B2B – Dutch Uncles

B2B Aggregators Disrupting the FMCG Distribution

Shalmoli Sarkar — Thu, 21 Apr 2022 09:42:15 +0000

The independent grocery store colloquially known as the Kirana store is a vital channel for FMCG companies also forming the bedrock for the economy, and supporting the livelihood of millions of households. Our lives now intertwined with technology have simplified tasks that earlier were cumbersome. Right from ordering food, clothes, and medicines within a click to fintech apps disbursing loans with the least paperwork, it is evident that technology has made our lives comfortable. But, sadly the influence of technology on the B2B FMCG distribution is less. According to a report by Nielsen, over the past decade, India’s 6.6 million network of small grocery stores is growing at a slower pace than the overall consumer market.

A supply chain full of bottlenecks, inefficiency, and inconsistency

The slower pace of the small grocery stores can be blamed for its fragmented market system. About 90 percent of India’s FMCG operates in unorganised channels, which comprises a million individual distributors, and wholesalers who reach over 15 million mom and pop Kirana stores serving millions of Indian consumers. With the rapid growth of e-commerce and modern retail formats, it is likely, that the fragmented or unorganised channels made of small grocery stores and independent distributors, and wholesalers will lose ground. There are several inefficiencies and bottlenecks in the supply chain process originating from small and multiple intermediaries that service the same routes and same retailers, frequently with partially loaded trucks. The distribution system is riddled with manual processes which are slow, inefficient, and inconsistent.

Besides this, there lies a challenge for credit. Small stores are cash strapped leaving them dependent on purchasing goods on credit and eventually keeping a limited range of products as compared to modern retail stores resulting in a shift of shoppers. The increasing channel conflict on pricing general trade, e-commerce, and modern trade lowers the price of products in turn benefiting the end consumer but the pressure on margins on small retailers continues to build up.

In addition to this, the distribution is mired in an inflexible supply chain where the sales plans to delivery routes alter dynamically once or twice a year. This provides no room for growth for agile reallocation of resources and with the growth of modern retail stores, the small grocery stores become burdened with higher costs to serve.

Witnessing the challenges in the supply chain the FMCG companies will attract a digital disruption that will help these companies to track, analyse and improve sales and distribution at these small outlets. They need data for outlet-level information and real-time insights on market trends that can help build their strategy.

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According to a report by Nielsen, over the past decade, India’s 6.6 million network of small grocery stores is growing at a slower pace than the overall consumer market.

B2B aggregators are bringing in disruption

A majority of the B2B aggregators witnessed that the FMCG distribution space is highly unorganised and a wide gap exists between the company and the channel partners. Aggregator platforms like Udaan, Xpand, and Creando are disrupting the FMCG distribution and changing how Kiranas operated in the past. These new-age ventures are a one-stop solution for providing an entire basket of products within a click and are empowering them through sales training and technology.

Below are how they are disrupting the conventional FMCG distribution:

Direct connectivity: These platforms help connect brands with retailers, and empower them through technology. It provides consulting to kiranas, smaller brands, and FMCG brands in the area of business strategies, sales, and marketing.
Better inventory control: The platforms act as replenishment apps based on sales trends that auto-generate the order for a retailer, and reduce salesmen’s interaction with a retailer. It also provides information on inventory, products, and input on sales and management.

Providing credit: Aware of the fact that small retailers are cash strapped, the platforms can provide credit for buyers and sellers and also offer the facility for doing hassle-free transactions online. They have partnerships with other financial institutions to extend credit facilities on its platform.
Predicting perishables: Perishable items like vegetables or fruits, have a short shelf life but using predictive analytics these platforms can accurately predict the demand for various categories of food and non-food items and source the right supplier.

Fair price: The emergence of e-commerce and most FMCG brands going D2C are attracting consumers with deep-cut discounts and slashed prices, thereby creating channel conflict. The buyers in an offline wholesale market are unsure if the products are sold at the right price. B2B aggregators ensure fair prices, reliability, predictability, and quality. The price is fair for everybody since the retailers are not under the clutches of middlemen making the entire transaction reliable.

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Crofarm, On a Mission to Streamline Farm-to-Fork Supply Chain

Mohit Pandey — Fri, 23 Jul 2021 12:30:09 +0000

Who does not want to set up a farm in their backyard and get fresh vegetables daily for healthy intake of resources? Or better, would it not be great if we could get fresh vegetables directly from the farm, as per our demands and delivered within a day? It is like taking a big step towards a healthier and hassle-free lifestyle, avoiding even stepping out of the house, while still getting the freshness straight from the farm delivered at doorsteps. Crofarm is doing just that.

This agri supply chain start-up buys fresh fruits and vegetables directly from the farmers and supplies them to the online and offline retailers in a cost effective manner.

Crofarm: The Necessity of a Direct Farm-to-Fork Supply Chain in India

The agricultural sector in India, even though being massively unorganised, employs around 50 per cent of the workforce of the country and accounts for 18 per cent of the gross domestic product (GDP). It is still astonishing to see that due to the absence of transparency, more than 90 per cent of the agricultural produce is eaten up by the middlemen who are well entrenched in the system, leaving very little for the farmers. Additionally, 20 metric tons of the harvest is lost due to an inadequate supply chain.

In 2017, India ranked 100 in the Global Hunger Index (GHI) out of 119 countries. This also results in the wastage of about 7 per cent of the total food produced in a year – which is worth about Rs 58,000 crore. When we understand that farmers are indeed the backbone of society and agriculture is the biggest sector of the economy, farmers’ plight due to the layers of intermediaries denying them a fair price for their produce becomes more visible.

