for services such as the use of mobile applications or voice-telephony services. Monthly per customer revenue averages $800. Their 2014 revenue exceeded $250,000 of which 80% is recurring. Operations are cash flow positive.

Ankota’s core market includes over 25,000 home care agencies in the US and Canada and their average annual spending on software is $9,600. However, of these, 4,000 agencies have 10 caregivers or less and would be unlikely to purchase their software services to manage their business and about 3,000 agencies are already closely associated with a software company through franchises. Therefore, the adjusted addressable market is 18,000 companies with ARR of $9,600 that translates to a total addressable market of around $173 million for the core product. Ankota also targets emerging markets for care transitions and chronic care management, but these markets are in the early adopter phase and therefore not included.

Presently there is no debt and operations are cash flow positive. Regarding funding, Ken says, “We are not actively seeking funding, but rather focusing on accelerating growth and profitability. We’re very interested in being acquired by a like-minded company who sees the potential to improve healthcare by focusing on avoiding hospitalizations for the 10% of the population who account for roughly 75% of healthcare spending. We realize that in order to be considered we’ll need to show constant and sustainable growth.”