Cloudnine Hospitals, a maternity care chain backed by Matrix Partners and Sequoia Capital, has started talks with existing and new investors to raise Rs.300 crore to fund its expansion into cities such as Noida and Coimbatore.

“Tier 2 markets are attractive because the opportunity for quicker returns and ease of set-up are much more here, along with longer outlay of capex,” said Kishore Kumar, chairman and managing director, Cloudnine Hospitals.

Cloudnine, which was founded in 2007 and received Rs.145 crore in funding from Matrix and Sequoia, currently has 16 hospitals, mostly in Bengaluru. It wants to set up 12 to 15 more units. “We evaluate opportunities in the context of population, growth metrics, demographics, industrialization and income levels, all of which ultimately leads into the pricing of the services,” Kumar said.

The maternity care chain is looking to join hands or acquire small hospitals or start on their own in cities such as Coimbatore, Mysore, Mangalore, Indore, Surat, Nagpur and Noida. The company has also started expanding into related areas such as gynaecology, paediatrics and infertility.

Cloudnine, which has revenue of about Rs.150 crore, expects sales to double in the next few months. “With recent addition of units in Chennai and Gurgaon, and units in Pune and Mumbai, which will be operational this month, we will be achieving revenues over Rs.240 crore this fiscal. We expect the same set of units ramping up to achieve around Rs.300 crore in the months shortly thereafter,” the founder said.

Cloudnine also wants to use some of the money it gets to connect patients with doctors through apps and tech tools.

“There always have been mom and pop maternity hospitals in every other street mostly run by a husband-wife duo. Alongside, speciality hospitals for experience birthing are coming up too. So opportunity for the type of hospitals which cater to the middle segment, the ones who want affordability plus good care, is decent,” said Dr Ramesh Byrapaneni, a venture partner with the Ventureast Tenet Fund. “However, such hospitals need to be motivated not just by the higher returns but look at creating a social impact, too.”