Due to these reasons, Varun Khurana and Prashant Jain took the responsibility onto their shoulders and started towards solving the problem by streamlining the supply trade, removing the middlemen and establishing an efficient trade relation between farmers and retailers by incorporating Crofarm in May of 2016.

To ensure a better price for both sides, Crofarm serves as a platform to form a relation between the farmers and the retail market, building direct trade. Also, by reducing wastage and offering better value of their produce to the farmers, Crofarm is friendly and meaningful for both the farmers and the retailers. By optimising the logistics of supply chain management using AI-enabled proprietary tools, Crofarm supplies to big retail chains like Big Bazaar, Reliance Retail and online stores like Big Basket, among others.

In 2020, Crofarm shifted from a farm-retail business to become a B2C platform using Otipy, which is a community-based platform that helps connect the farmers directly to the consumers, bringing the freshness directly to the doorsteps. After this new strategy and integrating WhatsApp to their business structure, the company gained more authenticity and helped the farmers and consumers build a direct connection removing the need of retailers as well.

The Founders: Bringing Crofarm to Life

The problem and the inefficiency of the ‘mandi system’ always bothered founders Varun and Prashant. This made them start their previous business venture in 2014 – Greenbox – which was a smartphone-based grocery delivery platform. Later, the platform was acquired by Grofers which was building a supply chain directly from the mandi to consumers. Varun joined as the Chief Technical Officer of the app while Prashant was the Vice President of Operations.

While working at Grofers, they understood the problems of the supply chain system and wanted to create a direct link between the farm and retail entities. Therefore, after leaving Grofers, Varun and Prashant spent time across the major farming states like Haryana, Uttarakhand and Uttar Pradesh meeting vegetable and grain merchants, understanding their problems and figuring out the inefficiencies of the supply chain that gets their fresh harvest to the public. Through all the research, they were able to build the platform, Crofarm, with the aim of eradicating the problem and hassles of a mandi.

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Crofarm helps farmers get their fair share by removing the middlemen and also by providing the retailers with freshness from the farm.

How Crofarm Brought in Much-Needed Innovation of the Supply Chain

The revenue model of the business is pretty simple – procure the fresh fruits and vegetables directly from the farmers and deliver them to retailers or consumers, with the company getting their commission for the delivery. This direct trade makes the system transparent and easy for both the farmers and the consumers. On every sale it makes, Crofarm is able to get a commission ranging from 15-20 per cent depending on the quality of the produce.

Starting with a $1.5 million seed funding from Pravega VC and a couple of angels including Rajan Anandan (MD, Google India) and Jitendra Gupta (MD, PayU India), the founders have been able to raise around Rs 15 crore in the venture. In 2018, the company raised Rs 5 crore pre-series A round from Factor[e] Ventures and other existing investors, and planned to raise another round soon. Since its integration with WhatsApp, the company has been able to cater over 5,000 daily orders from over one lakh registered customers across NCR.

During the fiscal year 2019, Crofarm, after directly serving the consumers, managed to grow its sales by nearly 2X to around Rs 11.26 crore compared to fiscal year 2018 when they posted a top line of Rs 6.7 crore. In FY20, the new business model showed its true efficiency, when the company was able to raise a little over Rs 24.4 crore which is nearly 2.2X of their sales in FY19.

The company had to expense around Rs 30.72 crore in total in FY20, growing by 86.8 per cent from the total expenditure in FY19 of Rs 16.4 crore. Since the demand for their services increased, the majority of these expenses, around 72 per cent, incurred in collecting farm produce, which grew by 2.15X from Rs 10.31 crores in FY19 to Rs 22.15 crore in FY20.

Expansion and Consumer Satisfaction

Focusing on the growth of the employees is also the biggest target of a company. Crofarm’s employee benefit expenses grew 47.4 per cent from Rs 2.5 crore in FY19 to nearly Rs 3.7 crore in FY20. The company also incurred around Rs 4.44 crore in operating expenses during the same period.

With current supply in cities like Gurgaon, Noida, Mumbai, Bengaluru and Delhi, Crofarm is also planning to raise $10 million this year to expand Odipy, the farm-to-fork chain, more in tier II and tier III cities of the country. The company had already raised $2 million in 2020 from Inflection Point (IP) Ventures and the Smile Group.

Not just driven by economic motives, Crofarm also helps in supporting social causes. In 2020, the platform was able to produce a robust fresh produce category supporting over 2,500 women and stores as resellers. This group earns a commission of more than 9% of all group sales, which is the highest across all social commerce brands in the country.

With the use of AI powered engines for better traceability, transparency and hassle-free designs, Crofarm has been able to make its place known in the agricultural industry of India as the most trusted and reliable brand. The growth of a company is always dependent on factors like employee satisfaction, economic growth and satisfaction of the customers, and Crofarm has been able to provide a surplus of these values in their venture.

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In 2020, the platform was able to produce a robust fresh produce category supporting over 2,500 women and stores as resellers.

How Crofarm Dealt with Maintaining Quality and Its Place with the Competitors

India being one of the largest producers of fruits and vegetables, maintaining the quality of the farm produced freshness is a challenge that all agricultural sector companies face. Around 30 per cent of the wastage of the produce happens because of inadequate logistic support and inefficient supply chains. One of the biggest advantages that Crofarm was able to take was using cold storage for perishable vegetables and protecting them from moisture. While commodities like potato and onion can have a higher shelf life, leafy vegetables like spinach, methi etc., require a certain moisture level to ensure maximum life.

The Food and Agriculture Organisation (FAO) stated that due to the lack of good refrigerated storage space, vegetables and fruits worth around $8.3 billion, which is about 40 per cent of the total produce of the country, get wasted. Additionally, if the commodities have to get transferred through various vendors, middlemen, mandis, the amount of food wasted is increased substantially. In NCR, Crofarm promises to deliver vegetables from farm-to-fork within 12 hours. This makes sure that there is a lesser need for storing commodities and delivering them fresh.

