Unicorn Startups – Dutch Uncles

Unicorns Launch Investment Arms To Fund Start-ups

Anju Nambiar — Wed, 18 Aug 2021 10:35:07 +0000

The unicorn club of start-ups in India have come a long way and have created history in the start-up world. After successfully filing for IPOs, they are now turning their attention to profitable investments within their community. By doing this, they want to create an independent investment wing for the industry they belong to. Thus, aspiring start-ups who are following in their footsteps can avail funding without the need to approach other investors or struggle to acquire funds.

What is a Start-up Investment Wing?

Start-ups which have raised the benchmark for the community and have reached high valuations are setting up a Venture Capital arm with a fixed corpus. These VCs are then identifying budding start-ups that belong to the same or similar industry and are displaying disruptive business models and million-dollar potential. Such VCs are called Start-up Investment Wings which are giving back to the start-up community.

Why are India’s unicorns turning VCs?

India’s unicorns are turning venture capital investors because the unicorn club in India is steadily growing with 16 more to be added to the pool in 2021 alone. By 2025, the total number of unicorns in India will cross the 100 mark. Existing unicorns in India like Paytm and Dream11 have developed an increased appetite for growth. They have also developed the need to tap into adjacencies which is pushing these unicorns to set up funds and turn investors.

Investment arms of Dream Sports and Paytm

DreamCap – $250 Mn Corpus

Dream Sports, the parent company of Dream11 (fantasy sports start-up) has rolled out a $250 Mn corpus to fund sports start-ups in India. This investment wing of India’s first gaming unicorn Dream11 will fund start-ups operating in the sports, gaming, and fitness tech spaces.

One97 Mobility Fund – $100 Mn Corpus

One97 Mobility Fund is Paytm’s investment wing with a $100 Mn corpus which is investing in mobile-first early-stage start-ups. They have invested in companies like Oorja Analytics, LeapSky Wireless, Ciqual, TenCube, and Singapore-based TheMobileGamer.

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Dream Sports, the parent company of Dream11 (fantasy sports start-up) has rolled out a $250 Mn corpus to fund sports start-ups in India.

What’s in it for me?

Investment wings of top unicorns in India have already invested $1.5 Bn in start-ups. The trend of unicorns investing in other start-ups kicked off when these companies discovered opportunities to invest in seed capital and early-stage funding. However, off-late, these unicorns are ready to invest in lucrative late-stage start-ups as well.

Indian unicorns have achieved the heights of success, making stellar IPO performances, and achieving billions of dollars in valuation. They are making strategic investments in the start-up world and have already invested in more than 90 start-ups.

Popular names in the unicorn club like Zomato, Zerodha, LensKart have invested in start-ups. But what’s common among their investment strategies is that they are funding their own kind of start-ups:

Zomato recently invested in Grofers since they are keenly interested in this segment.
LensKart launched a $20 Mn investment wing called LensKart Vision Fund which will invest in eyewear and eyecare start-ups.

To attract funding from one of these investment wings, your start-up must venture into or belong to one of their close-knit industries. Also, an important thing to note is that these unicorns are mostly interested in start-ups with the potential to become the next unicorns or give rise to the next wave of unicorns in India. ‘Baby unicorns’ with disruptive technology and the potential to reach $100 Mn in revenue in the next few years have a high chance of getting funded by Start-up VC funds.

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Byju Playing Down The Euphoria

Aakash Sharma — Tue, 10 Aug 2021 03:35:08 +0000

Byju’s, founded in 2011 and the brainchild of engineer turned tech-billionaire entrepreneur Byju Raveendran, has become one of the most worthwhile companies in India and is the highest valued start-up in India. According to Forbes, Byju Raveendran is now one of India’s youngest billionaires with a net worth of $3.05 billion.

Like every start-up, Byju’s started small, and its “BYJU’s-The Learning App” was launched in 2015. Since then, it has evolved into a powerful online training platform with comprehensive training and coaching platform for multiple exams. Today, Byju’s provides online learning classes for kindergarten to Class 12 students and training for entrance tests to engineering colleges, medical colleges and civil services.

According to a recent report titled “EdTech in India” by Omidyar Network India and RedSeer Consulting, the hitherto untapped market of edtech, joint with the rapid growth in internet access, awareness and digitisation of primary education, is driving the growth of education technology in India.

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Byju’s is now India's most valuable unicorn - a decacorn - valued at $16.5 billion, surpassing the $16 billion valuation of fintech and payments giant Paytm.

Edtech is the fastest expanding industry in the world

Globally, education technology is expected to grow at 16.3% from 2019 to 2025, with total international spending reaching $404 billion during the period. Even at this level, by 2025, spending on education and digital technologies will only represent 5.5% of the global education market that is pegged to be worth $ 7.3 trillion.

The size of the Indian edtech market

As per data by the Statista Research Department, the market value of the Indian K-12 education market in 2020 was approximated to be worth $1.16 billion, compared to less than $500 million valuation in the development market for education skills. In 2020 the total market value was around $2.8 billion, but by 2025 this situation will change drastically, and the whole market size will reach $10.4 billion.

According to the Omidyar Network India and Redseer Consulting report, by 2022, online education services across Classes 1 to 12 are predicted to increase 6.3 times to form a $1.7 billion market. The post-K-12 market is set to grow 3.7 times to build a $1.8 billion market.

Byju’s is ‘taking space’ in India and the world

While Byju’s is growing its own services and platform rapidly, it is also overtaking new spaces and platforms at both national and global levels to become a genuinely international education and training company.

Starting, for example, from its acquisition of the US-based start-up, EPIC – the digital reading platform for children, at $500 million, Byju’s has made space for itself on the global start-up map. No wonder it is the 11th most valuable start-up in the world.

By expanding its US footprint, Byju’s is reaching for more than any other edtech company in the world. In many of its acquisitions, the edtech start-up retains the original teams and lets them carry their functions under Byju’s umbrella, making them a Byju’s company. EPIC co-founders Suren Markosian and Kevin Donahue have also been retained in their roles. They continue carrying out the company’s mission to ‘unlock the potential of every child through reading’.

New-age business and division of success – lessons for upcoming entrepreneurs

More people ought to be credited for Byju’s expansion and success, along with Byju’s co-founders Byju Raveendran and Divya Gokulnath and the company’s C-suite.

For instance, take Anitha Kishore, the maths teacher and Chief Strategy Officer driving acquisitions at Byju’s. Kishore is considered to be the driving force behind Byju’s massive expansion spree across international borders.

As head of the strategy, Anita Kishore works closely with Byju on inorganic growth strategies. She also plays the role of a strategic CFO, working on capital allocation decisions and fundraisers, along with investor management. This type of multi-level involvement of teachers in Byju’s growth is seen as the main force behind the edtech giant’s success.

Divya Gokulnath, Byju’s co-founder, was among the first people who started teaching on Byju’s platform. Despite being the company’s co-founder, Gokulnath counts herself as a teacher first. At Byju’s, she first started teaching easy hacks to get through campus recruitment and then shifted to mathematics, English and reasoning classes.

This goes on to show that teachers, as well as executives, at Byju’s are witnessing their renaissance as not only educators and subject matter experts but also as pioneers of business formation and market capturing. And new businesses in the segment can learn a lot from these recent trends.

