Playing catch-up in the start-up funding race

NobleDentist

NobleDentist describes itself as Australia’s first dental plan. It has already attracted support from more than 500 dentists and 20,000 customers.

StartupSmart spoke to executive chairman Dion Kramer.

What inspired the idea for NobleDentist and how does it work?

Here are some common complaints about extras insurance that get to the Private Health Insurance Ombudsman every year:

• It’s complicated and it’s difficult to understand.
• It’s difficult to choose – there are 37 health insurance companies and over 17,000 different policies on offer.
• You pay for services you don’t use.
• It’s expensive and may even get more so if the government decides to means test the extras insurance subsidy of 30%.
• There are waiting periods.
• Some treatments are excluded.
• There are benefit loops. Also, the benefits paid out often don’t cover the cost, leaving the consumer paying the gap.

NobleDentist works by joining online in just a few minutes. You then visit any of our participating dentists across Australia and your fees are reduced by up to 40%.

On our website, we actually put the fees for every state. So if you’re in Victoria and you attended a dental practice, you will see the fees for each dental item number.

Each year, NobleDentist calculates its fee. So when you go to any of our participating dentists, they’ve got it in their software system.

If you get a filling or a crown or whatever it is, their usual fee might be, say, $1,500. Because they’re a member of NobleDentist, it would only be $1,200.

Who’s your target market?

Right now, the target market for us is the 22 million people in this country because NobleDentist can be used as an alternative or in addition to extras insurance.

We want the 48% who don’t have extras or any insurance, but also it complements with extras insurance.

With NobleDentist and insurance working together, it’s reducing or eliminating the gap.

How has the concept been received?

Right now, without any advertising, we already have 20,000 members Australia-wide and that’s rising.

We already have almost 500 participating dentists throughout Australia – we’re in all the major cities now – and 300 on the wait list to join us as we expand.

Our member and revenue growth rate have been tripling year on year for the last five years. Our member growth rate is 14 times greater than health insurance currently.

Our renewing rate – that is our members who renew year after year – is approximately 80%, with 59% currently choosing to auto renew by direct credit.

What are your revenue projections?

We’ve been profitable since our very first year. Our objective is to create a business worth $250 million within the next five years.

In America right now, one third of their population is a member of a dental plan, so over 100 million people.

The equivalent in Australia would be a little over seven million. In the next five years, we aim just to achieve 500,000 of that potential seven million.

What that does is gives us an EBIT of about $15 million and a potential valuation, based on current multiples, of $250 million.

How much money are you hoping to raise?

NobleDentist came onto the platform in September with the fastest round one capital-raising on ASSOB for 2011. We closed our round one, $500k, within the first week.

We’re wanting to raise $1.6 million, for 14% of the company, for three things essentially:

• To implement practice integration system into the dental practices, which will create a barrier of entry. We’ve already started this work.
• We want to launch our national public relations and advertising campaign, which is already in the planning.
• To support the growth that we’re talking about, we need to recruit some additional staff.