With major competitors like Bijak, BlueCart, Agrowave and AgroCenta, Crofarm is constantly applying new technology and techniques to keep up with the increasingly competitive market. Keeping in mind the separate requirements of each part of the supply chain, five separate engines have been created to help in the efficiency of the supply chain.

Here are some of the technologies that Crofarm employs:

Procurement Engine: It is made for the farmers for better traceability of the produce and its quality. This app also helps farmers in complete transparency of their POs and payments.

Distribution Centre Engine: It uses AI-based demand prediction based on historical data-efficient procurement. It also helps in tracking the shelf life of the vegetables by alerting in case of aging inventory.

Transport Engine: Providing optimal routes to reduce delivery time and real-time tracking of the delivery vehicles.

Reseller App: Uses AI powered CRM enabling better communication and tracking customer orders and deliveries, while also earning incentive on sale.

Consumer App: It is filled with catalogues and offers a simple interface to place orders and track delivery.

With the introduction of AI based technology, Crofarm has been able to take big leaps ahead of its competitors, therefore, building its proper place in the market.

Crofarm: the Present and the Future

After recently extending services in Bhiwadi, Crofarm is constantly taking big steps to cater to more and more cities of India. With the introduction of the new farm bills by the Indian Government, which present farmers with an alternative platform to sell directly to a retailer without going through mandis, Crofarm’s Odipy will work with the farmers to create a level playing field. With the asymmetrical information system of the agricultural sector, where the farmers had no knowledge of the price of their produce, now with the help of these new emerging agritech platforms, they will be able to negotiate well with their customers. Moreover, by the elimination of the gulping middlemen, the farmers can now establish their own stand in the chain.

Varun and Prashant’s aim to provide a solution to the plight of the farmers by incorporating Crofarm and giving them a platform of their own now seems to be taking big steps in every part of the country. By giving the farmers an assured price, bringing efficiency into the supply chain and reducing wastage of the commodities, the company has already proven to be a contributor to the ‘Atma Nirbhar Bharat’.

For more inspiring stories, check out our Inspire Section!

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M2P Building a Global Infrastructure Play

DU Desk — Sat, 10 Jul 2021 05:35:18 +0000

Technology is an asset in any industry. When your technology game is strong, you can even help your competitors do well in the market rather than thwart their efforts. M2P Fintech is a unique start-up because it befriends banks instead of appearing as a threat to them. They are happy to give other fintech start-ups a leg up and are subsequently scaling up rapidly.

Who is M2P?

M2P Fintech is a start-up based in Chennai founded in 2015 which is an API infrastructure company that works hand in glove with the fintech industry. It’s a pan Asia company with an active presence in the Southeast Asia and MENA regions.

What do they do?

M2P can be thought of as an ‘enabler’ of fintech companies. They enable fintech companies to launch their own products by taking advantage of their superior cutting-edge technology solutions.

How are they different from other fintech start-ups?

The main differentiator of M2P from other fintech start-ups is that they are a B2B solutions provider. They partner with other fintech start-ups, banking, and financial institutions who take advantage of their technology to build fintech products and services. Rather than providing fintech products directly to the customer, they help other start-ups get into the market. Instead of getting into head on competition with other start-ups in the same space, M2P is actively supporting and helping scale up other fintech companies with their technology. This is what sets them apart in the industry.

Product offerings

It offers fintech services like Instant Issuance, Tokenisation, Programmable credit cards. Their services are used to integrate APIs across cards and wallets. They also facilitate neo banking capabilities like bank accounts, deposit accounts and remittances.

The company’s API platform is called YapPay. Other fintech start-ups can support and build payments services on Yap’s API infrastructure platform. Yap provides embedded finance infrastructure for start-ups to build new use cases. Its API helps banks and other financial institutions integrate various digital payment modes to their products like debit, credit, prepaid, QR, UPI and toll payments.

How M2P intends to build large scale product platforms

M2P intends to build large scale product platforms by reimagining their technology stack to serve new products in efficient ways. They will upgrade their platform to serve global use cases by making it cloud-native, cloud-provider agnostic, and by making sure they adhere to high standards of resilience, security, and availability. M2P will eventually build out a global infrastructure play by building large-scale product platforms that conform to global best practices around infrastructure operations.

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The main differentiator of M2P from other fintech start-ups is that they are a B2B solutions provider.

What’s in it for me?

While traditional banks are hesitant to partner with fintech start-ups because they see them as direct competitors, M2P Fintech approached them from a very new perspective. The company stepped into the fintech industry when it was still a novel sector in India. The timing was right. They focused heavily on their tech stack which would go on to become their biggest USP.

Their product offerings sat perfectly well with the market demand for cashless payments during the onset of the pandemic and continues to do so. They offered to become the ultimate technology partner of fintech services for traditional banks. The start-up also quickly ventured into new, lucrative markets where they were well received and served a large purpose. They are continuing to explore new and profitable markets across the globe which are proving to be high-growth avenues for the company. These are all the things that M2P fintech did right along their journey which other fintech start-ups can emulate.

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Seed Fund Opportunity for Early Stage Agri-tech Start-ups

Anju Nambiar — Tue, 06 Jul 2021 08:35:06 +0000

EGreens, an investment firm headquartered in Delhi focuses specifically on Agri-tech start-ups. They have launched a seed fund valued at $2.1 M (INR 15 Cr) for early-stage investments into agri-tech start-ups.