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Hospitality Unicorn Supports Small Hotel Partners With ‘Samarthan by OYO’

Anju Nambiar — Fri, 06 Aug 2021 10:35:13 +0000

Frontline workers, volunteer organisations and everyone who joined the Covid fight during the second wave worked tirelessly to supply oxygen to critical covid victims. Without pausing to think about the dangers to their own life and their family, they joined the first response for Covid emergencies. OYO’s hotel partners and homeowners actively participated in the fight by providing quarantine, self-isolation and accommodation requirements. Unfortunately, a lot of hotel partners succumbed to the virus and lost their lives leaving behind children without financial backing and mentorship, spouses and families who had lost their support system. Samarthan by OYO is designed for them.

What is Samarthan by OYO?

Samarthan, which translates to ‘Support’ in the Hindi language is a Covid-19 Hotel Partner Bereavement Support programme for patrons by OYO, the hospitality unicorn. Through this programme, OYO is extending welfare benefits for the families of their small hotel partner community.

It is mainly aimed at offering support for families and immediate kin of Covid-19 victims who died during the first and second wave of the pandemic. Wellness benefits like financial aid, waivers, and education funding are being provided to help them grieve their loved ones and find solace in knowing that they can fall back on the employer until they recover from the loss.

Beneficiaries of the programme

The main beneficiaries of Samarthan by OYO are the company’s hotel partners, and their community of homeowners also dubbed as ‘OYOpreneurs’ registered with OYO. The families of these beneficiaries are covered in this bereavement programme including their spouse, children and other eligible relatives supported by the programme.

Wellness benefits and Bereavement support for kin of deceased hotel partners and homeowners

Bereavement support

Families of deceased beneficiaries obtain bereavement support including a three-month commission of take-rate support for the OYO property. This amount will be transferred to the deceased partner’s OYO Secure wallet, a digital wallet provided exclusively for partners. Additionally, families will receive waivers on pending dues for said property registered with the company.

Wellness Benefits

Children of the deceased (below 2 years of age) will receive funding on their education for a period of 5 years. The spouse and children (below 1 year of age) will receive medical coverage amounting to INR 5 Lakh up to 3 years from the time of death of the hotel or homeowner partner. Eligible relatives and family of the deceased beneficiary will receive mentorship and internship opportunities.

The VaccinAid initiative

VaccinAid was an earlier initiative by OYO for its hotel partners and staff. It was launched to get the entire staff of their hotel chains fully vaccinated. As part of this initiative, OYO organised vaccination camps across multiple cities in India. Fully vaccinated hotel partners and support staff under this initiative received the ‘VaccinAid’ tag.

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Children of the deceased (below 2 years of age) of the hotel partner will receive funding on their education for a period of 5 years.

What’s in it for me?

Start-ups in India have led the fight against Covid. Their partners, staff, customers, have assisted the company in extending Covid help. Start-ups like Ola (delivery of oxygen cylinder by partner drivers) and Paytm (covid helpdesk by local Kirana shop partners) have seen immense contribution by partners. If your company also relies on partners for running business operations, or if they are assisting you in the Covid fight, enrolling them in a welfare benefit programme is an appropriate acknowledgement for their efforts.

If you have not already organised vaccination drives for your staff, it’s high time to ensure that every worker and support staff who is a part of your business is fully vaccinated. Health and education assurance for children and families of staff is the biggest concern among the workforce currently. By taking the responsibility for the same, your partners and support staff can breathe a sigh of relief and dedicate themselves fully towards your business. Provide covid-19 insurance, organise vaccination camps and ensure you are there to support your staff and families before and after any unfortunate deaths or hospitalisation.

Small businesses impacted by the Covid-19 pandemic are on the verge of or are already shutting down. It’s important that after the death of the owner or the founder, the business carries on to support his/her kin. Business shouldn’t get impacted due to Covid death since it will put additional burden on the devastated families.

The staff and workers of the hospitality sector are at high risk during the pandemic for two reasons:

Lack of job and income guarantee
The fear of contracting covid

Due to their vulnerability, wellness and bereavement support programmes are highly necessary for start-ups and small businesses. Be connected with the families and loved ones of your staff and partners if you are a hospitality start-up. If the sector needs to successfully revive, this sense of community and social responsibility is the need of the hour.

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Opportunities for Agritech Start-ups

Abhilash Bapanasha — Mon, 26 Jul 2021 09:10:19 +0000

With about 150 million farmers and majority owning less than two hectares of land, the Indian agriculture sector needs to adapt innovations to become sustainable and profitable for farmers. Crippled with many challenges like climate change, water stress, deterioration of soil health and price volatility, a farmer with average land holding of about one hectare is hardly left with a surplus for productive investment into new age solutions. Fortunately, agritech start-ups driven by entry of high-quality entrepreneurs and increasing investor interest, have come to the aid with innovations in improving farm economics. In all probability, agritech will continue to attract venture capital in the foreseeable future while trying to solve multi-dimensional problems prevalent in Indian agriculture including low productivity, sub-optimal efficiency in supply chain and lack of access to markets, institutional credit, crop insurance, quality inputs and market linkages.

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I really worry about start-ups who spend eighty percent of their time fundraising and twenty percent of time building business. It should be the other way around.

In order to highlight the opportunities of agritech start-ups in the Indian context, Mr. Hemendra Mathur was the speaker for MentorED, our weekly live 45-minute workshop where industry veterans share their knowledge and experience and discuss topics that are apt and relevant to the start-up and small business fraternity. A PGDM from IIM Ahmedabad and Bachelor in Engineering from Rajasthan Agricultural University, Mr. Hemendra Mathur is currently the Chairman, FICCI Task Force on Agri Start-ups and Venture Partner of Bharat Innovation Fund. He is the co-founder of ThinkAg – a platform for accelerating the adoption of innovations in the agriculture space. He has authored many papers on the subject and speaks regularly at conferences pertaining to the food and agribusiness sector as well as the start-up ecosystem.

In brief, the session had the following takeaways for the audience:

Current status of Indian Agritech
Ecosystem support available for start-ups
Innovation themes and opportunity areas
Learning from other agritech entrepreneurs

Innovation and Young Entrepreneurs: Key Drivers for Growth

Mr. Mathur started his highly informative presentation highlighting the status of agricultural sector in India, “It is a very vast area, as we know agriculture is one of the key pillars of Indian economy contributing to almost 15 to 17 percent of the GDP and almost 50 percent of the population continue to depend on the agricultural sector. I think one of the key drivers for growth in agriculture at least for the next decade or two will be innovations and these innovations are going to be driven by young entrepreneurs who are joining the sector.” In an encouraging ecosystem that has picked up momentum in the last three to five years, the agritech start-ups have come to the aid trying to solve problems across the value chain from pre-production to production to post harvest.

Although the Indian agritech start-up space is almost a decade old now with the first names popping up in 2011-12, several of them are building interesting models considering the needs of small and marginal farmers who constitute eighty-five to ninety percent of the farming community in the country. As of the present day, there are more than a thousand agritech start-ups in the country and Mr. Mathur is hopeful of that figure to grow to ten thousand in the next ten years. Terming the sector as a resilient one that had even bowed down unlike several others during the pandemic, the perception of investors has also changed. “I think investors are becoming more and more amenable to invest in the sector and as we speak about more than a billion dollars has been invested in the sector in the last eight to ten years. Out of that maximum amount has come in the last 18 months. I am sure as we go along this number is going to change and again my prediction is, we are going to get at least a 10-billion-dollar investment in the next 10 years.”

