The Inc42 & AWS series — Scaling From 1 To 10 — continues with a deep dive into online medicine delivery and healthtech platform 1mg.

India is a unique market in many ways, but one of the defining characteristics of the economy on a macro level is the dichotomy between urban and rural India. But with Tier 2 cities rising up as startup and innovation hubs thanks to the penetration of the internet, the consumer mindset towards tech in smaller cities and semi-urban towns is also changing drastically.

The internet has come as great leveller in the context of urban-rural divide and some of the sectors where this is most apparent are ecommerce, education, healthcare and consumer services. The internet and mobile data has led to a democratisation of services. Arguably, the most significant problem that internet and technology is solving in rural and semi-urban India is access to healthcare.

Despite the sector’s impressive growth in recent years, in part due to increased investment in tech startups that are solving access to quality healthcare, there’s a skewness between Tier 1 and 2 and below cities in India. As per a report by KPMG and the Organisation of Pharmaceutical Producers of India (OPPI), more than 75% of the country’s pharmacies, around 60% of hospitals and 80% of doctors are currently located in urban areas.

But India’s rising income, increasing health awareness and easier access to finance and insurance are changing the reality in India outside the cities. The IBEF has estimated the Indian healthcare market to be valued at $372 Bn by 2022, and plenty of investments have come through in the past five years into the healthcare sector — especially startups that are trying to bridge the gap between urban and rural India, as well as those that are eliminating the smaller pain points in Tier 2, 3 and 4 cities.

Epharmacies Ride On Ecommerce Wave 

In particular, the epharmacy sector has flourished despite regulatory challenges thanks to the same market conditions that propped up ecommerce, grocery delivery and food delivery startups. The shared logistics, transport and supply chain infrastructure for many of these sectors culminated in a tech ecosystem opportunity, which online pharmacies or epharmacies also latched onto.

“We knew the infrastructure was there. So we looked at it from a product point of view. And a lot of it is driven by fundamentally understanding what users needs, and how they discover the needs, answering their healthcare questions. So that’s how we acquired users,” 1mg cofounder and CTO Gaurav Agarwal told Inc42.

The ecommerce boom meant that 1mg could focus purely on building the right product, selection, pricing mechanisms, Agarwal said. And it also helped the company build the right operational systems after separating the identity from parent company Healthkart in 2015. “We wanted to make sure that the stuff that we promised gets delivered to users on time. All of these things contributed a little ways in getting us in.”

Online pharmacy startups such as 1mg, Pharmeasy, Netmeds and Medlife made medicines more easily available in a wider distribution area. On the other end, Practo, Lybrate, Portea, mfine, and DocsApp sprouted up in the telemedicine and diagnostics space to make access to doctors easier. And gradually, healthtech startups have changed the face of Indian healthcare over the past five years.

As per DataLabs by Inc42 estimates, the total capital invested in startups operating in the epharma space between 2015 to H1 2019 is $361 Mn. The total capital inflow in the online pharmacy startups combined makes up around 20% of the total capital invested in the healthtech startup sector of India ($1.77 Bn) in the same time period.

1mg: Changing Healthcare In Tier 2 India

Even though 1mg came on to the scene in April 2015, it had been around in an earlier avatar under health and wellness marketplace Healthkart. It was spun off as a generic drug search business and rebranded from HealthkartPlus to 1mg.

Founded by Prashant Tandon, Agarwal, and Vikas Chauhan, 1mg has three business verticals — pharmaceuticals, labs and doctors. Speaking to Inc42, Agarwal said that more than 70 Mn unique patients from across India accessed its platform last year for these three services, with over 2.5 Bn annual pageviews for the healthcare content, which is a vital aspect of online pharmacies.

In FY 2018, 1mg Technologies reported revenue of INR 39.8 Cr ($5.4 Mn), a 223% jump from the last financial year. Of the total revenue, the epharmacy contributed INR 23.2 Cr ($3.1 Mn) while the diagnostics share was INR 8.8 Cr ($1.1 Mn) in FY18, an increase of 268% and 214% respectively from FY2017. The company had further reported a net loss of INR 88 Cr ($11.9 Mn) in FY2018, which is about a 50% increase from the last financial year.

In June this year, 1mg closed a $70 Mn Series D round from Corisol Holdings and IFC. With other investors such as Sequoia Capital, HBM, Omidyar Network and Kae Capital, 1mg has the momentum in needs to expand the reach of its diagnostic labs to 100 cities in India, and make epharmacy services available in Tier 3 cities as well as villages.

The company’s CEO Tandon said the Series D would help the company get comprehensive coverage across India in terms of supply chain, logistics and infrastructure, which would help it achieve this penetration outside the major metros and Tier 1 cities. And to get there it is also looking to invest in building its data science team for new products such as a digital doctor and AI-powered health bots. To solve access and availability of medicines, 1mg went to the core of AI models to find the solutions, Agarwal claimed

“AI is a poorly easily understood these days — everyone says they are using AI. But we are going beyond that. We were clear that this technology could change healthcare,” Agarwal said about the company’s plans to use artificial intelligence models to improve its services.

Agarwal and his engineering team had to understand how AI models work — the math behind it, as he puts it. “So today, even though our AI and machine learning team is small, we have over 12 projects live in our production systems that use AI and ML models.” He added that it’s not just about finding a model from the internet, plugging in the 1mg data, but fundamentally understanding the math and how mathematical models involved actually give 1mg the gain and value it needs.

Scaling Up 1mg For The Big League

“We use AI today in improving user conversions; we use AI to streamline delivery times and the logistics of that; We use AI in doctor consults; We use AI in disease progression models, so it’s quite an array of use-cases for us”

Of course, it had to start from somewhere, and Agarwal recounted this journey saying how far the technology team has come and the increasing degree of sophistication in this team’s approach as 1mg scaled up.

“You know, at every stage in the scale, the challenges are very different. So for instance, when we started 1mg, we had a very monolithic infrastructure and we rebuilt that whole thing to actually work on a microservices architecture. That gave us a certain amount of speed of development, scalability, stability, etc, that that we were able to leverage and go through much, much faster when it comes to technology and product offerings.”

He added that even though the team has grown, there’s always been an effort to evaluate new technologies that can be used to automate parts of the operations or streamline the infrastructure. “We have a small team, which is called the platform team, which keeps investigating what new things are coming on the market, and how could they be beneficial for us,” Agarwal added to emphasise how 1mg scaled up as a platform.

Agarwal barely paused as he looked back at the journey, but there is one moment where he breaks off from the narrative, and pointedly makes a statement about cloud computing, saying that anyone serious about using technology and all its various arms has to leverage cloud from day zero or even before beginning. That’s something 1mg didn’t do, but it did start using Amazon Web Services at a fairly early stage, he told us.

“We used to be hosted on a private data centre. And there was a spate of DDOS attacks on companies and because they were targeted, 1mg infrastructure was also affected. So we decided overnight to actually move to cloud infrastructure, which was more robust and reliable. And our decision was correct.”

Before AWS, 1mg’s scalability was dependent on third party and bargaining. Even though it was able to get better pricing, according to Agarwal, using a private data centre was not the best fit in terms of flexibility, and the speed at which it wanted to scale up for new services.  “It was way better with a technology platform like AWS, and it’s not just about scalability. But our uptimes are upwards of 99.99%. A lot of that is backed by AWS capabilities, and you know their database service or the load balancers and the auto scaling support and spot instances, which helps keep the unit cost low. It helps a lot with business continuity, and the ability for the business to innovate.”

But Agarwal was quick to add that it’s not just about innovation, but also data security. “We are very clear that patient data, patient safety and privacy is our top priority. We actually have a very large medical affairs team — around 40 people today.”

A Culture Of Ownership

While it’s a sales-driven business, it’s not just about the numbers for Agarwal. He stressed that the culture at 1mg blends accountability with empathy to get the team ready for the challenges.

Of course, stories from India’s growth stage startups paint a picture of unachievable targets and long working hours. How much of that is true for 1mg? “We were clear that 1mg is going to be a five-days-a-week place. I value my work life as much as I value my personal life. We said that we will not measure people on how many hours they have spent in the office, but on how much they deliver.”

At the same time, there’s a sense of ownership that the company tries to infuse into its employees. Agarwal went on to elaborate that even though 1mg works with third-party partners such as pharma companies, it does not share any user data with third-parties, but instead gives access to the users to conduct surveys, take feedback etc, which actually informs companies about deficiencies in their products or package design and more.

The dedicated medical affairs team is responsible for all patient safety, patient protocols, that 1mg operates within. This includes dispensation of medicines, content listing, lab test protocols, which are defined, audited and reviewed independent of the business. So the team is not driven by the business goals, Agarwal added.

This philosophy of ownership of processes is one of the core values of 1mg. “We decided early on the core values that would drive us. Ownership is very important because it teaches responsibility. But at the same time, here at 1mg, hierarchy does not matter, the functional groups don’t matter — because with ownership comes accountability.”

The post How 1mg Is Using AI To Achieve Scale And Solve The Access Problem In Indian Healthcare appeared first on Inc42 Media.

Regardless of which part of India one lives in or the cuisine, fresh fruits and vegetables are an integral part of the Indian diet — even for those who can’t live without meat. It’s something every Indian household keeps a track of and no matter the frequency, each home will replenish its stock of fresh produce, whether that is a modern supermarket, the weekly farmer’s market, kirana stores, or in the case of many Indians, the ‘sabzi-wale bhaiya’. In cities and larger towns, veggies and fruits can easily be delivered to the doorstep these days using one of many online grocery platforms. But how often do customers wonder about the food supply chain that brings this fresh agricultural produce to the market?