Eligibility Criteria for Start-ups

Early stage Agri-tech start-ups in India are eligible beneficiaries for funding.
Start-ups that operate on disruptive business models spread across the end-to-end value chain of food production, storage and transportations can be at the receiving end of the funding.
Start-ups who are providers of market linkages are eligible.
Start-ups who leverage technologies like AI (Artificial Intelligence) and ML (Machine Learning) in farming practices are eligible.
Start-ups who implement IoT (Internet of Things) across the supply chain also come within the scope of benefits.

The Objective

The objective behind EGreens is to identify and invest in start-ups that are offering last-mile delivery solutions in the agriculture sector. EGreens is interested in utilising valuable opportunities to fund Agri-tech start-ups that will address the fragmented agricultural supply chain in India.

With the inception of this new fund, EGreens wants to make a move into food distribution and retail from the FMCG sector. EGreens is also a ‘people first retail company’ alongside its investment firm and has amassed decades worth of experience in the FMCG sector.

Start-up funding success

EGreens has made its maiden investment of INR 15 Cr ($2.1 M) in its in-house brand VegEase. VegEase is a food retail brand which delivers fresh fruits and vegetables to customers’ homes through its ‘cart-at-home’ model.

After being bootstrapped by its parent company, VegEase acquired a user base of over 5000 customers within a span of 3 months. It has also reported a volume of 200 orders per month. They have also established two warehouses in two cities Delhi and Gurugram, each spanning 9000 sq. ft. in total area. They have also achieved a turnover of INR 7 M and reported a return rate of 0.25% in their sales which is tremendous given the average industry return rate in this segment is 2-3%.

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The objective behind EGreens is to identify and invest in start-ups that are offering last-mile delivery solutions in the agriculture sector.

What’s in it for me?

EGreens is prioritising its future investments for Agri-tech firms that can create forward and backward integration with its own venture ‘VegEase’. EGreens will surely fund Agri-tech start-ups in India which will help both EGreens and VegEase diversify their market footprints from B2C to B2B and B2B2C.

There are several Agri-tech focused investors in India alongside EGreens like Omnivore, Nabvebtures, India Quotient, Accion Venture Labs, Aavishkaar, WEH Ventures and Ankur Capital to name a few with similar investment philosophies. WEH Ventures, a Venture Capital firm based in Mumbai has already launched its second seed fund of INR 100 Cr after the successful launch of its first seed fund corpus of INR 40 Cr for Agri-tech start-ups in India.

EGreens wants to invest in companies that are focused on consumer insights since these are the firms that will drive assured growth.

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InterviewDesk Can Help You Build Great Tech Teams Faster

Aakash Sharma — Wed, 23 Jun 2021 12:35:03 +0000

InterviewDesk is a business-to-business (B2B) human resources technology company that helps organisations to save up to 80% of their time and money spent on hiring and onboarding new employees. The start-up was founded by Pichumani Durairaj with the aim of offering a unique recruitment experience to candidates, employers and interviewers.

Pichumani Durairaj, Founder-CEO of InterviewDesk and an industry veteran of twenty years, believes that by improving recruitment efficiency, his start-up will gain a significant share of the HR technology market and create a world-class recruiting community. InterviewDesk was launched in 2017 to help companies conduct technical interviews remotely; it is based in Chennai with operations in Singapore and New York.

Recruitment Market Trends – Facts and Figures

According to the latest data, the global online recruitment market is expected to reach $43.39 billion by 2027, with an average annual growth rate of 7.1% over the forecast period. It currently stands at a valuation of $28.68 billion.

On a global stage, InterviewDesk competes with the American companies Karat and BrightHire in the same segment. According to company officials, by 2022, the start-up will have conducted 100,000 remote interviews for technology posts.

InterviewDesk Increases Efficiency and Cuts the Clutter

The model used by InterviewDesk eliminates HR managers’ hectic tasks in companies. Its AI and ML approach helps in analysing a candidate’s data separately by personalizing and cataloguing the data of those who are genuinely eligible for specific posts.

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Since 2017, InterviewDesk has conducted more than 25,000 technical interviews for over 45 clients in the Indian and American markets. These include Common Energy, Rupeek, Tekion Corp, Ally.io, SPi Global, MobSquad.io, BYJU’S, among others.

InterviewDesk conducts technical interviews and hires for posts like software engineers for companies. The goal of the start-up is to help clients create technical staff who best suit their employee criterion by assessing core competencies and making the most of recruiting processes.

Key features of InterviewDesk include:

Vast Interviewer community
Outsourced Interviewing
Rapid Recruitment
Talent Sourcing
Video and Virtual Interviews

InterviewDesk Experts Work in tandem with Massive Data

The company has more than 500 experienced recruiters with proven mettle in hiring for software development, sales and professional leadership posts. It helps companies find the best distributed systems engineers, front-end engineers, backend engineers, senior EM/PM, senior IC, and mobile application developers, among many other posts.

For clients, the company works on key elements of recruiting like the to-do list, needs, and job description, manages the employee interview program, and creates an internal needs-based project through its AI and ML platform. Customer costs for using InterviewDesk are based on the number of people interviewed.

Hiring Skilled Employees Made Easy – what can others learn?

The B2B HR tech start-up helps organisations find suitable candidates by giving the option of pre-assessed applicants wherein organisations can leverage on the ready-to-be-hired group of candidates anytime. In following InterviewDesk’s artificial intelligence and ML platform, and coming up with even better solutions, companies can quickly build themselves up by changing the face of HR industry in India.

Start-ups and entrepreneurs functioning in this industry must aim to create a system for predicting data collection on specific problems based on the past and for targeting future strategies for job creation, career choice and career information. This will help not only the large Indian corporate sector, but also the new businesses that are using the developing AI/ML technology engines to enable dynamic communication in hiring processes.