Considering the supply chain, Indian agriculture exhibits a highly fragmented scenario with concerns like high water stress, degrading soil quality, unavailability of labour coupled with low mechanisation. Similarly, inadequate storage, processing and transportation facilities cause a significant amount of food loss which makes the supply chain very inefficient. “If you look from a farmer perspective, one of the biggest challenges most of the farmers in India end up selling their produce at the nearest mundi (market yard) which is typically thirty to fifty kilometres from the farmer’s field and it is not necessary he gets the best price from that market.” Thus, there is an urgent need for logistic solutions to discover more buyers.

Agri-fintech: The Next Big Opportunity for Agritech Start-ups

Mr. Mathur also mentioned that only about thirty percent of Indian farmers have access to institutional credit and the rest have to pay as high as twenty-four to sixty percent of credit per annum. He stated, “Just imagine the cost of capital is so high which makes the whole farm economics look very vulnerable. So, can we improve the excess of institutional credit to the farmers and that is where I see a very interesting intersection of agritech and fintech, I call it agri-fintech.

I think this is the next big opportunity in the sector.” Again, data figures out as a scarce commodity in the entire agricultural value chain where it fails to meet the requirements for decision making. “That is where I see a huge application potential for data sciences. I think agriculture is another area which is heaven for data scientists, there’s so many variables and you can do so much with it which can essentially help in decision making for the farmers as well as for other value chain members.”

The mentor listed down seven opportunities in his presentation for the audience and thereafter he elaborated on each of them. The seven opportunities are:

Access to Quality Inputs
Farm to Fork Market Linkages/Post Harvest Management
Access to Financing (Agri-fintech)
Data & Advisory
Mechanisation
Novel Farming
Platforms

Mr. Mathur underlined the nitty gritty of the Indian agritech ecosystem. He is thrilled at the promising presence of many high-quality entrepreneurs, supportive incubators and accelerators to whom he insists to connect. “One area which I feel is catching up is the village ecosystem. None of the agritech models are going to scale without participation from village level entrepreneurs. Because a farmer is not going to trust a person who’s coming from Bangalore, Delhi or Mumbai. He is going to trust someone who is there in the rural area. So, I think that it is very important that we build the local ecosystem, create opportunities for rural entrepreneurs.” He believes that entrepreneurship and agritech go hand in hand and it will create millions of jobs in the rural areas. Furthermore, Mr. Mathur also listed down some of the key incubators who can be reached out for assistance.

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You should be obsessed with what problems farmers are facing. You need to have a farmer-centric approach. Unless you are solving for him you will never be able to create a scalable solution.

Agritech start-ups must focus on creating value

He concluded his presentation citing his own experience as a mentor, advisor and board member in various forums. “One thing which I really like about agritech start-ups is – it is a learning for everyone who wants to be in this sector and that a lot of them have a high degree of resilience and a frugal approach. Do not burn cash in farmer and customer acquisition but create value, as farmers are not looking for discounts, they are looking for value.” That appears as a unique trait of Indian agritech start-ups exhibiting a mortality rate of less than fifteen percent.

The supply chain of agritech being longer, there is a higher scope of unit economics utilisation. “I really worry about start-ups who spend eighty percent of their time fundraising and twenty percent of time building business. It should be the other way around. You should be spending less than twenty percent of your time fundraising and eighty percent time on building business, product development, hiring team, etc.”

He also highlights that most of the start-up founders come from a technology background and not agriculture. “Agriculture in India is a multi-dimensional problem so you need a multi-disciplinary approach.” He insists on a bridge approach whereby a holistic team works with multiple skill sets and which also understands technology, data science, behavioural sciences, meteorology among others in addition to agriculture.

Audience Asks

How do you encourage the youth to see the future in agriculture when a general notion seems to attribute it as a traditional sector?

People will laugh at me if I say that we are going to see reverse migration in 10 years. But that is the truth, people like you and me who are fed up with city life will migrate to villages, run farms, produce and sell. The reason I am saying it is because technology will help it. Probably we do not like traditional agriculture the way it is done but there are so many tools now available where you can go and manage very efficiently.

All said and done in agriculture, unlike the notion that we have, the gross margins at the production end are very good. If you add the cost of inputs labour and everything you can still make a thirty to fifty percent margin. Unfortunately, those margins are eaten up by the interest cost, by the food losses or by the price shocks that you see. So, I am very bullish that agriculture is the future not just for rural India but for urban India.

There is a good example that people with urban background and urban thinking have ventured into rural areas which demonstrates that there is a role for youth, not necessarily rural youth but also for urban youth to look it as a potential opportunity to create value and I can tell you it is going to be very satisfying career for people like you.

On what factors do you assess and agree on a tech starter for deciding to invest in?

I think first and foremost, from an investor perspective, the solution has to be scalable. Whether we like it or not, technology has a role to play and when I say technology, it does not mean just digital technology, it can be biotech or foodtech, it could be some other, but I think technology has to be integral. It need not be proprietary or patented but scalable. What is that differentiator in the business which can make it scale and answer typically is in the use of technology. I am not saying over-invest in technology but you should be clear how it will drive scale.

Second, of course, is the composition of the team. You need multiple skill sets, so do you have those skill sets in the team or do you have the ability to hire those skill sets is the biggest challenge for the sector. Today it is not capital, it is talent. That is where a start-up which has scaled and a start-up which is struggling to scale – the difference is talent.

Third is, you need to demonstrate unit economics. Everyone in the supply chain has to make profit. Since the supply chain is elongated and complicated, the unit economics at multiple levels becomes a bit of challenge but again with use of technology I am sure that can be solved and that’s where we will see models scaling faster.

Last but not the least, build a gross margin strategy. That is where I see a lack of articulation or lack of strategy in the ecosystem. Even now most starters have figured out how to scale but how to build a profitable business is still a question mark. You need to figure out how you unlock value so that it becomes a sustainable and profitable venture.

A Unicorn in Agriculture: To Create Wealth for the Ecosystem

With over 25 years of experience in venture capital, private equity, management consulting and investment banking, Mr. Mathur has invested in several early stage agritech and mid-sized companies in the agricultural supply chain. From his experience he stated, “You should be obsessed with what problems farmers are facing. You need to have a farmer-centric approach. Unless you are solving for him you will never be able to create a scalable solution.

To me, a unicorn in agriculture means someone who has created wealth of a billion dollars for the ecosystem not necessarily for his own shareholders which means creating wealth for the farmers for the local entrepreneur, for the entire value chain rather than creating wealth for yourself. And that’s why I always say there are already multiple unicorns in the sector because they have created wealth for everyone, not just for themselves.” The mentor is hopeful of the next decade as one for agriculture and that it will be disruptive!

The post Opportunities for Agritech Start-ups appeared first on Dutch Uncles.