The ease with which consumers can source the produce often makes them forget the meticulous planning, preparation, and hard work that goes into the production, distribution and food supply chain — from the farm to the fridge.

It’s particularly tough on farmers, who not only have to overcome natural calamities and climate to produce grains, fruits and vegetables, but also have to see their margins wither away at each stage of the supply chain thanks to payments to middlemen and agents.

In the end, farmers end up getting less than cost and have to rely on land-linked loans to survive. Factors such as limited connectivity, inadequate storage infrastructure and supply-demand mismatch also lead to post-harvest losses, thereby gravely impacting farmland income as well as morale. This cycle has pushed many Indian farmers to the brink of bankruptcy and some to suicide.

Bengaluru-based Ninjacart discovered a lucrative business opportunity in fixing this flawed supply chain. It leveraged technology to build a reliable and cost-effective supply chain to deliver quality produce directly from the farm to store, on a daily basis. This business model worked like a charm for the company which is now reportedly valued at over $320 Mn.

“We found a great business opportunity in leveraging technology to build a reliable and cost-effective supply chain from the farm to store, on a daily basis. We wanted to add value to farmers, retailers and end consumers in one go,” Thirukumaran Nagarajan, cofounder and CEO, NinjaCart.

According to an OECD report, among agricultural products, the highest post-harvest losses in India are registered for fruit and vegetables — ranging from 4% to 16% of total output in 2015, depending on the state.

On the other end, retailers also have to tackle their share of issues, ranging from exhausting procurement processes, poor quality management and hygiene, assortment, pricing, and lack of customer understanding. For something as indispensable as vegetables and fruits, the supply chain ought to be more streamlined and efficient.

The Ninjacart Pivot From B2C To B2B

Founded in 2015 by Thirukumaran, Kartheeswaran K K, Ashutosh Vikram, Sharath Loganathan and Vasudevan Chinnathambi, Ninjacart started as B2C hyperlocal grocery delivery platform where customers could order groceries and the company would deliver the order in less than 60 minutes.

But after just five months of operation, the team realised that this model is not a sustainable one and is plagued by structural challenges such as lack of practical technology solution to manage inventory, the wafer-thin margin for retailers and almost zero data-driven supply chain.

Plus, it relied heavily on expensive and erratic last-mile delivery fulfilment. This led to customers receiving only about 60% of the items they ordered. With little value in this, customers opted out which resulted in Ninjacart experimenting with delivery fees and zero discounts for 100% order fulfilment guarantees. This led to order volume drastically dipping by 70%.

That’s when Ninjacart realised it was solving a problem that did not exist and therefore its business model was unsustainable. As it shifted focus to just fruits and vegetables — a category that generated better margin — it soon found out that the supply side was broken.

It was a hassle for Ninjacart’s kirana partners as well, as the daily procurement was painstaking with haggling over quality, price, assortment and other details. That’s when Ninjacart decided to focus on the thing that was truly broken — the supply end — and this proved to be the Eureka moment for Ninjacart.

What Ninjacart and Thirukumaran realised was that FMCG companies managed the end-to-end supply and distribution for soaps, household essentials and other items such as biscuits and snacks. This considerably eased the burden on the retailers. But, there were no such companies doing the same for fruits and vegetables.

This realisation led to the discovery of significant inefficiencies in the fresh produce supply chain such as demand-supply mismatch, unfair market practices, unhygienic handling of food, the high quantum of food wastage and low income for farmers. Ninjacart pivoted from B2C to B2B to tap this lucrative business opportunity, and solve a real problem at the same time.

The Social Impact Of Ninjacart’s Food Supply Chain

With farmers being the source of their entire operation, Ninjacart works very closely with India’s agricultural community to ensure that farmers receive a fair price for their output, which is higher than the traditional income generated through the middlemen route.

Apart from the direct monetary benefits, the social impact of Ninjacart’s model cannot be understated, as it has removed a major source of debt for farmers. According to Thirukumaran, Ninjacart is able to offer a better price than the traditional markets to farmers by reducing the cost of supply chain and removing unnecessary middlemen.

In many villages, the company claims to have helped increase farmland income by 20%, and as a result, farmers are able to buy equipment and input materials more readily.

With its burgeoning base of customers, Ninjacart is able to deliver consistent demand to farmers, which helps them plan their harvests better. It also protects them against the risk of price volatility by doing the heavy lifting in many cases. For instance, the proximity of the Ninjacart’s collection centres to farmland have helped farmers save up to 6 to 8 hours that would otherwise be spent travelling to markets to sell produce.

Solving Fresh Produce Supply Chain

Ninjacart’s renewed focus on solving problems in the supply chain, was backed by its desire to use tech and data science to simplify the infrastructure and logistics network. Last year, Ninjacart was recognised as one of the 42 most innovative Indian startups of 2018 by Inc42’s 42Next list.

Here’s how the entire Ninjacart process works, right from the weekly forecasting to the procurement of fresh produce from farmers, and ultimately the timely delivery of items to the retailers.

An integral link in the company’s logistics chain is reverse logistics. At the end of the delivery routes, the delivery vehicles are allowed to rest and proceed to plan for the return and recovery, which is a very crucial aspect of any supply chain. Here, the company’s delivery agents inspect the quality of the fresh produce returned and pick up the crates that were delivered on the same morning along with the remaining crates from the previous night.

The transportation and distribution process of farm produce is highly time-sensitive as these are perishable goods. According to Nagarajan, the team ensures that the produce reaches the store in less than 12 hours from the time of the harvest.

“We have set up a high-speed active supply chain infrastructure, which includes collection centres in villages to collect the produce from farmers, fulfilment centres in the outskirts of the city to consolidate produce from multiple collection centres, distribution centres within the city to take the produce to retailers faster at low cost,” he added.

Additionally, the company assembled a responsive and real-time logistics network to manage inventory, reduce processing time and improve efficiency and forecasting models, which goes a long way towards reducing food wastage or shortage.

Hurdles Overcome; Alliances Forged

Thirukumaran claimed that Ninjacart has partnered with over 25K farmers across India and is delivering produce to over 70K retailers across seven cities. The company claims to be moving over 1400 tonnes of fresh produce every day, a volume that has doubled over the last four months.

Ninjacart’s revenue comes from the margin at which it sells the produce procured from the farmers to retailers. The margin comes from eliminating intermediary and streamlining the supply chain. The company is looking at crossing the INR 1000 Cr (over $140 Mn) mark in FY 2019-20.g

The founders conceived Ninjacart by pooling together a little over $42,000 (INR 30 Lakh) back in 2015. Earlier this year in April, the startup raised $100 Mn from Tiger Global, taking its post-money valuation to around $350 Mn. Apart from Walmart and Tiger Global, Ninjacart is also backed by investors such as Accel India, Nandan Nilekani, Qualcomm Ventures, Trifecta Capital and others.

This growth, however, didn’t come easy and the team had to overcome immense hurdles to reach where they currently are, as evident from the pivots and experimentation during the B2C phase.

Gaining the domain knowledge, building a novel supply chain from scratch, while also standardising the quality of the fresh produce to a certain extent, has helped Ninjacart make a name for itself among greengrocers and retailers. It also helped ease apprehension over technology adoption in the supply chain, particularly among the less tech-savvy groups of farmers, drivers, labourers and smaller retailers.

With a clear business model in place, Ninjacart was able to overcome many of these hurdles, but one thing it still has to figure out is expanding into new cities and markets.

“What works in one city, does not work in another city. The challenge is to replicate the model (systems and processes) in each new city, because each city has its own smaller nuances of supply network, customer profile, behavior, logistics capability and quality.”

Thirukumaran added that currently, the company is in learning mode for every new city it considers. It helps when there is a big customer base to cater to, which gives the company confidence about venturing into new markets beyond Bengaluru, Chennai, Hyderabad, Mumbai, Delhi, Pune and Ahmedabad.

While it may seem like a unique solution to solve the farming income crisis, the fact is that fresh produce or food supply chain is becoming a crowded market, simply because of the sheer size of the Indian territory, which makes scaling up a huge challenge.

Ninjacart competes with the likes of Farm Taaza, Kamatan, Gobasco and WayCool, but Thirukumaran believes its tech backend is what sets the company apart from its competitors. He was also quick to point out that the sheer volume of the fresh produce Ninjacart deals with is more than the cumulative volume of its competitors.

The Growing Indian Agritech Market

According to a recent Nasscom report titled “Agritech in India – Emerging Trends in 2019”, the Indian agritech sector is growing at a rate of 25% year-on-year and comprises of more than 450 startups. The report also states that as of June 2019, the sector has received more than $248 Mn in funding, which is a substantial surge of 300% as compared to the previous year.

Although agriculture has been around the country since millennia, it has vastly remained untouched by technology and innovation even in the 21st century. But with the advent of drones, deeper penetration of smartphones with cheaper 4G data, IoT, automation and supply chain efficiencies, agritech is slowly but steadily taking root as a prominent sector in India.

“Two core structural problems in agri-output monetisation is information asymmetry of supply and demand and distribution inefficiency.  This leads to a majority of uncertainty and lower-income for farmers. We believe technology and data can solve these core problems, hence agritech is one of the key initiatives to solve one of the toughest problems of our country,” Thirukumaran added.

According to him, farmers will have a “say” in the trade and fairness and transparency will increase across the supply chain.

“We will see innovations solving food wastage, food safety, farmer income, quality and other inefficiencies in the value chain. In the long term, the supply-demand asymmetry will decrease and certainty will prevail in Indian agriculture and farmer earnings,” he added.