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India a Strategic Market for Talent Management Start-up, Sense

Anju Nambiar — Tue, 22 Jun 2021 11:33:39 +0000

Sense is an HR Tech and Talent Management start-up based in San Francisco, California which has raised $18 M in a Series C funding round. An AI based talent-management company, Anil Dharni is the Indian CEO and co-founder of Sense.

Why Sense is expanding in India

The company is increasingly focused on the Indian market and has received funding from India’s B2B VC fund ‘Avataar Ventures’. Sense believes that the key to expanding their global presence is to strengthen their hold on the Indian market. As part of this vision, the company has onboarded Sanjay Dharmani as Sense India’s Managing Director and Nishant Rao, founder of Avataar Venture Partners. Sense will make India its regional headquarters as part of its Asian expansion. They are hoping that India’s tech talent pool will add to their engineering team. They also want to have a dedicated marketing and customer service team here in India.

The start-up’s ambitious expansion plans

Sense is harboring broad expansion plans in Asia. In terms of global expansion, Sense plans on tapping into India’s ‘rich talent market’ to help with growing their product. Backed by its latest funding round, Sense is all set to expand its technology centre, data sciences, and product teams. The company is keen on doubling its headcount of 57 staff members at its Bengaluru office in the coming 6 months.

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India is being visualised as a highly strategic market for Sense because the tech talent in India is thriving here and possesses in-depth know-how in the field of SaaS (Software-as-a-Service).

Why India is a strategic market

India is being visualised as a highly strategic market for Sense because the tech talent in India is thriving here and possesses in-depth know-how in the field of SaaS (Software-as-a-Service). Sense believes that the whole of Asia holds a market potential of $100 B and India is best fit to serve as the regional headquarters for this market.

What’s in it for me?

Freelancing and the Gig Economies are becoming increasingly popular among the modern workforces. Talent Management start-ups have a good opportunity to capitalise on the transforming work trends. HR Tech is a big part of enterprise tech holding a big chunk of the market share and start-ups will do well to venture into it. Large enterprises and recruitment firms need productive, profitable candidate engagement amidst disrupted job markets.

Recruitment technologies and HR Tech solutions bring in big money in the form of recurring revenue streams. Although the market has significant competition already, with constant innovation, it’s possible to stand out from the crowd and acquire large clients.

The labour market is rebounding even as the second wave ebbs. Remote connectivity is giving new life to the labour market. Talent acquisition technology is thus seeing strong demand within the enterprise tech industry and investors are getting attracted to HR tech start-ups.

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5 Years of B2B E-Commerce Firm Udaan, Eyes 100% YoY Growth in FY’22

Anju Nambiar — Mon, 21 Jun 2021 03:35:03 +0000

Udaan, a Bengaluru-based B2B e-commerce start-up offers an online wholesale market and caters to bulk orders. It is one of India’s biggest wholesale markets and recently completed a Series D funding round worth $280 M backed by Moonstone Capital Partners, Octahedron Capital, Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital, and Tencent Capital.

5 things done right by Udaan

Evolving business model to meet market demands

Each year, Udaan’s business model was sharpened and has evolved to meet market requirements. This is one of the many things that they did right.

Udaan’s business model initially took off as an idea that they could somehow bring about a transformation in India’s trade ecosystem. It has always aimed at becoming a full-stack marketplace, logistics, and lending platform for small and medium enterprises. When the SME community in India was growing at an accelerated pace, Udaan capitalised on the high frequency of transactions taking place here and subsequently gained an increase in their revenue along with the growth of the SME ecosystem over the years.

Strategic Investments in various business arenas

In the span of a single year, Udaan invested more than INR 4000 Cr in a number of business arenas including technology, supply chain, category, credit, people, compliance and more. These efforts were aimed at accelerating and strengthening their capabilities.

Providing solution to fill gap in a critical market

Rural India is riddled with mom-and-pop Kirana stores. These stores need B2B marketplaces to connect with sellers for stocking up. Businesses of all sizes in B2B especially the neighbourhood grocery stores are being empowered by Udaan’s much-needed supply chain solution. Thus, the start-up has proved to be a saviour for Kirana stores during the pandemic.

Much needed deviation in e-commerce

Kirana stores contribute to nearly $650 M of the $1 T retail market in India. Udaan rightly capitalised on the huge demand for B2B online retail which is 7.5 times bigger than that of B2C online retail. The secret sauce behind Udaan’s rapid growth has been the fact that they took on the challenge of rural Kirana stores’ stocking problem head-on.

Deep personal understanding of the problem statement

Last but not the least, Udaan’s stellar success can be attributed to its founders’ own lives which are deeply connected with rural India. The founders have known what it feels like to have your hands tied due to lack of credit access as a small towner or villager. This understanding has been a boon for them along with the fact that they gained hands-on online retailing experience at ‘Flipkart’ prior to Udaan.

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Each year, Udaan’s business model was sharpened and has evolved to meet market requirements. This is one of the many things that they did right.

What’s in it for me?

It’s a no-brainer that e-commerce is one of the raging successes among all business and industry sectors during the pandemic. With the entire retail and commerce space moving online in just a span of 1-2 years, the opportunities are huge in e-commerce.

Running an e-commerce firm during the pandemic and amidst lockdown restrictions will entail higher costs which you need to be prepared for before launching your online store. To constantly work around the short-term disruptions which will no doubt show up, your start-up needs to learn to be adaptable.

E-commerce start-ups listing products from a variety of categories including food, lifestyle, electronics, etc. are guaranteed to succeed. Even with the intense competition, the sector is still largely untapped especially in the small business scene in rural India. Small business food e-tailing is exceptionally lucrative and Udaan is a prime example of this.