Marketing Mis-steps that Entrepreneurs Should Watch Out For

Saurabh Bajaj — Sun, 25 Jul 2021 10:35:12 +0000

The term unicorn was coined in 2013, by Aileen Lee, founder of Cowboy Ventures, to refer to technology start-ups with valuations over US $1 billion. At that time there were 39 unicorns in the US and none in India. India today has a total of 50 plus unicorns, the third largest number in the world after the US and China. However, firms like Ola, Flipkart, Lenskart, Nykaa, UrbanClap, Paytm and Zomoto make the journey look easy. There are a number of firms that have struggled to scale-up the founder’s visions or the market’s expectations.

Let’s study the journey of some of these companies, each of which have done many things right, but have taken a few marketing missteps that they have then had to pivot to recover. As we investigate these stories, perhaps there are learnings for other entrepreneurs to learn as they navigate their own passion projects.

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The legend goes that the inspiration for Paper Boat came from the flask of Aam Panna, Suhas Misra's mother would pack for him every day.

Hector Beverages

Paper boat is one of the companies that have caught the imagination of consumers and investors alike. They have had years that have been extremely successful and a few in which the market questioned if the growth story has come to an end.

Hector Beverages was founded in 2009 by Neeraj Kakkar, Suhas Misra, Neeraj Biyani and James Nuttall. Today Neeraj Kakkar and Neeraj Biyani run the show after Suhas and James decide to exit the company.

The company started operations with Frissia (protein water) and later Tzinga (energy drinks) but later smartly pivoted to their third venture Paper Boat. The legend goes that the inspiration for Paper Boat came from the flask of Aam Panna, Suhas Misra’s mother would pack for him every day.

The company started its operations through the Manesar Plant and subsequently roped in its first investors in 2011 including Catamaran and Foot print. The next reached out to Elephant Design that helped them both with the naming as well as pack design leading to the launch of ‘Paper Boat’ in 2013.

The Brand saw strong initial success and they quickly expanded to a second factory in 2014, which was their Mysore plant with a speed of 380 bottles/minute versus 80 bottles/minute in the Manesar Plant, along with the capabilities for coconut water and sugar cane juice.

From 15-16 to 17-18 the Brand kept its focus on three key levers of growth:

Brand Building: They launched Paper Boat with a novel purpose of trying to preserve traditional recipes that go back thousands of years, and were handed down from one generation to another, in a modern form. On this Brand core they invested aggressively in digital engagement and also launched a TVC on main line television.
Innovation: They launched a slew of products including more than 11 types of ethnic drinks and juices: Jal jeera, aam panna, aam ras, alphonso aam, jamun kala khatta, chilli guava, nimbu pani, kokum, neer more, kanji, sugarcane juice, lychee ras, apple and orange.
Distribution Expansion: They also partnered with the Japanese food giant Indo Nissan Foods to strengthen its distribution and brand presence in tier II cities and rural markets.

However, while all three strategies are based on sound business fundamentals, their premium pricing of Rs 30 for 200 ml proved to be an impediment to scale growth and their turnover appeared to stagnate at under 100 Cr.

As a result, the analysis, started to question if the product and packaging novelty has worn off and has the impact of competition in the form of Daburs Hajmola Yoodley, B Naturals Zero Concentrate Promise and the entry of Coke and Pepsi into healthier beverages started to make its impact on the major.

The company pivoted smartly again and has launched a mega push in the last couple of years into several mainstream categories:

Paper Boat Swing at much affordable prices of Rs 10 for 150 ml
Juices in Tetra Pack at Rs 130 for 1 Ltr
Dairy Beverages like Lassi, Thandai etc

Their largest gamble to date is the entry into traditional Indian snack-based products like Peanut Chikki, Banana chips, Aam papad, Bakarwadi, Namak para, Gur para and Shakar para.

The key challenge that the expansion of such a wide portfolio would be Brand stretch. However, what appears to be helping the majority is the fact that the Brand has been based on an emotional promise of ‘nostalgia’, rather than a functional promise and that appears to be assisting them, despite sharp reduction in advertising investments every subsequent year. And the second is distribution expansion where the partnership with Indo Nissan foods only took them to 100,000 outlets. They have now started investing in their own field force to expand to 250,000 outlets and are now targeting 350,000 outlets.

The key thing on the mind of the founders now appears to be an IPO to continue to fund their expansion as they make steady steps towards profitability.

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Mounting losses, restless investors and the pandemic eventually led to the firm being acquired by Wingreens Farms. Raw Pressery business has picked up substantially post the acquisition by Wingreens Farms.

Raw Pressery

Raw Pressery and Wingreens Farms are two Sequoia Capital backed food start-ups which have boasted of innovative food products capturing the imagination of the growing millennial audience. Interestingly the learnings that we take from the challenges these firms have faced very closely mirror what Paper Boat taught us. Let’s now investigate their journey.

Raw Pressery was founded by Anuj Rakyan in 2013-14, with the dream of preparing cold pressed juices at a shared kitchen in Mumbai. He wanted to deliver these juices directly to the customer daily, by utilizing spare time of Mumbai’s daddawalas.

The original insight for the Brand emerged when Anuj Rakyan suffered a back injury playing football. He wanted to heal himself naturally without surgery through rest and nutrition. He made juices at home, but realised that something equally good was not available on shelves. He realised that there was an opportunity for a clean label product with only goodness inside and nothing else.

It was indeed an inspiring vision, and enabled him to take the brand across 15 cities in the country.

This allowed the brand to scale-up to a business of 65 Cr 2020 however they retained very high operational expenses and hence a loss of almost 60 Cr. In chasing their vision, the company made several logical pivots. The first was the realisation that while a few core consumers may take subscriptions, a large part of the business is going to remain offline. So, despite a very premium product, the online share of the business in 19-20 was only 10%, however the bulk of their business came from airports (30-35%) and organized modern trade stores like Food Hall and Reliance (50%).

Next, the group believed that the product should do the talking for them and they kept their advertising expenses persistently low at 30% in the initial years and under 10-15% by 2020. Their biggest challenge with the low shelf life of the products and the very expensive cost of refrigerated logistics. Though investments in technology were able to expand their shelf life quite substantially, logistics remained a persistent challenge. The softer challenge that the organization was not able to solve was the high cost of employees which accounted for as much as 40% of their top line. The equivalent numbers in scale firms are between 4-5%. These challenges could only be solved by expanding their range into products with a more affordable entry price and a range which holds its core promise of goodness but can move into the non-refrigerated aisle. And hence in Oct’18 the company expanded into Almond Milk at a pricing of Rs 80 – Rs 200. By Nov’19 they launched Coconut water with a pricing of Rs 50- Rs 60 and by Dec’20 into High Protein Smoothie.

By 2020, the contribution of these businesses was 40% for Cold Pressed Juice, 10% for Dairy, 35% for Coconut Water & 15% for Almond Milk. However, these initiatives only increased the dependence of the company towards offline channels and as the pandemic hit the company could only increase their business contribution from D2C to 15% and modern retail then accounted for 80% of their business. The lucrative Airport channel which was the backbone of their business could only account for 5% of their business. Mounting losses, restless investors and the pandemic eventually led to the firm being acquired by Wingreens Farms. Raw Pressery business has picked up substantially post the acquisition by Wingreens Farms. Let’s understand Wingreens business model a bit more to understand the synergies that have kicked in for both the companies.