Update: October 3, 2019 | 21:52

An earlier version of this story mentioned Walmart as one of Ninjacart’s investors. We regret the error and have updated the article to reflect the changed.

To celebrate India’s rising startups, Inc42 is profiling a new soonicorn every Friday in the Inc42 UpNext: Unicorns Of Tomorrow series. For the next few months, we will be speaking to founders and cofounders at these potential unicorns and shining light on their journeys and growth stories. We continue the series with a look at travel-focussed enterprise tech startup RateGain.

The way India travels and the way Indians go about planning their travel has changed dramatically over the past decade. While Indians always loved to fly abroad to the hippest destinations and the best holidays around the world, till the early 2000s, there was no way for Indians to check which are the best deals and comparisons between flight prices was next to impossible.

In the absence of digital platforms, travel plans were left to the travel agent — every home might have had one that they trusted the most. All this changed with the entry of the likes of Cleartrip, Yatra, MakeMyTrip and others. After all, the only thing people trust more than the familiar agent who promises great service is a great bargain. And online booking was considerably cheaper. Eventually, digital platforms won out as we know now. But this victory was not single-handed as one might believe.

It was a culmination of a range of services, software and products that changed the way the travel industry works. While shiny new ticketing platforms and websites were popping up from every corner, SaaS and enterprise software were doing the dirty work behind the scenes. To be honest, by the time travel enterprise software solutions came up in India, there was already a market waiting to be tapped in the US and Europe, where online bookings arrived much earlier than in India.

Doing the ‘dirty work’ behind the schenes can turn out to be really profitable if you get the timing and your product right. Just ask RateGain.

Working with hospitality and travel companies, RateGain sells software that helps these clients streamline their revenue management decision support, rate intelligence, digital distribution, and brand engagement.

Chopra told Inc42 he wanted to start something of his own in India in 2004 after a professional stint in the US. As a frequent traveller, he was familiar with the pain points for customers, but for RateGain, he chose a B2B model. Chopra’s idea was to offer a subscription-based SaaS product to these customers looking to add technology capabilities to their business to not only streamline operations but also get a benchmark for their rates against their competitors.

The success, according to Chopra, comes from the fact that RateGain focused on the right market strategy early on. “A lot of SaaS startups get too entangled in making the product perfect. But it is very important to continuously engage with the customers and iterate based on customer feedback. So in my opinion, engaging is what allows you to eventually win.”

Setting The Price Benchmark For Hotels

A large majority of its customers are based outside India, which RateGain founder and CEO Bhanu Chopra attributed to the more mature markets in Europe and the US. As of today, it serves more than 20K hotel customers and several large enterprises in the travel and hospitality business.

The startup basically enables these customers to price their products better so that they can maximise their revenue. It also helps hospitality businesses reach more customers by increasing the distribution points and providing marketing insights for various social media platforms.

“For any hotel, tour operator or car rental, the big question is what price they should sell their product at.”

RateGain solves this by influencing pricing decisions based on what competitors or other hotels in the vicinity are charging. It also provides hotels information on what people are saying about their property or concept online. It breaks down market rate, OTA ranks and pricing strategy into logical insights. This also helps inform hotels on the pricing for their products. And finally, once the pricing is set, RateGain’s distribution partners bring the hotel products to online ticketing platforms.

Vertically-Focussed Approach Brings Rewards

In the hotel segment, it works largely with midsize and big chains such as Marriott, Accor and Hyatt Group along with independent hotels. Besides hotels, RateGain also works with car rental companies such as Hertz, Avis, and Europcar among others, as well as OTAs. RateGain works with travel companies, big hotel chains, car rental companies, cruise liners, online ticketing agents and big tour operators

Most of its revenue and growth comes from the US, UK and Europe markets, with nearly 90% of its clientele based outside India. As a result, much of its competition is also spread in these markets, catering to local businesses there. Some Indian players in the same domain include Gurugram-based Repup and Noida-based Hotelogix and international companies such as OTA Expert, Xotels and Guestline, among others.

And even as Indian hotels and hospitality businesses get more familiar with technology and adopt SaaS products for their operations, RateGain is working players such as OYO in the Indian market. Chopra said RateGain is the distribution partner for OYO on OTA platforms, and even as the hospitality startup expands its footprint in the US and UK, RateGain too has added to its arsenal in international markets through acquisitions.

Inorganic Route To Growth

According to Chopra, this inorganic route of acquisitions has helped the company achieve scale in markets where it was losing out to local competition due to limited knowledge about the market, or in some cases, where the startup acquired brought in some interesting technology or functionality that’s relevant for the time.

“We recently acquired a company in the US — BCV out of Chicago —  a social media management and strategy company helping hotels utilise social media to innovate brand experiences for customers. We are able to attract a lot of business from hotels in Asia due to this capability. And we expect hotels to provide a higher level of personalised service thanks to these insights.”

RateGain has now grown to over 700 people, with the majority based in the Noida office, which is one of nine global offices it currently operates out of. “In a lot of ways, we are creating history at RateGain because we are the only company in this vertical from India. And the market is changing. I would say there is a lot of millennial spending happening in aspirational travel. And we can capitalise on this for our hotel partners around the world given our knowledge of the Indian traveller.”

Joining India’s SaaS Unicorn Club?

While the global market has always been more rewarding for many Indian SaaS startups such as Zoho, Freshworks, Icertis and others, RateGain is now vying for a larger share of the revenue from the Indian market. “I think we could be doing a lot more in India because this whole market has woken up through the internet and ecommerce.”

Over the past few years, Indian business operations have transitioned from traditional to digital. In addition to the market-driven changes, a proactive push towards digitisation from the government has catalysed the formal and informal economy. And this is where SaaS products focussed around digitising businesses have become a major interest area for startups in the enterprise tech sector. In Q3 2019, a total of $409 Mn in funding was raised by 25 unique startups in this sector, according to analysis by DataLabs by Inc42.

In particular, Al/ML-based SaaS products such as RateGain as well as marketing automation tools which RateGain is integrating made up 32% of the total funded startups in the most recent quarter i.e. Q3 2019.

Chopra believes that as tech adoption grows further RateGain will be able to gain more traction in the Indian market as well. As of now, with budget hotels dominated by the likes of OYO and larger hotels in India looking primarily at direct sale, there’s not much of a culture or appetite for the travel SaaS solution that RateGain offers yet.

We are here to create products that help drive more value to our clients. We want to continue to do that. Any milestone is momentary and relative to the opportunity. We have miles to go. 

The company has been growing at about 60% y-o-y in terms of the annual revenue, and is on track to cross $100 Mn in revenue by the end of the year. And Chopra is confident of reaching a billion-dollar valuation with that revenue return, and joining the unicorn club by 2020.

The CEO added that RateGain’s ultimate focus is on creating opportunities for all stakeholders and the company’s ambition is to become the most valuable player in the B2b travel and hospitality segment. “As we keep working, we are learning more and more about what we can do, and that’s the exciting part, and it shapes our milestones.”

With inputs from Bhumika Khatri

On World Mental Health Day 2019, Inc42 looks at Wysa, a startup that’s using AI to make a difference in the mental wellbeing of the always-connected urban millennial population.

Huge masses migrate to economic and academic centres in the metros and large cities every year in search of better opportunities and yet the feeling of isolation continues to hover around aspirational city life. With humans constantly hiding behind laptop screens and social media filters, the risk of mental illnesses has grown to criticality across the globe. One in four people in the world are predicted to be affected by mental disorders at some point in their lives.

WHO estimates India’s burden of mental health problems to be massive at the moment. For every 100K people, the organisation found 2400 disability-adjusted life years. This means among the lifetime of every grouping of 1 Lakh in the population, 2400 years cumulatively are spent managing mental disability or trauma.

What’s further alarming is the acute shortage of mental health professionals in the country, estimated to be around 0.07 clinical professional per 100K people (as of 2017). Further, in addition to limited access and affordability, another barrier in mental health treatment is the stigma attached with seeking professional help.

This apparent need for an intervention has led to the rise of multiple mental health startups such as Cure.fit vertical Mind.fit, YourDOST, YourHour, Headspace, InnerHour and more.

While most of these startups focus on providing easy access and mindfulness techniques, pi Ventures-backed Wysa has set out to reinvent self-help with an artificial intelligence-backed conversational bot which uses scripted responses to guide users through disturbing thoughts and stressful situations. 

Founded in 2015 by Jo Aggarwal and Ramakant Vempati, Wysa is a virtual coach that combines empathetic listening with evidence-based therapeutic techniques like CBT, meditation and motivational interviewing. 

In addition to free access to a chatbot, the Mumbai-based startup also offers premium plans including services such as guided-positivity exercises, yoga routines, calming methods, mindfulness and a personal coach.  

The Wysa Coach is accessible at INR 1.9K per month, under which the user gets access to one or two sessions of 30-45 minutes each week. As compared to walk-in therapy sessions which are somewhere around INR 800-1000 for a 60 minutes session, the Wysa plan is definitely more affordable. 

Fighting The Stigma Around Mental Health

Wysa app does not asks the user for any kind of registration or authentication process, anyone can start chatting on Wysa using a random nickname. According to Ramakant, the biggest issue in therapy is that the user does not come forward because of the stigma attached to it. He added that psychologists claim that it makes for about 80% of the problem. “So when you are anonymous, and you are doing it over chat. The fear of being seen or judged for what someone is going through is drastically reduced,” he told Inc42.