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These are the New Agri-Tech Start-Ups in India

Anju Nambiar — Mon, 24 May 2021 07:35:03 +0000

Agri-Tech is thriving despite the second wave of the covid-19 pandemic in India. Irrespective of a few speed bumps and lesser production due to movement restrictions and transport constraints, Agri-tech startups are rapidly scaling up, innovating, and even raising capital with ease. In fact, between October 2020 up until now, new start-ups have emerged with their own unique spin to Agri-Tech products and services.

Jai Bharat

A new entrant to the Agri-tech sector, ‘Jai Bharat’ is a start-up founded in October of 2020. Headquartered in Punjab, Jai Bharat was conceptualized by Agripreneur ‘Mohit Dahiya’. The company’s sole focus is to bring about a machine-driven transformation to farming. Their products include agricultural tools that automate manual labor. The first and most notable product launched by Jai Bharat is their Paddy Transplanter Machine.

The automation achieved through this product can substitute the hard manual labor of up to 10 farmers at a time. The paddy transplanter machine works to reduce water consumption for paddy production, through the SRI technique of Rice Intensification. The product is 100% new-age, modern and built on a novel farming methodology that increases the yield in rice farming.

A very commendable fact about the founder of Jai Bharat, Mohit Dahiya is that he created the Paddy Transplanter Machine from scratch. Unique and new to the industry, this product has immense potential in farm usage since it significantly reduces the need for manual labor.

Deep Rooted.co

The next Agri-tech start-up which is a new entrant to the industry is Deep Rooted.co. Headquartered in Bengaluru, Deep Rooted is a D2C start-up as well as a ‘farm-to-fork’ commerce offering which was launched as a new brand in 2020.

The story of how the start-up was founded is interesting because it was launched as a mobile application by the founders of another well-known Agri-tech start-up called ‘Clover Ventures’. Clover Ventures was a B2B Agri-tech firm which was impacted hard by the pandemic outbreak.

So, in order to improvise, the founders ventured into D2C with Deep Rooted.co. which seems to be doing well amidst the second wave of covid-19 in India. Deep Rooted.co is a mobile app which sells curated and packaged fruits and vegetables directly to the end consumer.

Customers can place orders which will be supplied by farms having contracts with Deep Rooted. There are about 70 varieties of fruits and veggies listed on the app.

Another unique aspect about the startup is that their app algorithm can gauge consumer demand. This in turn helps farmers to plan their production season accordingly.

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A new entrant to the Agri-tech sector, ‘Jai Bharat’ is a start-up founded in October of 2020.

What’s in it for me?

Agri-Tech is one of the blessed industries which has not suffered too much disruption, neither in the first wave of covid-19 last year nor during the second wave this year. In fact, one of the industry leading start-ups ‘Dhanuka Agri-tech’ has declared a net profit of 48.64 crores which is a 24.72% rise for them in the quarter which ended in March 2021.

Another Agri-tech start-up ‘Reshamandi’ is also confidently moving forward with their ambitious expansion plans in the midst of the second wave. The industry is not experiencing too many restrictions in movement since it falls under the essentials goods. There are positive signs that start-up founders need not be hesitant to venture into Agri-tech at the juncture. There is ample opportunity for innovation since farmer challenges are many and have multiplied during the pandemic. Hydroponic farming could prove to be a profitable service during the second wave since consumers are actively looking to get access to fresh farm-to-fork produce of nutritious vegetables.

The post These are the New Agri-Tech Start-Ups in India appeared first on Dutch Uncles.

What Did the Banking Tech Start-Up Zeta do Right?

Anju Nambiar — Thu, 29 Apr 2021 11:35:04 +0000

Zeta, a Bengaluru based Fintech / banking tech start-up is the talk of Unicorn town because it will make a grand entry into the start-up unicorn club of India with a valuation of above $1B. Zeta will join recent unicorn start-ups after closing an ongoing Series D funding round of $250 M backed by SoftBank Vision Fund 2.

Zeta’s technology offering is helping banks by providing them a cloud-native API-first banking stack at the core framework. Banks also have the opportunity to build atop this framework. The technology will empower banks to improve their customer experience through a better mobile app, debit, and credit features. Zeta is also providing API, SDKs, and payment gateways to banks.

How Zeta checked all the right boxes

Since its conception 5 years ago, Zeta has been checking all the right boxes to get to the highly coveted unicorn status. Earlier in 2019, it had garnered a funding of $300M in a Series C round. So, what did Zeta do right along the way to get to where it is now? Let’s find out!

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The first thing Zeta did right was to venture into the fintech or banking tech sector.

Enterprise Tech – Hot sector for the Unicorn club

To get a one-way ticket into the Unicorn club, Fintech and Enterprise tech are currently hot sectors to venture into. The first thing Zeta did right was to build products and services for the fintech or banking tech sector.

The Indian neo-banking market is rapidly expanding with the arrival of several Indian start-ups alongside Zeta which are seen as strong contenders. If their funding is successful, Zeta will be the third fintech start-up and a modern banking tech company to become a unicorn.

Zeta is a full-stack neo-banking platform that’s enabling banks and financial institutions by helping them for security purposes like Authentication, Fraud and Risk Management, a strategy that has worked very well for Zeta.

Their solutions are currently very popular among Asian issuers, banks and corporate firms.

Another strategy which has worked in their favour is the fact that they pivoted from corporate finance management solutions like tax saving reimbursements, employee rewards and recognitions including corporate cafeteria solutions. Their changed stance is now to provide fintech solutions for banks and bank centric solutions.

What’s in it for me?