Wingreen Farms

Wingreens Farms was incorporated in 2011 by Anju Srivastava and Arjun Srivastava. The products of the firm include dips, spreads, sauces and bakery products. The couple was working in the US for several years advertising and marketing and decided to return to India. They were taken aback by the condition of farmers in the country and the company was originally christened as WIN (Women Initiative Network) in Gurugram in 2008 with a capital of Rs 10 Lakh.

The initial idea was to work with farmers who had land but no money. The business model was to rent out land and pay the farmers the same both for renting the land and also as salaries for the women working in the company. In 2008, Anju started growing potted herbs in a half acre of farmland that she rented from the farmers in Tauru village, Haryana. She grew varieties of basil, thyme, oregano, peppermint, and other herbs for sale. However, she struggled in the initial years due to the extreme weather conditions in northern India.

She finally tasted some success in 2011, when Anju made pesto out of the basil she grew, and approached Spencer’s in MGF Megacity Mall, in Gurugram. The plan was to allow customers to taste the pesto, however they didn’t have any pasta and hence used chips. To their surprise customers showed good acceptance for the product as a dip. Following the successful launch of pesto as a dip, WIN was rebranded as Wingreens Farms, and the company then went on to launch 150 variants in 50 SKUs including, chipotle sauce, fiery desert mustard dip, dill tzatziki, peri peri hummus, rosemary hummus, peppermint with green tea leaves dip, etc.

Within a span of 8 years, the brand has built a presence in 1300 Modern trade stores and 9,000 general trade stores across 140 cities across India. The company has plans to expand its distribution network to over 200 cities, over 2000 modern trade stores and over 1 lakh general trade stores over the next year. They also plan to extend their portfolio to 220 products across the range of dips, spreads, sauces and bakery products.

Despite accessing good funding from the market Wingreens has managed to deliver a far more sustainable business model. The pandemic has been an issue and an opportunity for the company. At one end the cost of business escalated, on the other the consumer was actually drawn to better cooking because of the rise of in-home dining.

However, all in all the acquisition of Raw Pressery has been a big opportunity towards the sustainability of both companies due to the following reasons:

Raw Pressery and Wingreens Farms have a complimentary set of products with little overlaps giving the combined entity the right to build a Holistic Food and Beverage company that is structured as a House of Brands.
Both company portfolios have a presence in the refrigerated isle and the sampling and activation infrastructure of both companies can be synergized.
Further promoters believe that combining both portfolios should help them reduce their logistics and transportation costs by half.
Also, with the enviable portfolios of both companies there is an opportunity to negotiate better with retailers when it comes to shelf space and commissions.
And finally, most importantly, a strong portfolio combined with significant distribution heft is the magic formula for success in the Indian landscape.

There is a lot to learn from the three Brands that we have investigated, Paper Boat, Raw Pressery and Wingreens Farms. However, the key learnings can be gleaned in the form of the following steps and missteps that entrepreneurs should factor in their plans.

First, as entrepreneurs seek to launch innovative offerings in the Indian market, there remains a large role for storytelling and Brand building. This is something Paper Boat did very well. A large part of the allure of their 3rd product after Frissia (protein water) and Tzinga (energy drinks) was Paper Boat. And the platform of Drinks and Memories allowed them an opportunity to charge a premium and hence build a product that can be fuelled with advertising to command a premium. Perhaps this is where Raw Pressery missed a trick. While a clean label positioning is strong. It would have taken a while to catch up with the consumer.

Secondly, entrepreneurship is not for the faint hearted and business pivots are a part and parcel of the game. Hector beverages showed their resilience in reinventing themselves time and time again. This was perhaps something Raw Pressery took a little longer to do.

Thirdly, distribution expansion alone doesn’t ensure top line growth as Hector Beverages learnt the hard way in the period between 15-16 and 17-18. It has to be complimented with an accessible portfolio and the right branding strategy.

Fourthly, it’s critical to marry your business opportunity with consumer expectations, as Wingreens Farms learnt to their delight, almost by accident when they uncovered the opportunity for a dips market.

Fifth, as one discovers a significant business opportunity, it’s critical to make infrastructure investments to improve technology and set up factories; however it’s critical to keep a keen eye on cash burn and operational profitability. Solving for the right supply and logistics costs, employment costs and marketing spends is critical to build confidence with investors as Raw Pressery learnt to their peril.

Lastly, it’s important to start one’s business through a pilot mode across limited markets or channels, however the final path towards profitability in a market such as India, depends on building a robust distribution infrastructure for expansion.

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India is Home to More than 50 Unicorn Startups

DU Desk — Sat, 24 Jul 2021 10:35:09 +0000

Where pandemic hampered the operations of Indian businesses bringing it closer to the jaws of closure, surprisingly it could not deter some startups across fintech, agritech, healthtech, retail, e-commerce and fintech gain the unicorn status. In 2020, the startup ecosystem got a total of 11 unicorns and 2021, within 6 months, saw 16 startups join the unicorn bandwagon thus taking the count of 50 unicorn startups.

With the rise of multiple unicorns emerging in a short span, India has truly retained the title of third-largest in the world right after the US and China with 124 and 92 unicorn startups respectively. A joint report from Nasscom and Zinnov anticipates that India is on track to be a 50-plus strong unicorn club in 2021 and holds the potential to be a 100 unicorn club by 2025.

Despite challenges in the pandemic that disrupted business continuity, entrepreneurs have quickly responded to varying consumer behaviour and chose to understand the business opportunities laid by the crisis to get the benefit of first-mover advantage.

Why is India able to give birth to Unicorn startups?

The reasons for the growth in India’s unicorn can be attributed to:

Leveraging new-age technologies such as Artificial Intelligence, Internet Of Things, data analytics, big data, robotics, etc. focussing on customer personalisation and bridging gaps resulting in product acceptance and sales
Disruptive solutions in the conventional systems
Product or service innovation
High-quality talent
Investors are willing to invest in Indian startups. Since 2015, India has seen an inflow of $250 billion of foreign direct investment (FDI). Out of which, 75% of this FDI, i.e. $184 billion, has come in through venture capital and private equity funding.
Increasing internet penetration

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With the rise of multiple unicorns emerging in a short span, India has truly retained the title of third-largest in the world right after the US and China with 124 and 92 unicorn startups respectively.

List of the recent Unicorn Startups in 2021

Cred

Sector: Fintech
Founder: Kunal Shah
What it solves: It reduces the hassle of handling multiple credit cards and helps pay credit card payments on a timely basis.

FirstCry

Sector: E-Commerce
Founder: Supam Maheshwari
What it solves: A one-stop shop for babies and kids ranging from clothes to toys.

Meesho

Sector: E-commerce
Founder: Vidit Atrey
What it solves: An social commerce platform to enable shoppers from smaller cities and towns to shop online.

ShareChat

Sector: Social Media
Founder: Bhanu Pratap Singh
What it Solves: Multilingual social media platforms

Urban Company

Sector: Marketplace
Founder: Abhiraj Bhal
What it Solves: Offering services like plumbing, salon, electronics repair, etc. on a single platform

Digit

Sector: Insurance
Founder: Kamesh Goyal
What does it solve: Offers car and health insurance

Pharmeasy

Sector: online pharmacy
Founder: Dr. Dhaval Shah
What does it solve: Customers can conveniently buy medicines online

Chargebee

Sector: SaaS
Founder: Krish Subramanium
What does it solve: A subscription billing and revenue management platform.