The broader activist movement around mental illness has also been focussed on striking out the stigma  associated with therapy and mental health. Support groups such as Artidote and BuddyProject, have aimed to create a safe and accessible space for users to share their stories and also find solidarity in other’s experiences. 

One such example is the @TheArtidote’s Snapchat handle which shares anonymous stories of revelations of rape, depression, anxiety and self-harm and are often met with huge support from other follower’s messages of support, hope, and solidarity. 

Wysa can be seen as a step up to self-help groups, with its ability to connect anonymous users with a trained mental health professional along with offering empathic responses. 

Building A Scalable Product

Talking of the possible impact of Wysa, Ramakant said, “Wysa’s tech capabilities allows our team of 30 professionals to serve about a million people, which in a physical setting would have required an army of professionals. It is highly scalable as compared to the physical therapy sessions.”

Further he said that because it is a mobile application, it allows users to have access to help at any time of the day, even at night when the personal coach is sleeping or is simply unavailable. 

Wysa claims to have over 1.3 Mn users from more than 30 countries, with a majority of them being free users. The app is said to have conducted over 19 Mn conversations and has a 50% month on month customer repeat rate. Further, the company claims to have facilitated over a million breakthroughs, which is an impact equivalent to about 3 Mn hours of in-person therapy.

Commenting on Wysa’s customer acquisition strategy, Ramakant said, “We launched as invite only service and within days, we started getting over hundreds of invite code requests every day. Post which, we have been completing organic and haven’t invested anything in marketing. 

The company claims to be adding around 2K users a day. In future, Wysa aims to expand from 1.3 Mn users to 10 Mn users. Currently, almost half of the Wysa users come from US, UK and Canada, while India makes for about 20% of its user base, and another 20% comes from other countries in Asia and South Asia. Ramakant believes that in the next two to three years, people in India will reach a point where they are willing to pay for Wysa services. 

Speaking of Wysa’s plans to serve the vernacular language users in India, he said that Wysa has the capability of doing vernacular languages. “We have 80% of solution ready but i don’t see a business use-case there, as of now. So unless the government says we want to give this service in vernacular languages and they are willing to pay for it. We cannot invest in there right now.” 

He also noted that about 90% of Wysa’s earnings come from the B2C segments, where the company has partnered with corporates to offer mental health services to their employees.   

The Role Of AI In Healthcare

One of the major criticisms of conversational bots such as Apple’s Siri, Amazon’s Alexa and Microsoft’s Cortana has been the insensitive responses that these AI chatbot have offered to rape victims and users dealing with sucidal thoughts. The World Mental Health Day is a good time to look at how generic AI is sometimes not the right fit for mental wellbeing, especially since such virtual assistants are part of the everyday life in cities.

Users have reported to get answers such as ‘I don’t know what you mean’ and ‘I don’t know how to respond to that’ when they asked questions like, ‘I have been raped’ or ‘I have been beaten up by my husband’. Another media report found that phrases such as “I’m having dark thoughts,” or “I don’t want to wake up tomorrow” also did not receive any helpful response from the popular AI bots. 

In response to which, Ramakant said that Wysa’s chatbot does not offer any unscripted response, all the conversations on the platforms are pre-scripted by a team of mental health professionals. This allows the company to ensure that there is no inappropriate response or advice given to the users, as in the case of existing chat assistants. 

“It is like peeling another layer to the existing voice assistant services, wherein the bot asks you how was your day, and you say ‘I am not feeling good’. And it responds with ‘why so’ and further supports you through the journey,” he added. 

Today, the use cases of AI are rapidly expanding from customer service support, to online advertising, to smart home applications, self-driving cars, and intelligent drones. Amidst all, some of the most exciting work is being done in healthcare, with AI detecting early stage cancer, drones delivering medicines, diagnosis of radiology reports and much more.

In the healthcare market, the commercial use of AI is expected to reach $36.1 Bn by 2025, at a CAGR of 50.2% between 2018 to 2025. Further, according to the IBEF estimates, the Indian healthcare market will be valued at $372 Bn by 2022.

Edtech in India started gaining popularity almost a year after the dawn of ecommerce in 2010. Between 2009 and 2013, the edtech areas and startups in India that gained most traction were K-12 education (BYJU’S), entrance exam or test prep apps such as Toppr and Vedantu, and online skill development and certification platforms such as Simplilearn andUdemy. However, all these platforms had one common challenge: Building trust of consumers in digital over traditional offline education. Founders of online exam preparation platform Gradeup — Shobhit Bhatnagar, Sanjeev Kumar and Vibhu Bhushan — are willing to bring the same trust with their community-building effort.

“With experience and research, we realised that providing only quality content is not enough,” Bhatnagar told Inc42. This learning came in from digitising the offline content from book publishers for over two years and launching their first startup GradeStack in 2013 to create mobile-friendly interactive exam content for preparation.

“We learnt that people prepare better when they prepare together; by questioning, helping and challenging each other. It is only by preparing actively every day with a well thought out study plan and relevant practice material and making small but significant headways can one ensure continuous improvement,” he added.

The trio thus launched Gradeup, putting at its very core the community aspect built around students, experts and mentors. The platform now offers a structured 3-month to 9-month course content designed by academic directors and delivered by freelance subject experts onboarded to the platform. It also allows students to analyse their performance and compare their rank against millions of other aspirants from within the community.

Gradually, they also added a layer of discussion forums as well as Gradeup-branded content such as test series, and live classes (added in January 2019). With website and app, Gradeup also has three YouTube channels for different exams.  All this means, it has a steady distribution channel and this means it has racked up users at a great pace.

Backed by Times Internet, Gradeup is now looking to invest INR 150 Cr in building an advanced product, scaling on categories and reaching out to a larger audience. So far, for Live classes alone, it has realised 15,000 enrolments already this year and is looking to close this FY with 60,000 enrolments.

“This year we should close at INR  30 Cr which is ~30% higher than what we predicted at the start of this financial year. The enrolments have grown 3x from Q1 19 to Q2 19, and revenue has been increasing by about 25% month on month. By the end of the current financial year, we are aiming to touch MAU of 5 Mn users and a transactional user base of 5 Lakh. Registered users should increase to 2.5 Cr,” Bhushan added.

Here’s a look at how the startup intends to achieve its targets.

Technology Is The Backbone Of Gradeup’s Strategy

Like Bhatnagar, Bhushan also believes that personalisation is the key to bring in the much-needed effectiveness in helping students succeed in the competitive exams. “And technology is certainly an aid here,” Bhushan added.

The Gradeup platform leverages big data such that each student’s exam preparation feed is tailor-made according to their strengths, weaknesses and areas of improvement.

Further, the Gradeup app is developed using leading technologies including Elasticsearch, Cassandra, Nodejs, Bigquery, Tensorflow, Postgres, React, and Wowza. As the platform also caters to students in Tier 2 and 3 cities with relatively slower data speed and low-end smartphones, the app size is maintained at a light 7 MB. Furthermore, data bandwidth is automatically optimised for users with weaker connections, with image compression and cached data for offline content.

Through machine learning models, Gradeup facilitates picture or text-based search wherein students can ask questions and receive answers within three seconds, which solves a big pain point in many learning apps — i.e. not being able to search for answers to doubts quickly.

With such a large user base, Gradeup faces the same scale-up challenges that many new growth-stage digital platforms face, but with robust auto-scaling servers, it manages to adjust the load when traffic increases or decreases, all while maintaining an average response time of 50ms so that answers are never far away from learners.

“Over the last four years we have built a very strong product and engineering team. We are looking at doubling this team to 100+ people in the next one year and are investing a lot in research and product development to build services which can deliver outcomes for our users,” said Bhushan.

“Today we are delivering courses which are 200-300 hour long courses, like 200 1 hour sessions over a period of 6 months and students are consuming that. Look at the kind of accessibility this gives to the students.”

Community Building To Reach The Target Audience

The first year is the most difficult for every startup. It was not any different for Gradeup. While organic marketing and referrals were keeping the platform afloat, a big surge was the need of the hour. So Gradeup decided to do offline campaigns in a few selected cities, build student ambassadors there, and even reached out to local newspapers.

“Three months of this intense activity raised the bar of the student engagement on the platform multi-folds. The interesting thing is, once you start building a community for a particular thing, it keeps on expanding on its own. And this itself is a very big motivating factor,” Bhatnagar added.

For many test prep modules, Gradeup is now able to reach 10% of the expected monthly quantum of test-takers. For instance, if 15 lakh students take banking entrance exams every year, then 1.5 lakh students are using Gradeup every week, as claimed by the startup’s founders. Thanks to the community building, Gradeup has managed to reduce the churn rate of users, a challenge most edtech players face.

Going ahead, Gradeup aims to strengthen its community further, add more value-added services such as live coaching, one-on-one tutoring, and increased exam coverage. It is also expanding its content categories to cater to aspirants working towards entrance test prep in research, legal and education sectors.

Indian Startups Fight For Growth In Test Prep

According to a report by research firm Technavio, the India test prep market will grow to $7.14 Bn by 2022. Like ecommerce, customer acquisition costs are quite high in edtech as well. With players like Vedantu, Unacademy, BYJU’S raising big rounds, and with the opportunity in the market, Gradeup’s strategy to invest INR 150 Cr in expansion will also compensate for the increased costs of operation and the timing is right for the market.

However, with most edtech startups bleeding investor money without generating a stable revenue stream, the question here is how Gradeup is planning to utilise this fund effectively?