The neo-banking sector is seeing a lot of investments and fundings. Start-ups venturing into this sector have a good chance of following Zeta into the Unicorn world.

Also, the B2B market in banking tech is lucrative for start-ups at the moment. Online banking solutions for businesses is a good idea which is sure to attract funding.

As we are well aware, the availability of instant payment products is popular among Indian users. There is high demand for quick cash apps, virtual payment products, loans and financial products like post-paid services. Start-ups creating a portfolio of similar products will attract investments and funding.

There is immense popularity, awareness and demand in the digital payments space. There is also a lot of competition in the market.

The post What Did the Banking Tech Start-Up Zeta do Right? appeared first on Dutch Uncles.

Udaan: A Flight of Success

Naina Sood — Tue, 09 Mar 2021 04:35:03 +0000

For three years, Raju Sahu, a common man, travelled 20kms to buy products for his kirana shop (mom-and pop store). A simple smartphone changed the way he works today.

One fine day, Sahu was approached by a team of local techies, who informed him how he could use his smartphone to source his products for the Kirana shop instead of travelling all the way to the city. The team helped Sahu download an app, learn the application and its usage. Initially hesitant, Sahu’s entire sourcing is now done on his smartphone through that app. And why not? He gets his products on time, has a variety to choose from, returns easily, the price range is affordable, can avail credit and most importantly, has help and advice to grow. Sahu doesn’t have to move places or seek credit from local lenders or wholesalers at a high interest rate anymore. In short, a smooth sailing with just an app.

Now imagine 3 million Sahus (traders, manufacturers, wholesalers and retailers) on that single platform provided by Udaan. That’s an idea for disruption and something to take inspiration from.

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Within a short span of about 22 months of operations, Udaan had gained a significant foothold in the market. It had been able to onboard about 1,80,000 sellers and buyers on the platform.

The Inception of Udaan: ‘Let’s Build Together’

You are able to understand the problem better when you have first-hand experience of the same and hence come up with better solutions. The Udaan trio, Sujeet Kumar, Amod Malviya, and Vaibhav Gupta, grew up in small towns of Uttar Pradesh and Bihar where shopping was a hassle as they had to travel all the way to the nearby city. They understood the pain point of the customer, the local kirana uncle and the city retailer.

This was the trio’s first inspiration to come up with Udaan’s business model. This was built up during their respective stints in Flipkart where they noticed that the company provides logistics to over 500 cities but their small hometowns were not one of them.

Before the conception of the ‘idea’, the trio of IITs had one thing clear on their minds – to work together. Kumar, who worked as the President of Operation at Flipkart, and Malviya, as Chief Technology Officer, had quit the company in mid-2015. They had gone to visit Gupta – then on a sabbatical as Senior Vice President at Flipkart, Seattle in October 2015 when the brainstorming of creating something disruptive happened.

They had gained enough exposure on the retail market structure, the challenges and the gaps that need to be filled, especially with small business owners. The initial idea was simple – to streamline the B2B market by bringing small traders, retailers, manufacturers and wholesalers on one large single platform and discover the best-value for money and access to a wider selection of catalogue.

In 2015-16, the trio began with their market survey and analysis. They reached out to merchants, retailers, and manufacturers to understand, discuss terms and negotiate besides visiting several wholesale markets across the country to witness the ground action.

It was in February 2016 when the decision to venture into the B2B marketplace had been made. After all the research, the trio launched the beta version of Udaan in November and threw it open for public, announcing a Series A fund-raise of $10 million from Lightspeed Venture Partners at the same time.

A wider launch took place in June 2017 when the company had curated enough users. Udaan, which means ‘Flight’ (metaphorically equivalent to freedom to explore and live to the full potential), began operations as a logistic platform for buyers and sellers in staple, electronic and apparels. This helped the company understand the demand and supply in these categories, to begin with, and build a relationship in that space. They became more aware of ‘who is buying/selling what’, besides building a database of buyers and sellers.

Within a short span of about 22 months of operations, Udaan had gained a significant foothold in the market. It had been able to onboard about 1,80,000 sellers and buyers on the platform and had even set up a team in China for sourcing sellers in apparel, smartphones and electronics. In February 2018, the company had again raised around $3.2 billion from its existing investor Lightspeed Venture and Russian Billionaire Yuri Milner’s Apoletto Fund. Within 7 months, the company announced Series C fund-raise of $225 million from Lightspeed venture and DST Global and became the fastest Indian start-up to reach Unicorn status, soaring to the $1 billion valuation milestone in merely 26 months of registration. This was a record. It took almost four years for similar start-ups like Swiggy, Hike and InMobi to enter the billion dollar club.

The goal of ‘largest variety at the lowest cost’ was achieved. Now, all the manufacturers can present their product on the platform, and interested traders had the freedom to select and buy it. Retailers and wholesalers also had the same freedom to advertise and buy a product with secure payments and logistics.

Marketplace, Logistics, and Lending: A Perfect Marriage!

First came marketplace, then logistics and finally lending. Charging commission on transactions and for logistics was the core source of revenue for Udaan, but not the ultimate. The company was eyeing bigger opportunities through lending and hence becoming a full stack platform for SMEs (Small and Medium-sized Enterprises).

This made sense for the company as the majority of the lending companies in the B2B space focussed on mid sized sellers with credit history, neglecting the smaller merchants. Udaan was sitting on a golden opportunity here with an advantage, especially in comparison to other start ups in this space.

The company had built a pool of knowledge starting from the financial health of small sellers and buyers through their transaction history to understanding their capital requirement and recovery position. Thanks to technology and data, offering loans (working capital for retailers) without additional manpower, was the perfect proposition for Udaan.