GupShup

Sector: Conversational messaging
Founder: Beerud Sheth
What does it solve: It is a messaging services company with primary operations in India, the US and the UK. It has been providing SMS, email, Voice, USSD, and IP messaging and chatbot development services to leading BFSI, Retail, e-commerce companies.

Moglix

Sector: Industrial Marketplace
Founder: Rahul Garg
What does it solve: A B2B E-commerce marketplace for industrial supplies, Safety, Electricals, Lighting, Cleaning & Housekeeping, Office stationery & Supplies and Power Tools.

Other Unicorn Indian Startups

Five Star Business Finance
Zeta
Innovaccer
Mindtickle
Infra.market
Groww
Glance Inmobi
Dailyhunt
Zenoti
Cars24
RazorPay
Unacademy
Postman
Nykaa
Pine Labs
Lenskart
Ola Electric
Citius Tech
Rivigo
BigBasket
Dream 11
Delhivery
Billdesk
Freshworks
Oyo
Policybazaar
Swiggy
Paytm
Byjus
Shopclues
Hike
Zomato
Quickr
Paytm
Ola
Snapdeal
Flipkart
Inmobi
Icertis
Blackbuck
BrowserStack

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Start-up, A Dream of the Young and Progressive India

Abhilash Bapanasha — Fri, 23 Jul 2021 06:52:16 +0000

Indian youth is oozing out with ideas for businesses and new market concepts. More of them are shifting towards entrepreneurship with the hope to achieve freedom and fulfil their worldly pleasures. The very same reason why India has many start-ups but only a smattering survives. But that doesn’t mean the aspiring start-ups give up, most manage to nurture themselves. 83% of the Indian youth are willing to step into entrepreneurship, the global average being 53%. The number of youths willing to start their business fall between 25 to 34 years of age, followed by the age group 35 to 44.

Dr. Hari Shankar Shyam, a leading educationist and business consultant was the speaker for MentorED, a weekly live 30-minute workshop where industry veterans share their knowledge and experience and discuss topics that are apt and relevant to the start-up and small business fraternity. Dr. Shyam, Educationist and Business Consultant, has counselled more than 10000+ students across the world in his role as start-up mentor. With a Ph.D. in Marketing, an MBA and a Masters in Population Studies, he is currently an Associate Professor of Marketing at Sharda University.

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Now the question is, why should we not have a dream if the OYO promoter Mr. Agarwal can start at such an early age? It changed the entire hotel and tourism industry of India.

Dr. Hari Shankar Shyam touched on the following points during his thirty-minute workshop which was followed by questions and answers from the live audience:

Why start-ups can be a good career
How one can exploit India’s strong IT infrastructure
How to become agile using digital innovation
How to get support from government, VC and other sources

Addressing the audience comprising mainly youth entrepreneurs and aspiring business minds, Dr. Shyam shared, “We have realised from the last 15-20 years the word startup was coming. And from the last 10 years, it was THE word in a country like India and today for many youngsters we need not tell, they are already aware, but yes, there are a lot of challenges.” Even during the pandemic, many young entrepreneurs have come forward with solutions to problems with the usage of technology as an intervention. He expressed how the pan-Indian mentality of career orientation has changed from getting a good education in medical or engineering followed by getting a good job to envisioning the idea of a startup during graduation and actualising a startup idea into reality.

In his illustrative presentation, Dr. Shyam talked about the success stories of Indian startups established between 2014 and 2019. Unicorns like OYO Rooms, Snapdeal, Ola Cabs, BYJU’s, Delhivery among others are role models for a young population. “In 2015, there was a Fintech boom. One of the Fintech companies, One97 Communications, came with a brand called PayTM and what wonders it did! Today even if you go anywhere, even a vegetable vendor, you see across even the smallest vendor, they are using PayTM. After the pandemic, it is a revolution.”

“Now the question is, why should we not have a dream if the OYO promoter Mr. Agarwal can start at such an early age? It changed the entire hotel and tourism industry of India.” In a country like India, young minds are inculcating high ambitions and are at a lower risk as compared to one generation prior. With a high motivation, passion and a little craziness to stand out of the crowd, an aspiring startup founder can do wonders. Dr. Shyam also underlined the catalytic role of a mentor as for pursuing a startup dream. A mentor can also be someone from the peer group who has failed in his/her venture, but it is equally important to learn from such an individual so as to not repeat the past mistakes.

“Yesterday was the man of finance, today is the man of marketing and tomorrow is the man of HRD.” Many years ago, only those who had money could think about a business venture but in the present scenario, investors come forward to fund. The years ahead, as Dr. Shyam envisions, are that of technology. India has a strong IT infrastructure and has to be exploited to the fullest. Dr. Shyam stressed on how different cities like Bengaluru, Gurgaon, Noida, Pune, Hyderabad, Kochi have emerged as convenient ecosystems for boosting startups and support opportunities have to be utilised in these cities. Apart from that, there is an easy availability of manpower and technical support aided by a supportive supply chain and digital marketing avenues.

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Yesterday was the man of finance, today is the man of marketing and tomorrow is the man of HRD.

Audience Asks

How feasible is it to launch a startup in a hi-tech city and start to run it from a small town?

Many of the big cities are having this ecosystem but the smaller ones are not having it. The best part is even though that ecosystem is not there, there is internet connection. There are also many digital tools and platforms, you have to join them. There are also many angel funding communities in Chennai, Mumbai – associate with them and become a member. At the same time, take a mentor and you can really start from a small town. For a big town which is already established, the advantages are much more undoubtedly.

What do you suggest: start a business in a new (untouched) industry or in a tried and tested (already booming) industry?

One thing you need to understand is that we are not competing only with an Indian counterpart. You have to see where the scope is. Startup itself is that your idea is unique and innovative. While deciding which area you have to do, I will not say untried or untested areas. First, you have to find an area, an untested and untried area might be a problem for a newcomer, you need to analyse the situation very well. To begin with, you can enter into an area where some work has already been done. Later on, when a focus will be there, you may take a change in your path.

Dr. Shyam concluded by sharing his experience of being to the best Universities of the world and he has felt that Indian students, with a little awareness and guidance, can rub shoulders with students from across the globe. Though young and talented, Indian youth languish due to low dexterity, indiscipline, sense of responsibility and lack of strategic planning. Despite the failure and shut down rates of start-ups, being an entrepreneur is undoubtedly the current dream and aspiration of the millennials.

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Raising $40 Million as Seed Fund, Thrasio Model of Start-up 10Club

Anju Nambiar — Tue, 06 Jul 2021 03:35:06 +0000

10 Club is a Bengaluru based start-up which is focused on acquisitions of fledgling e-commerce sellers. Upon acquisition, this startup works to scale these sellers. It was founded in 2020 by ‘Bhavna Suresh’ (ex-CEO of Lamudi, a Real-Estate Marketplace based in the Philippines), Joel Ayala (Co-Founder & Managing Partner at Class 5 Global), and Deepika Nair.