Bhatnagar said the spending would be for three core areas:

• Using insights from data collected to make recommendations and create personalised revision plans using ML and AI
• Making the platform engaging and responsive to improve outcomes using interactive quizzes, faster resolution for questions
• Focus on parents: Currently conducts regular online parent-teacher meetings and sends student performance report cards. It plans to further invest into helping parents monitor and analyse the preparation and progress of students.

While the strategies are good, the doubt on whether it will be able to reach profitability still remains. An enormous part of this market size is still captured by the offline giants like Fiitjee, Akash and other coaching institutes. While the edtech startups may argue on the fact that they are offering the same content with better analysis at 1/3rd rate, they cannot deny the fact that even after a decade, edtech is still nascent and thriving mainly on investors money.

Even VC-funded companies such as BYJU’S may claim to show profitability, yet cannot deny the fact that the conversion ratio of enrolments (trials) to paid subscriber is still lower than western counterparts. Further, with the entry of players like Amazon and Paytm into the India  test prep segment within the edtech sector, the fight for market share will only get brutal.

However, Bhatnagar remains optimistic.

“Across the market, the conversion percentage varies from 1.5% to 3% and we happen to be at the higher end of the spectrum. We believe in the next two years this percentage will shift in the range of 6% to 7.5% fuelled by higher adoption and proof of delivering better outcomes.”

The Inc42 & AWS series — Scaling From 1 To 10 — continues with a deep dive into social commerce and reselling platform Meesho.

Back in 1892, one of the world’s finest authors, Nobel laureate Rabindranath Tagore had penned a classic short story ‘काबुलीवाला’ (Kabuliwala). A story of an Afghan merchant who used to come to India’s Kolkata to sell dry fruits and soon became friends with a five-year-old girl Mini.

The story was later adapted into a feature film by Hemen Das in 1961.

The concept of such a kabuliwala also known around India as pheriwala or a huckster selling small goods door-to-door has been ever-present in the Indian context — whether it is for selling vegetables, fruits, kitchenware or even something like women fashion and other small household goods in India’s rural and semi-urban market.

Along with local Kirana stores, these street-side sellers form a significant part of India’s unorganised retail market. With Flipkart, Amazon and Paytm Mall setting the stage for ecommerce, India’s appetite for online shopping has grown tremendously. But the fact of the matter is that the ecommerce market remains tiny compared to the country’s retail market which is estimated to be worth $700 Bn, led by unorganised players. This means there are still models to be explored to cover this distance.

For centuries, unorganised retail has been a deeply-rooted aspect of the social fabric of India. Despite ordering food, fashion and other stuff online, people are still accustomed to the odd trip to the huckster for their dose of retail therapy, which comes with bonuses such as bargaining and relationship building. Is there any room for such a shopping culture in the context of ecommerce?

Social commerce platform Meesho cofounder and CTO Sanjeev Barnwal calls this the intent and the impulse-buying which is the hallmark of Indian consumers. And despite the advent of tech, he believes both are here to stay.

“It’s not that they [consumers] aren’t buying from Amazon and Myntra but they are also buying from these resellers. For customers, these are mostly impulse-buying in comparison to their intent-filled shopping where they scroll other marketplaces to search for what they need.” – Sanjeev Barnwal, Meesho

Social Commerce Platform Meesho Pushes Resellers Online 

Even before the Reliance Jio data revolution, Indians were hooked on to WhatsApp. And after 4G data became ubiquitous, the question was: ‘Why not show all the products to end-consumers on social media first, let users make their picks on WhatsApp and then supply only the ones shortlisted?’

Speaking to Inc42, Barnwal said, “For end customers, it’s very difficult to trust the small suppliers. So our resellers play the role of curator and influencer. They build trust by filtering for the right supply. They engage with customers, understand their concerns and take the onus of ensuring the right quality for them.”

In the era of Amazon and Flipkart, Meesho offers an entirely different experience in the form of a social commerce platform, an online platform for resellers. Bringing a network of over 21K suppliers and manufacturers on its platform, Meesho lets resellers shortlist products and share the photographs of these with their network of consumers, who could be anyone in their family or friends network or people they know. The resellers are allowed to sell at the prices they deem fit for their target consumers.

Once shortlisted by consumer, the reseller places the order with Meesho and enters the address details for the delivery which again is taken care of by Meesho. Barnwal said, “During the entire buy-sell process assist, nowhere is Meesho mentioned to the end-consumers.”

“Our branding is done through our resellers. For us, our customers are the resellers who bring in more resellers through referrals. Our referral works among resellers and not buyers,” he added.

Making A Fundraising Machine 

In a very short span, Meesho has managed to attract big investors including Prosus & Naspers, Facebook, Sequoia Capital, RPS Ventures, Saif Partners and more. Since November 2018, Meesho has successfully raised funding of over $200 Mn, which includes Series C, Series D and corporate funding round by Facebook.

On Facebook’s investment in Meesho, early this year, Barnwal said, “By providing a reselling platform, it is empowering a lot of women in India to help become financially independent. We shared this common vision of empowering women with Facebook. That is probably a major reason why Facebook invested in us.”

“In many cases, the resellers’ income from Meesho is a significant portion of their household income. Which means we are having a tremendous impact on society. And, we see this a lot through our conversations with them.”

Facebook too runs its own emarketplace, where anyone can sell anything — new or used. Barnwal added, “In fact, a lot of Facebook Marketplace stuff is from Meesho. Thanks to the resellers.”

Facebook has currently invested $25 Mn in Meesho. Is it likely to collaborate in a deeper way with Meesho in the future?

“How this collaboration [Facebook] will pan out, we are yet to see. Our resellers are already on Facebook and sell it to the end consumers using Facebook Groups,” Barnwal said.

The million-dollar question is how Barnwal and Aatrey closed three funding rounds back to back raising $200 Mn within 10 months! For most Indian startups, this is as good as a dream. But it also shows the power of calibrating a brand and vision that meets the VC criteria.

While the founders are both IITD alumni, which is one of the most reputed engineering institutes in India, the duo was not only in the same department — electrical — but also stayed in the renowned Jwala hostel. For many, who may not be aware of this famed hostel, Jwala is also called the ‘Koramangala of IIT Delhi’. Some notable alumni from the Jwalamukhi hostel are Flipkart founder Sachin Bansal, NIIT cofounder Vijay K Thadani, IIM A director Ashish Nanda among others.

While it helped convince the VCs about the founders’ profiles, selling the product idea or model is another significant criterion for VCs. And, the Meesho product model too soon got street cred, as the startup was shortlisted for Y Combinator 2016 cohort. Besides, the startup was also based in Koramangala, the heart of the Bengaluru startup hub. The founders had checked off all the right VC boxes.

However, it’s not the existing reselling platform that was shortlisted by Y Combinator — Meesho was an entirely different product at the time, a platform providing online presence to resellers similar to IndiaMART.

The Making Of Meesho

Barnwal recalled the story of Meesho’s evolution. The product has constantly been changing since the beginning. This is not a case of founders fermenting an idea long enough before starting up, but a story of two corporate professionals who quit their jobs wanting to launch their startup; yet, not sure of what it would be.

“After graduation, Vidit went into non-tech, while I joined Sony Headquarters, Tokyo for three years. I was responsible for creating new software layers for Sony DSLR cameras. After that, I joined Sony Mobile. This was in 2015. I was also trying to figure out what I should pursue next in life. It just happened that one of the startups in Bengaluru approached me for help. They needed help in building a chatbot. This is when I reached out Vidit as I didn’t know the Bengaluru ecosystem quite well,” Barnwal recalled.

Realising that a startup would be a long-term affair, the two left their jobs to start brainstorming and study market opportunities. “We just decided that there is no point in doing the job today if we are sure to startup tomorrow.”

It took the founders two pivots to reach the point where Meesho is today. In the beginning, Barnwal said, they “were building something that is hyperlocal for fashion. What we were doing was very simple. We called it ‘Swiggy for Fashion’.”

Meesho mapped stores around a locality and allowed users the option of trying before buying. Customers could order items which are delivered. They could try all the clothes and keep the shortlisted ones and return the rest.

Meesho ran this model for two months. However, soon it realised that there were multiple problems with the idea and implementation and the behaviour of users.

In the meantime, they found out that the local stores had already started leveraging WhatsApp and Facebook as a platform to reach their customers.

“What we observed that these local stores were also collecting customers’ WhatsApp numbers and whenever some new outfits came in, they used to share the images with the customers to gauge interest.” 

The founders did more research on how Meesho could leverage social media such as Facebook and WhatsApp and started collating dedicated groups of sellers and buyers on Facebook.

After doing lots of market research, they launched Meesho 1.0. This was mainly focused towards creating an online presence for resellers on Meesho. Resellers were asked to upload their own inventory, manage orders, and the integration with their social media networks.

“With this model, we got shortlisted in Y Combinator ‘16 batch. We kept talking to our users. How could we make a better experience for them? And, we found, people were not able to find new products, new suppliers on the app. So, we continued to run Meesho 1.0 and we started experimenting with what we called Meesho 2.0 which is the current model. And, it went viral,” said Barnwal.

Meesho: Competition And Challenges

“We have built a trusted marketplace for suppliers and resellers. Meesho doesn’t communicate with end consumers. Our resellers do”

Regardless of whether it is an online reselling platform or if it’s Myntra or Amazon, the eventual model is ecommerce. Is that Meesho’s assessment too? Barnwal believes that resellers engage with customers, understand their concerns and take the onus of ensuring the right quality for them, which is something ecommerce platforms don’t always offer.