In November 2018, Udaan had secured a Non-Banking Financial Company (NBFC) license, to be able to disburse loans to its retailers and sellers. It also provides accounting, order management, and payment management solutions to merchants on its platform.

They provide a credit limit to the only verified buyer that too if is eligible for the limit. At first, they will provide Rs 1,00,00 credit with no interest charges then the credit limit will be increased to a maximum of Rs 2,50,000.

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Rather than expecting traders to change their traditional ways of doing business and conform with a rigid set of rules, Udaan enabled users to trade the way they want to.

Making Money

As an asset-light company, Udaan’s major source of revenue comes from logistic service. Besides the delivery charges, it also charges fees for collecting any return of sales from the customers. Second is the revenue from storage and warehousing services. Sellers are charged a fee for such services. Third is the fees from receivable collection services which include fees for collecting payments from buyers in cash on behalf of the sellers or fees for accepting payments online on behalf of the seller.

Fourth is the advertisement services it provides to its sellers on its platform where their listings can be promoted with a fee. Fifth is the interest it earns from credit. Interest income from loans is an important source of revenue for the platform. Udaan also earns from other fee-based value-added services like packaging and printing of labels on products, printing of invoices and returns management service.

No CEO: The Power of Decentralisation

The founders did not find any sense in having a CEO for the company. Why? The foremost reason for this was the company’s structure.

The e-commerce platform is a pure-play horizontal marketplace which doesn’t focus on a particular product or a sector. A horizontal structure represents a belief that involving employees directly in the decision-making processes and minimising management supervision of employees increases productivity. For instance, if there is a problem, people do not go looking for an answer. They try to figure out something, and then they start scaling, keeping everybody in the loop.

Designation was never important for the founders. Gupta had once shared his co-founder’s card with a buyer who, quite puzzled, had asked him what a ‘co-founder’ meant. Gupta suddenly sensed a disconnect. So, the next time he went, he gave the buyers a sales executive card, and that worked with them. He was quick to realise that designations do not matter in his field of work.

Nothing Great Comes Easy

To make something successful, especially that big a stature, is no cakewalk. Building B2B e-commerce from the scratch is a challenge in itself, starting from complex logistics to technology integration.

Besides the technicalities, the founders had the biggest challenge of convincing businesses to come online. Weaning small retailers away from local relationships they have built over the years was a tough nut to crack. Targeting tier 1 and 2, the team went on the ground, spoke to retailers, suppliers, and tried to understand their roles before launching their product. Post the launch, the team worked towards building the massive network of 3 million users it has today.

Scaling was also a challenge, given the horizontal structure of the company, whether it was adding new products, building supply chain capabilities or offering credit. Besides challenges in product cataloguing and logistics, the company faced hurdles with respect to payments. In B2B, only two modes of payment work — cash or credit — unlike B2C e-commerce where options of credit cards, debit cards, cash and net banking are provided. Initially, the company failed to model and improvised later.

For Udaan, Timing is Everything

A lot of things played in Udaan’s favour, especially timing. Besides, having an early movers’ advantage against its large rivals, crunching off expensive data prices came as a huge advantage for the company.

Udaan’s major requirement was tech penetration and adoption. In 2016, Reliance had entered the Indian telecom industry with 4G network and smaller towns, especially remote areas, had started to undergo a major change with cheap data and advertisements. A lot of dealers on Udaan’s platform today are first time internet users while some were completely unaware of any other role of a smartphone besides WhatsApp. As soon as the data reached the villages, Udaan took a flight.

The founders also credit some of the success to the 2017 Goods-and-Services (GST) tax. After GST, moving goods across states became much easier and helped solve the logistics issues which were driven by multiple rates and high compliance costs. When Udaan had started out, majority of the players in the B2B segment were vertically focussed like Power2SME in industrial products and Bizongo on packaging materials while horizontal platforms like ShopX, Wydr had not gained enough momentum and were still figuring out the unorganised market.

Besides the idea, handwork and execution, Udaan had money. The start-up had managed to duck most of the challenges due to its massive war chest. With reach, scale, ambition and finance, Udaan was able to put things at place and became the leader of the pack.

What They Did Right

Initially, the company did not charge almost anything for the logistics. Doing logistics at subsidised rates gave the company gain sufficient exposure within the community besides the right market share.

Most of the start-up launch the app first and then go about validating the same. Udaan did the opposite. It first made its product relevant enough to be accepted and launched the beta version before the official launch. They spoke the language of their target audience, kept themselves abreast with the ground realities. Rather than expecting traders to change their traditional ways of doing business and conform with a rigid set of rules, Udaan enabled users to trade the way they want to.

Above all, a strong founding team was the company’s most valuable asset. The team members, majorly comprising ex-‘flipkartians’, were best at what they did — logistics, supply chain, product development, management, IT, etc. They had quit their jobs and extended support with the founders’ trio and implemented the best practices they had learnt over years at Flipkart, only with slight change in focus towards smaller towns.

Udaan has taken over 80% of the B2B e-commerce market, delivering goods it stocks in 200 warehouses to more than 1.7 million retail stores in 900 cities everyday. The company kickstarted the year 2021 with a fund-raise of $280 million from new and existing investors as the start-up builds a war-chest to accelerate its growth and fend off rivals. The company’s valuation stands at $ 3 million post investment.

There are often talks about Udaan taking on the likes of Amazon, Flipkart and Jio Mart. However, front-end retail is not even on the focus list of the company, which is eying a much bigger lucrative opportunity in B2B e-commerce. The per-unit profitability in B2B e commerce is five times that of B2C e-commerce and eight times the market size. Udaan is at the forefront of this ‘uniquely Indian’ e-commerce opportunity.

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