10 Club has raised $40 M in a seed funding round which is the highest for any seed funded start-up in India. It is backed by Fireside Ventures, Hayday, Class 5 Global, PDS International, and Secocha Venture.

What is the Thrasio model?

The ‘Thrasio model’ was fashioned after ‘Thrasio’, a US-based unicorn start-up. It’s based on the ‘e-commerce roll up space’ and is about building a house of online brands. The Thrasio model is a raging success and is quickly being emulated in India.

How the Thrasio model paves the way for success and funding?

Companies which follow the Thrasio model are pitching start-up acquisitions by offering to help them scale 10x within a span of 3 years. They propose to accelerate the growth of these firms by integrating supply chains, providing performance marketing expertise and gleaning insights from data analysis.

The secret to the success of Thrasio style start-ups is attributed to their target market, seller quality, purchase valuations, debt availability and the relationship they build with the owners of the acquirers.

Good chemistry, understanding and trust between the Thrasio start-up and the founder/owner of the company being acquired are key to success in this model. Thrasio model start-ups are also betting on sellers that can target pan Asian, and foreign markets like Europe and America to touch their growth targets.

Which Industry Sector does 10 Club belong to?

10 Club belongs to the Venture Capital and early-stage funding league of start-ups and will be investing in the Indian start-up ecosystem. It belongs to a league of new-age funding start-ups that want to build a house of e-commerce brands by identifying promising sellers on Amazon.

Learnings for aspiring Thrasio-style start-ups

Aspiring Thrasio style start-ups need to focus on acquiring up-and coming brands that are selling like hot cakes on Amazon. Also, profitable companies are your potential target. Before venturing into the Thrasio space, you need to research and study the market in-depth. Interact with potential sellers on Amazon, tune into their plans and processes. The next step would be to shortlist the most promising sellers who deserve a buyout.

Your pitching strategy can be unique depending on what works best in your relationship with the seller. There are numerous options to lay out attractive offers on the table. You can offer marketing expertise, strong media coverage, a partnership, etc.

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Companies which follow the Thrasio model are pitching start-up acquisitions by offering to help them scale 10x within a span of 3 years.

What’s in it for me?

The Thrasio style start-ups alongside Venture Capital firms are interested in funding early-stage brands in India that follow an online-first business model. They want to turbocharge these companies since they believe that these start-ups are an upcoming revolution.

E-commerce firms and founders are eligible for being acquired and to receive funding by Thrasio model companies. If selected, your start-up can assume its full potential with help from these investment firms. E-commerce sectors with the highest probability of being acquired by a Thrasio start-up include fashion, apparel, home décor, arts and crafts, bedding, yoga mats, bed sheets, premium food items and kitchenware sellers.

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Start-Up Closing Down Rate in India

Anju Nambiar — Mon, 28 Jun 2021 03:35:04 +0000

Start-Up Mortality

Mortality is rampant in the start-up ecosystem as much as investments and unicorns are. Most start-up ideas take off with a bang but fail to work out in the long run. These failed start-up ideas contribute to the mortality rate and ‘infant mortality rate’ of startups.

Factors that contribute to start-up mortality

A bad set of investors can easily ruin a start-up’s growth and eventually lead to its closure.
The pandemic and subsequent lockdowns are currently the biggest contributing factor for start-up mortality in India.

Start-Up closure rate in the year of unicorns

The pandemic years of 2020-21 are bad for many businesses but surprisingly proved to be the best years for start-up unicorns. However, the fact remains that many small businesses and SMEs in India have and are continuing to shut shop.

The closure rate for Indian start-ups, micro, small,\ and medium enterprises is projected at 59% for the year 2021 as they prepare to scale down, get sold or permanently shut shop this year. This forecast is wholly attributed to the lockdown related restrictions due to the second wave outbreak.

Closures among funded start-ups

The Indian Start-Up Ecosystem has seen close to 3200 start-ups which have received funding. Out of these funded start-ups, about 385 start-ups closed down due to various factors.

How DDD Framework reduces start-up closure rate

What’s the DDD Framework?

The Discovery-Driven-Disruption (DDD) Framework is a planning technique. It’s a management process best suited for projects with high uncertainty. The DDD framework is useful for start-ups launching new products or venturing into new markets.

How to adopt the DDD Framework?

Adopt the DDD Framework by breaking your start-up plan into small stages. At every stage, you become aware of and pin-point any assumptions your start-up has which may have proved to be risky. Next, you put these assumptions to the test at the lowest possible cost and timeframe.

How the DDD Framework reduces Closure Rate

It helps reduce closure rate by de-risking the firm. It also gives start-up founders a way to exit the business at the right time when signs of a possible failure begin to show.

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The closure rate for Indian start-ups, micro, small and medium enterprises is projected at 59% for the year 2021 as they prepare to scale down, get sold, or permanently shut shop this year.

What’s in it for me?

To improve your start-up’s chance of success, go into lean mode. Lean mode is when a start-up prioritises experimentation and relies on customer feedback before diving into a large-scale launch.

Perform cost-controlled ‘disruption trials’ to protect your start-up from failure. Adopt a disciplined approach for your start-up like the DDD framework.

Even though any start-up idea almost certainly has some risk associated with it, don’t come up with an over-the-top, high cost or reckless plan. Uncertainty should not exceed its limits in business. Operate on low-risk modes like DDD and the lean mode to reduce your start-up’s ‘assumptions’ and to increase your ‘knowledge’. In turn, your business uncertainty will reduce and the possibility of closure will be minimal.

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Policybazaar: Upending the Complex Indian Insurance Market with Tech

Aviral Srivastava — Tue, 15 Jun 2021 05:05:04 +0000

In today’s world, people tend to take steps in order to mitigate their losses and encourage their financial stability by binding themselves into a contract which gives them financial flexibility and encourages a better flow of trade (for business houses) even when they suffer an economic loss. This is where the insurance industry comes into motion and where Policybazaar makes its mark.

The uncertainty of events in our lives is the reason why insurance policies play a major role in securing a better future for oneself or our loved ones. A person can incur the risk of losses of life, health, asset, property, etc. It isn’t always possible to prevent the loss of any commodity, the financial sector provides us with this product called “insurance”. This helps in promoting economic growth, generation of long term financial resources, providing support in medical emergencies as well as providing safety to the business from extreme-end losses.

What is Policybazaar?

Policybazaar is an Indian insurance aggregator based in Gurgaon, India. This company helps a person compare financial services from different insurance companies on a single digital platform making it easier for people to choose the most convenient and affordable option. The company was founded in June, 2008 by Yashish Dahiya, Alok Bansal and Avaneesh Nirjar.

The company is now worth over $2.4 billion making it one of the most successful Fintech companies in the country. In early 2020, Yashish Dahiya told Bloomberg that Policybazaar was set to make its Stock Market Debut as India’s first Unicorn.

The enterprise has over 10,000 employees working from its headquarters in Gurgaon.
Policybazaar, now works as an insurance selling operator after switching from a policy comparison website. This move was a turning point in the company’s business run as they discovered multiple sources of income leading them to success.

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It isn't always possible to prevent the loss of any commodity, the financial sector provides us with this product called "insurance".