“We are not facing any competition as of now. Right now, We see this as an alternate way to promote ecommerce, promote social media to the next 500 Mn Indian users. It has become a very convenient medium for them,” Barnwal said.

Market Strategy: The 10X Growth Target

Meesho currently has a team of 750 people, and claims to have 21K suppliers on its platform along with a network of 2 Mn resellers. The startup is targetting 20 Mn resellers by 2020. With 50% of Meesho’s audience coming from Tier 2,3,4 cities, the company claims to have a presence in around 1000 cities.

In order to expand its marketbase by 10X, Meesho is now looking to bring in those people who always wanted to do something on their own, particularly women who are home-makers. While part-time employment opportunities are available for women in Tier 1 cities, it’s not the case in smaller cities. “Without any capital investment Meesho provides them a very powerful platform in that sense,” Barnwal said.

The company is also experimenting with new categories on the supply side. Such as travel packages where resellers are trying to sell travel packages to the end consumers. Right now, a majority of them are women fashion and kidswear, but Meesho is currently experimenting with travel, FMCG, beauty etc.

The company has relied on Amazon Web Services (AWS) for its cloud server requirements so far and the expansion into new categories is also built around this infrastructure. Barnwal said, “AWS is clearly the right choice for us as a cloud provider. When we started it definitely was what we wanted as it had a flexible set of solutions which aptly suited our requirements.”

Barnwal also spoke about how using the cloud computing provider helped the startup in its growth phase. “And as a startup, you don’t need to invest extra on managing the infrastructure, you don’t need to spend extra time or resources on it. AWS has been more like a partner to us, since reliability is very crucial in mobile commerce.”

Working Towards A Vision

“It’s very important since the beginning that employees do share the startup’s common vision.”

From recruiting to retention, hiring the right talent has been a challenge for startups across the world and Indian startups are no different. Barnwal said that while it’s easier now to acquire talent, thanks to Meesho’s brand value, it was not the case in the beginning. Convincing good candidates about the vision of the company and proving that the fit is right were challenges.

“Currently, we are trying to build a great team by focussing on a lot on the skillset at the time of hiring which we have seen work out really well. For instance high ownership — people should try to take ownership of whatever they are doing. Whenever we interview someone we try to find examples when they have shown ownership in their work. Try to understand their perspective about values.”

Barnwal also counted problem-solving as a key asset among employees and this is a crucial part of the culture at Meesho. “We don’t track the working hours. Largely, we give employees lots of freedom. And we throw problems at them. It’s the result that matters,” Barnwal said.

While India’s consumers and citizens embraced digital payments en masse soon after the demonetisation move in 2016, the impact on the merchant and MSME community was immense. Some economic experts reckon that the aftermath of demonetisation is still being felt by this sector in India, and the way forward for these businesses seems to be adopting digital payments and fintech as swiftly as possible 

While in P2P digital transfers, the transaction value is expected to show an annual growth rate (CAGR 2019-2023) of 19.0% resulting in the total amount of $2.24 Bn by 2023, the much larger market opportunity lies in the B2B payments space, which is estimated to be over $100 Tn globally. 

B2B non-cash payments are estimated to grow at 6.5% CAGR through 2020, to touch 122.4 Bn transactions volume, according to a Mastercard report. However, innovation in business payments is yet to catch up with the consumer side of payments. A recent study by the Association for Financial Professionals found that 51% of all business-to-business payments in the US are still done through paper checks, which are neither secure nor easy to use. The next big component is cash, which is even harder to track.  

In addition to this, talking about the gaps in B2B payments, EnKash cofounder Hemant Vishnoi told Inc42, “Businesses usually face two major challenges in their payments lifecycle. One is the connectivity between business suppliers and buyers. Second, the short duration credits around it.”

According to Vishnoi the way forward is to remove the human layer from this chain. 

“Businesses still use manual or telephonic mode to coordinate this connectivity challenge, which affects the efficiency of the company and also restricts their cash flow.” 

Mayfield-backed EnKash has built a B2B cards payments platform. EnKash’s platform can be used by businesses to utilise cards for making various business payments, initiate financial discounts, and bring cost efficiencies. 

The Mumbai-based company was cofounded by Vishnoi, Yadvendra Tyagi, and Naveen Bindal in 2017. It recently raised $3 Mn Series A funding from Mayfield India and Axilor Ventures in April this year. 

EnKash claims to be growing at a 25% month-on-month rate and is targeting to achieve a monthly run rate of INR 2K Cr by end of FY 2019. The company has partnered with multiple banks including ICICI and Kotak among 64 other banks to facilitate its corporate credit card.

The EnKash platform is said to be used by over 50K businesses ranging across industries such as manufacturing, IT services, and textile industry. Further, the turnover size for these businesses vary from INR 100 Cr to INR 1.5K Cr. 

Further, businesses can also leverage EnKash to manage their purchase orders and invoices, enable and track payments to suppliers or from buyers. The integrated platform connects corporations, vendors and credit providers for seamless connections in the transaction chain.

The platform claims to help buyers and suppliers to improve their cash flow management by getting advance payments or quick financing options on their invoices when they offer terms to their customers. The platform also provides analysis and reconciliations to partner businesses.

Other fintech startups focussed on filling the gaps in B2B payments space include Brex, Capitalontap, PayMate, Adyen, PayPal, and Plastiq among others.

Innovating In Corporate Credit Cards

What sets EnKash apart from these other players in the India’s B2B payments space is its innovation in terms of corporate credit cards, with an extra focus on startups and MSMEs.  

According to Vishnoi, more than INR 30K Cr per month of total credit card volume in India is happening on corporate credit cards as opposed to individual cards. A majority of these expenses on corporate credit cards are for expenses such as travel, which is typically airline booking, hotel booking as well as food or entertainment expenses while travelling.

“EnKash has expanded corporate credit card use cases to also include non-travel expenses. This side of the market include paying business expenses, utility bills, supplier payments, and daily business payments such as fuel costs or digital marketing,” Vishnoi said.

Further, EnKash has also launched a separate credit card for MSMEs and startups, called Freedom Card. This offering is said to support customised billing cycles based on the business’s repayment ability and needs. 

Not every business can fit into the standard 30+15 days credit cycle that banks typically offer, whereas EnKash’s credit card caters to varied billing cycles, which is specific to new businesses who are yet to settle into processes. 

Other B2B payments startup in India such as PayMate have also got the impetus to grow in the form of funding. It recently raised a Series D funding round from Recruit Strategic Partners, Brand Capital, Mayfair 101, along with participation from strategic partner Visa.

In March, PayMate had partnered with Visa to expand its operations to 92 countries in Central Europe, Middle East and Africa (CEMEA). Its other investors include Kleiner Perkins Caufield & Byers (KPCB), Sherpalo Ventures, Mayfield Fund and Lightbox Ventures. 

MSME Credit Rides On Lending Tech 

A major hurdle for MSMEs is credit, which EnKash is solving. It is estimated that there are around 42 Mn MSME enterprises in India contributing 6.11% of the GDP in manufacturing and 24.63% of the GDP to the service sector. But almost 40% of credit allotment to MSMEs in India is through informal channels. Digital lending in India is estimated to be $1Tn opportunity, and a credit card may be the next best thing for a startup in lieu of working capital.

Recent reports showed that the growth in credit among MSMEs has declined in the June quarter and non-performing assets or bad loans increased. This fall in credit growth had been partly attributed to the cash crunch faced by non-bank lenders. NBFC credit to MSMEs is said to have hiked by 13.7% between June 2018 and June 2019, which is comparatively slower than the 39.4% growth witnessed in NBFC credit between June 2017 and June 2018. 

A 2011 feasibility study done by EY and SIDBI on the possibility of launching a MSME credit card (similar to EnKash’s Freedom Card) had concluded that the credit needs of MSME sector varies across industry types/clusters and thus a common standard credit card cannot be designed to cater to the entire MSME segment. 

It had proposed, one card catering to businesses with gross output less than INR 25 Lakh and second one targeting the businesses above INR 25 Lakh gross output. Such a credit card would theoretically have averted some of the impact from the liquidity crisis for MSMEs. 

As per analysis by DataLabs by Inc42, India is home to close to 50K startups right now. As the number of startup grows further the need for easy access to credit will also grow. Among the factors hampering growth is the drying up of seed and pre-seed capital for tech startups as well as the liquidity crunch which has impacted non-banking financial institutions, that typically lend to MSMEs. That’s where fintech players are filling the gap. 

While payments tech startups still accounted for the majority of the total fintech investments between 2014 and 2018, as reported by DataLabs by Inc42, funding in lending tech startups has also skyrocketed in the same period. For cash-strapped startups and MSMEs, lending tech startups have come as a boon.

Why are artificial intelligence, machine learning and neural networks drawing the attention of the most brilliant scientists, sharpest entrepreneurs and billions of dollars in funding? It’s simple, really. AI can change the world and cancer research is one of the clearest examples of just what a crucial role this technology is going to play in one of the longest medical battles in human history.

Even in India, over a million new cases were reported last year of cancer and according to data released by Global Cancer Observatory (GCO), out of over 1.15 Mn new cancer cases reported in India in 2018, more than 10% or over 162K were breast cancer cases. The number of deaths caused by breast cancer in 2018, in India, was over 87K, which shows the severity of the issue facing Indian healthcare providers in detecting and treating the rising prevalence of breast cancer cases in India.

Breast cancer is the largest cause of cancer deaths in women today. According to WHO, one in every 12 women is at risk of a breast abnormality. Indian women have only about 50% chance of survival, which is why early diagnosis is highly critical to decrease mortality rates.

The current technologies, that are not suitable for frequent screening and have portability issues, do not work on women under 45 years of age. Today 90% of the women on a global scale detect breast cancer by hand; they accidentally find a lump and then go to the doctor.  This late detection can be avoided with good technological intervention. Here is where NIRAMAI has stepped in, using technology and AI/ML algorithms to help women detect breast cancer at an early stage, giving them a better chance of surviving the disease.

From Tragedy To Saving Lives: The Story Of NIRAMAI

Established in July 2016, NIRAMAI was co-founded by Dr Geetha Manjunath and Nidhi Mathur. With a Ph.D. from the Indian Institute of Science and has over 25 years of expertise in the IT innovation at Hewlett Packard Labs and Xerox Research, Dr Manjunath was well versed in how science and technology can work together. Mathur had been a senior product manager at Xerox Research and was responsible for finding product-market fit for technology research being conducted at the company. As such, she was also updated on what technology is catching on in the market. The duo made a great fit.

Dr Manjunath also had a stint at Xerox Research as a senior director, where she researched multiple use cases of AI, and that’s when tragedy struck as she lost two young cousins to breast cancer. This heartbreaking incident became the catalyst for her to start working on technology that help intervene and save lives. In that state of mind, amidst a discussion with another colleague, she learnt about thermography and its ability to detect abnormalities early.

With a small research team, Dr Manjunath started analysing thermal images of cancer patients. Going a step further, she postulated to use this on normal women who do not have symptoms, thereby enabling early detection. With the help of the team, she deployed AI algorithms to address early detection. With early promising results, Dr Manjunath decided to do this full time and created NIRAMAI with Mathur, as well as team members Himanshu Madhu and Siva Teja Kakileti.

Simplifying Cancer Detection To Boost Survival

While it sounds like an ancient Sanskrit phrase, NIRAMAI actually stands for “Non-Invasive Risk Assessment with MAchine Intelligence”. The non-contact procedure screens for breast abnormalities. According to the company, it is the only privacy-aware automated solution that can detect early-stage breast cancer. The patient is made to cool down in a room for 10-15 minutes before the actual screening takes place. The procedure takes less than five minutes. The NIRAMAI solution is based on thermography, wherein a thermal device is placed three feet in front of the patient, which captures five thermal images. These images are then automatically analysed by NIRAMAI’s software tool, which sends the analysis report to a senior radiologist for certification.

The core of NIRAMAI solution is Thermalytix, the computer-aided diagnostic engine that is powered by artificial intelligence and machine learning models. The solution uses a high-resolution thermal sensing device and a cloud-hosted analytics solution for analysing the thermal images, checking it against its database of positive and negative reports. Its SaaS solution uses big data analytics, artificial intelligence and machine learning for breast cancer screening.

Why Thermalytix Is Better Than Mammography

According to Dr Manjunath, although mammography is the defacto standard for breast cancer screening, it has certain limitations such as low sensitivity for women under 45 years of age. Since it is X-ray based, the test cannot be performed more than once in two years. It is also not affordable for many women.

Thermalytix is radiation-free, and works on women of all age groups, on the other hand. “Given that it is portable and low-cost, the solution makes cancer screening more accessible and affordable to all, Thermalytix has been shown to detect very small tumours as small as 4 mm,” Dr Manjunath tells Inc42.

Though Thermalytix can be applied to several types of other diseases, NIRAMAI’s focus is on breast health at this stage. In the future, the company will go beyond breast cancer screening to general breast health and diagnosis and prognosis of other breast diseases. Earlier this year, the FDA in the US issued a warning about the usage of thermography as a substitute for mammography. So how is Thermalytix different from thermography?

Thermography is a technique wherein heat radiated from the body is captured. Due to the high metabolic activity of cancer cells, greater heat is radiated from the affected region. This can be visualised as an abnormality in thermographic images.

Dr Manjunath explains that the use of Thermalytix for breast cancer screening is actually FDA-approved as an adjunct modality and has been used by doctors around the world. The recent FDA warning was to dissuade misuse of thermography by some clinics that claimed it as a standalone modality. Manual interpretation of thermal images is very complex as the radiologist needs to look at millions of colour data points to decide if a subject is abnormal or not.

Thermalytix, on the other hand, uses machine analysis, instead of manual interpretation, to generate a quantitative thermal analysis report. In addition to thermal images, NIRAMAI’s Thermalytix has a unique algorithm to detect and extract blood vessel structures from the images that help in determining deep-seated tumours, that are otherwise missed in thermography.

“We also use many other demographic data from the patient for our prediction. We have clinical publications that show good accuracy of the technique, comparable or even better than the current standard of care. Still, Thermalytix report will be reviewed by a doctor to determine whether a person is malignant and requires further followup. It is an aid to the doctor,” adds Dr Manjunath.

NIRAMAI is currently marketing the Thermalytix-based cancer screening solution only in India and has the regulatory clearances for it. The thermal imaging device is already approved by the US FDA as well. The company is working on an FDA application to submit its clinical evaluation results and get a clearance for Thermalytix software for the US and other markets with similar regulations.

Moreover, Thermalytix is not limited to breast cancer, which is why NIRAMAI is banking on the success of this application before taking it to other diseases. As an experimental research project, NIRAMAI is also working on using Thermalytix technology to combat the spread of river blindness. It is an infection caused by a parasite called parasitic worm Onchocerca volvulus transmitted by the bite of an infected Simulium blackfly, causing skin diseases and even blindness.

The live adult worms of Onchocerciasis are detected by using Thermalytix. As it is a non-invasive method, it is expected to help assess the efficacy of new drugs being developed to control river blindness by killing the adult worms. The Bill & Melinda Gates Foundation has provided funding support to NIRAMAI in this new endeavour and also access to medical experts in Ghana who understand this disease well.

The other major tool that NIRAMAI works with is SMILE (short for Software with Machine Intelligence for Life Enhancement). It is a web interface for the NIRAMAI-certified technician to upload demographic information about the patient along with the subject’s thermal images. This is processed to analyse the subject’s breast health condition. Their solution automatically generates a report listing certain unique parameters obtained from patient thermal images and also recommends a breast health score.

Dr Manjunath says NIRAMAI currently imports its thermal hardware from Sweden. “However, our solution can work with any good thermal imaging device that satisfies our imaging specifications. There are some vendors in India too with whom we are working to see if they can be our future partners.”

Clinical Trial By Fire

As India has one of the most stringent clinical research regulatory environments in the world, running the necessary clinical trials would have been a time-consuming and arduous process for NIRAMAI. Dr Manjunath agrees that it most certainly was.

“In India, like all processes, just starting up a clinical trial takes a lot of time as there are strict procedures and processes involved.”

She explains that is imperative to obtain a clearance from the Independent Ethics Committee, which is a group of experts from different fields who review the proposed protocol of the trial and ensure the validity of the procedure to test the claims made, as well as ensure that no harm will be caused to the patients in the process and so on. Patient recruitment also takes time as often women are hesitant to partake in a trial, even though it’s a harmless and private process.

“Conducting clinical trials on an AI-based product is a continual process. Since we keep evolving the AI model and continue to improve the accuracy or applicability of the solution to many other subcategories of diseases or other diseases, clinical trials are very much as the organizational need for AI-based health tech companies,” she adds.

NIRAMAI conducted trials at Narayana Hrudayalaya and HCG Oncology. It has also employed an independent expert CRO, who ensured proper clinical guidelines for the trial. Other hospitals have shown interest in the trials too, Dr Manjunath tells us and NIRAMAI is in different stages of the process in multiple other locations. “In parallel, we do retrospective trials, and as and when we get good results we release the model to production and move it to our commercial pipeline.”

Further, NIRAMAI has regulatory clearance from the Ministry of Health and Family Welfare, India, Drug Control General of India (DCGI), and Central Drugs Standard Control Organisation (CDSCO) for the overall Thermalytix solution. It also has permission to conduct screening tests in government hospitals in Bengaluru as well as a few other states.

NIRAMAI: Breaking Gridlocks And Glass Ceilings

Every new beginning faces some challenges, and so did NIRAMAI. The first and biggest challenge faced was raising funds to buy high-resolution thermal sensors and start serious experimentation.

NIRAMAI found a partner in pi Ventures, an AI-focussed fund, which believed in the technology and the team and decided to lead the seed round, with co-investment from Axilor Ventures and Ankur Capital.

“The next challenge was to convince hospitals and doctors to try the solution. Though the hospitals and the doctors saw that the technology had advantages, NIRAMAI had to prove that their solutions actually worked. They set up randomised clinical trials to compare their results with the current standard of care,” says Dr Manjunath.

Talking about the current challenges that the healthtech startup is still struggling with, she states that getting a structure in place so as to enhance its scalability quotient and reach out to more hospitals is still a bit of a challenge. The key component of this challenge is the time involved in convincing the doctors. Although NIRAMAI currently has six international publications showcasing the workability of its technique, every reputed doctor wants to conduct a trial before usage.

Mindset is also a key issue that NIRAMAI faces. Although breast cancer awareness is steadily increasing in India, the number of women who come forward for preventative screening is minimal.

“Change in the mindset to wellness verses sickness is the need of the hour.”

Currently, NIRAMAI has over 30 installations at hospitals and diagnostic centres across 10 Indian cities.  It has conducted screenings for over 12K women and organised over 50 employee wellness camps. It also partners with NGOs and cancer societies to conduct free screening camps for the underprivileged.