Policybazaar: Covering Milestones

In the mid 2000s, the Indian insurance industry was still growing and didn’t have a lot of impact on the financial sector. Policies and insurances were sold through agents via one-to-one communication. The industry back then didn’t have a lot of transparency and people were still hesitant to buy off even general policies from an agent.

But with the change of time, this perspective also changed. With more and more companies joining the insurance industry, the competition rose and trust was built between people because of the same. In 2008, when the three entrepreneurs came up with Policybazaar, it was merely an information portal which used to help people know more about different kinds of insurance policies and its benefits.

This process involved comparing insurance prices of different insurance companies, explaining about policy-programs and other useful information regarding the same. Policybazaar had a long Journey from being an information provider to a full-time policy seller agency. The website expanded enormously and became a premium hub for insurance policies.

In 2015, the company launched its own Android and IOS application which helped them grow on a bigger scale. The company made its services available to more and more consumers and sold more and more policies.

The Success Story of Policybazaar

Since its inception, Policybazaar has managed to make some good acquaintances in the financial industry. Policybazaar has managed to raise $US366 millions since 2008 within 7 rounds of funding. Major companies like Info-Edge, Intel Capital, Inventus Capital Partners, Premji Investments (Wipro), and Tokyo based Softbank:s Group of vision funds have invested in Policybazaar making it one of the most reliable Fintech companies in the country.

The owners proposed a good business model to every group of investors and were quite commendable with it. The business model of the company would be explained in the next section.

Policybazaar has also been awarded quite a lot of trophies for its consistent and trustworthy service that they’ve been providing to their customers. Some of the major awards won by the enterprise are IAMAI Indian Digital Awards for best financial website 2015, BAM award 2015, Best Marketing & PR Campaigns – India PR & Communications Awards 2018, Best Content in Online PR Campaign – Drivers of Digital – Inkspell Awards 2018, Best Consumer Awareness Campaign – Silver -Economic Times Brand Equity Kaleido Award 2019, Best bank in Fintech – Financial Express Best Bank 2019, Leading Fintech Innovator in India -KPMG-H2 Ventures Report and many more adding on to the list.

The company has proved its worth as they claim to process about 25 per cent of India’s total life insurances and about 7 per cent of the nation’s health cover. The company provides its consumers with more than 250 insurance plans and operates around 50 insurance brands on its platform.

The Genius Business Model Powering Policybazaar

Policybazaar being an aggregator of insurance policies which means that it would list out all the insurance products relevant to the search made by the consumer. They would redirect the consumer to the insurer’s platform for selling the required policy and therefore, earn commission based on the consumer traffic brought by Policybazaar on the insurer’s website. This process can only be initiated once the company has been approved of a IRDA license. Companies which have an IRDA license can directly sell insurance policies without the help of any mediator like Policybazaar. In such a case, Policybazaar sells information and leads of their customers to the other insurance companies for expanding their customer range. This is just one way of earning money.

The company has connections with various and different kinds of insurance operating companies. This network helps Policybazaar compare and analyse the price, benefit, insurance cover and reliability of different insurance plans. This information is provided to the customers in a more organised manner in order to research and buy. Policybazaar is in a tie up with companies providing car insurance, life insurance, corporate insurance, health insurance and travel insurance. This opens up a lot of options for a customer within the same platform.

One of the most important and toughest parts of the job is to convince people to buy insurance. With a lot of competition being around, this task was made nothing but more complex. Selling off insurance to an optimist might be seen as a hurdle because of the long term investment. Policybazaar made sure they maintained a reputable goodwill in the market and were very transparent with their work.

How Policybazaar Stared down the Competition

The major competition faced by Policybazaar is from Fintech companies like Bankbazaar, Acko, Coverfox, Easypolicy, etc. The insurance industry has grown to be very competitive and hard to survive with various other companies hanging around. The company had made their business model featuring the cost and services of the policies available to its customers increasing the company’s reliability. The insurance companies have started to adapt to the needs of their customers and have attempted to reshape the policies and their business models according to their target customers. This has opened up a lot of options for a person looking for a good insurance program.

The company has stayed afloat in a very competitive Fintech industry for more than a decade now. The company deals with millions of customers every year where they have to convince more people everyday to buy off insurance policies from their portal. In a country like ours, people tend to do a lot of research and analysis before buying an insurance policy. Policybazaar already provides the customers with such analysis making it easier for the customer to choose any policy from the given insurers.

There’s a huge traffic of policy-buyers everyday on the Policybazaar website already and now, the main focus of the traffic handlers is to increase the positive and more active network by encouraging people to buy policies or do any other kind of activity on the portal. The company is responsible for the privacy of the information shared by any customer as well as the legitimacy of information provided to the customers.

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Policybazaar is one of the clutch Fintech startups of the country looking forward to flexing the tightly regulated financial services segment enjoyed by state-held and bank-backed insurers.

The Road Ahead

India’s fast moving tech-industry has attracted numerous investors with huge investing capabilities. This is a great opportunity for well-established businesses to expand their wealth as well as reach. Subsequently, even Policybazaar announced that the company was going to go public and would be a part of the stock market from 2021.

The Soft-bank backed company would be filing for an IPO (initial public offering) that would raise upto $500 million for the insurance company. This would raise the value of Policybazaar to an estimate of $3.5 billion and would consist of new stocks of already existing or familiar shareholders.

Policybazaar is yet to announce their final decision regarding their IPO draft and is set to be India’s first mega-start up to go public this year. Yash Dahiya, Co-founder of the company, told Bloomberg last year that the company would mostly go public in 2021. The plan is to secure $250 million in a round of financing at a $2 billion valuation before September. The reports emerged stating that the company is enlisting themselves in the Mumbai IPO but Mr. Dahiya told Bloomberg that they were also looking for dual listings if there are any amends in the rules.

Policybazaar is one of the clutch Fintech startups of the country looking forward to flexing the tightly regulated financial services segment enjoyed by state-held and bank-backed insurers. The idea is to make these policies available to the middle class uninsured and under-insured Indians. The target customers can still be expanded in a country like India with most Middle classed men and women would not have insurance. The company has made goodwill in the market and is now considered as one of the best insurance aggregator companies in the country. With the IPO registration, the company obviously becomes public and the profit margin of the same has expanded indefinitely. Through this, the insurance company can support the incoming policyholders while still working as an aggregator.

Amidst all of this, the mobile app of Policybazaar plays a criminally underrated role. The app service launched by the company back in 2015 works for both Android as well IOS users and hence, increased the number of customers. This also made buying insurance online much easier and reliable. In 2018, Policybazaar adopted Amazon Polly and developed an AI system in order to improve their customer satisfaction. This proved to be very helpful as Policybazaar received a lot of complaints regarding excessive phone calls to their consumers.

Since 2008, the company has been a major part of the Fintech industry as an insurance aggregator and later witnessed a massive turnover. This just proves how deep the Fintech industry is in terms of the money involved.

The company still hasn’t reduced the intensity of the amount of work done and has already listed out targets for the upcoming year. These involve expanding their customer base to 1 crore, underwriting premium worth Rs. 10,000 crores, increasing revenue to Rs. 1500 crores, expanding across the globe and finally launching its IPO soon. All of these targets are to be achieved before the end of 2021.

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