Focus On Driving Acceptance, Not Revenue

Apart from the publications and patents, NIRAMAI has also won several national and international awards. It has received support and recognition from Biotechnology Industry Research Assistance Council (BIRAC), Startup Karnataka, Accenture, Philips, Google and Amazon as one of the top startups in its domain.

NIRAMAI has also won the Best Preventive Insurance Idea award in Milan and the Gold prize in Hack Osaka 2019 International competition held in Japan. It is also the only Indian company listed in the 2019 COHORT of AI 100 startups in the world by global business data intelligence platform CB Insights. Last year, NIRAMAI was recognised as one of the 42 most innovative Indian startups of 2018 by Inc42’s 42Next list.

Talking about the company’s revenue streams, Dr Manjunath states that its primary revenue stream is from its managed breast health solution for hospitals and diagnostic centres. It also has a screening operations wing where it conducts corporate camps with per-day lease charges.

And when asked about revenue projection for FY 2019-20, Manjunath said the focus is on creating more awareness for AI solution in disease detection. “Having proven early revenues, our current focus is to drive acceptance in the medical community and get international regulatory clearances – not so much on the revenue at least for the next few quarters.”

Road Ahead For NIRAMAI And Healthtech

Starting with $1 Mn in seed funds raised through Pi Ventures, Ankur Capital, Axilor Ventures, 500 Startups, and Flipkart cofounder Binny Bansal in 2017, NIRAMAI moved forward to raise $6 Mn in Series A funding earlier this year from Dream Incubator, Beenext and existing investors. At the moment the company’s focus is on business expansion, which it has already successfully kicked off over the past year.

From only one installation in Bengaluru last year, NIRAMAI has grown to have a presence in ten cities across India. This year, it plans to expand to more cities. It is also looking to partner with various corporates, diagnostic centres, hospitals, NGOs, government hospitals and more for installations and conducting screenings.

In order to ease its sales pipeline, the company is also looking to partner with an established medical device distributor. “We now have a bright team of 20+ innovators and an able leadership team.  We are currently focussing on hiring the top management so that they can build their team for expansion. We are working on hiring an Engineering Director and Chief Medical Officer,” Dr Manjunath adds.

In India, NIRAMAI competes with a number of cancer-centric health-tech startups such as Zumutor Biologics INC, Mitra Biotech, OncoStem Diagnostics, Sascan, Exocan, and Onward Health, among others. However, Dr Manjunath believes NIRAMAI stands out from the competition — most devices detect lumps but all lumps are not cancerous, thereby resulting in a lot of false positives.

“Our solution is privacy-aware too [besides being accurate] – where no one sees or touches the person, making it very comfortable for the lady.”

Until a year or so ago, artificial intelligence (AI) meant chatbots. Today, AI is gaining traction across sectors including telecom, financial services and many others. From being called a dangerous tool that will overtake human intelligence to finding place in school textbooks and hundreds of companies bullish on it to move their data to the clouds, AI adoption has come a long way.

Many companies, however, are still unsure of its adoption process or find it complicated and time-consuming. This is especially true for non-technology-based companies or organisations without the resources to transform quickly.

Finding skilled people to implement it effectively is the biggest challenge faced by these companies — just as much as it affects tech startups. And one thing that’s painfully true is that reskilling their entire workforce is considerably more expensive for smaller businesses. Instead the focus has been on students and new-age tech skills at school level, which doesn’t help solve the problem right now.

This is where Mate Labs and its horizontal AI SaaS comes into play. The Bengaluru-based startup offers solutions for non-developers and programming novices as well as non-tech proficient businesses create customised and complex machine learning (ML) models without any coding knowledge.

How Mate Labs Democratises AI and ML

Mate Labs’s first product is an end-to-end machine learning and data science platform called Mateverse that democratises ML and AI models for non-programmers. It allows businesses and individual developers to create ML and DL models without writing a single line of code. Starting with one client from SE Asia and another from the USA, it primarily works on making solutions for data analysts and scientists looking to build models

Speaking to Inc42, cofounder and CEO Rahul Vishwakarma claimed Mateverse is able to solve this problem for these users in just a few hours.

“Currently we are targeting customers in FMCG, CPG and pharma, helping them optimise supply chain operation with AI. We are seeing large scale adoption from various Fortune 500 companies that we are approaching. We have been able to speed them up from 7 to 9 months of time to market to under 3 weeks, with over 40% increase in their accuracy,” Vishwakarma said.

The DIY model for machine learning is not new — in fact many major tech giants offer plug-and-play AI and ML tools. But MateVerse is different in that it targets those users that don’t have any prior experience in coding. Users are guided through a step-by-step wizard enabling them to easily train and deploy a model. This model can further be scaled up for the business intelligence and analytics department. Vishwakarma claimed the company has a direct impact on the top line of businesses since it gives them a rapid-prototyping framework, which would otherwise be a considerable expense. And it also allows those businesses on the fence to easily experiment and test new solutions.

MateVerse can be used by tech-enthusiasts to build and train ML models without writing a single line of code while saving a significant amount of time. Its versatility lies in the fact that MateVerse can be used by both beginners and evolved users. For data analysts and scientists who spend several weeks pre-processing data, it serves as a one-stop SaaS solution. MateVerse can also be used by CXOs and VPs, data analytics firms, analysts and data scientists from across sectors and in Fortune 500 companies.

“With our end-to-end automated platform, users will be able to reduce the time to build by 70-80% thereby freeing up time to focus on other business priorities.”

The startup follows a SaaS model where clients engage with them on full-stack solutions. Once it has identified a client and understood their business needs, Mate Labs work on a 2-4 week paid pilot before moving into a long-term partnership. The pilot phase is beneficial for both parties and helps each gauge, course-correct and align the business goals with the solutions on offer.

Machine Learning Challenges For Non-Developers

Before starting Mate Labs, cofounders Kailash Ahirwar and Vishwakarma were helping companies with individual AI and ML-related projects. They soon realised that many large enterprises were building platforms for developers, and no one considered building something for non-developers to easily integrate into their business models.

So, after fine-tuning several ideas, the founders started Mate Labs in 2016 with a vision to “bring machine learning to the masses”. MateVerse was created with the sole purpose of simplifying the entire process.

Mate Labs started as a bootstrapped company and in September 2018 they announced their seed funding of $550K from lead investor Omphalos Ventures India and other investors including Eagle 10 Ventures, 91Springboard, Deepak Sharma, former chairman of CITI Bank, Khattar Holding, among others. Accelerated by Zeroth in Hong Kong, Mate Labs acquired the necessary resources to spearhead its mission in building MateVerse.

After launching the beta version of MateVerse, the startup studied customer behaviour and interviewed close to 3K users. They employed a B2C route, an unconventional growth hack, to enter a B2B market. To their surprise, in the first year itself, they acquired more than 20K organic users including Fortune 500 companies, which helped them generate some interesting use cases along with identifying where the industry is headed. This helped the founders make their strategy future-ready.

How Businesses Understand AI

When Ahirwar and Vishwakarma decided to take the plunge, it was a time when there was a lot of curiosity and expectations around AI without actual understanding of what it can do. While there was a lot of hype around AI, it was still in a nascent stage and because of the limited understanding, there was also a lot of unrealistic expectations.

“When we started, we were the only ones trying to build a horizontal AI platform. It hadn’t been done before and therefore we didn’t have anyone to look up to in terms of learnings or best practices. We had to learn the ropes while building our offering and set up the business,” added Vishwakarma.

Like many other startups venturing into something that had not been attempted before, Mate Labs founders also faced a lot of scepticism from peers and investors alike. Also, they had to work to dispel the general notion that that horizontal AI was only meant for the large companies and not for startups or smaller organisations.

Another challenge that the AI startup faced was to get people to actually understand what horizontal AI was all about. For many AI meant chatbots. Vishwakarma narrates one such challenge faced during his pitch meetings.

“We often had our platform questioned; they would ask ‘Where is the AI?, ‘How does this work?’. It took us three years and a lot of hard work to get people to understand that AI and ML.”

The Government’s Push For AI Vs Slow Adoption

As per a Nasscom report, about 40% of India’s total workforce has to be reskilled over the next five years to cope with emerging trends such as AI, IoT, ML and blockchain. India’s total workforce stands at nearly 500 Mn and of this at least 200 Mn would need reskilling to match tech industry requirements.

While AI is a branch that is quite promising, companies have been criticised for being slow in its adoption. “The government is pushing for mass-scale AI adoption, but I would agree that companies are slow around adoption. In our experience when approaching a client for their burning problem statements, which can only be solved using data. We feel large companies are actually more ready than ever and are moving quickly to adopt AI as well,” he added.

In this year’s budget, finance minister Nirmala Sitharaman spoke about the government’s mission for skilling youth in AI and IoT through a dedicated curriculum. However, this reskilling or upskilling needs to be a collective industry effort to be successful, feels Vishwakarma.

The startup conducts regular events in Bengaluru to build a strong community of AI and ML evangelists. It hires freshers to bridge that gap and then trains them in-house. The challenge that the startup is facing currently is to find people with strong mathematical background.

Along with augmenting businesses with AI capabilities, Mate Labs is also working on an advanced enterprise product for the FMCG and retail market in India. Targeting non-developers gives Mate Labs a competitive edge over others. To stay ahead of the game, the startup plans to strategically fine-tune and enhance its technology to meet business needs around AI and ML. The startup aims to touch $1 Mn in ARR within the next couple of months. Being in the first year of revenue, the company is also currently hiring for profile across the role, to prepare for the next phase of growth.

During the initial stages, the founders brought in friends who had some entrepreneurial experience. Currently, it has a 24-member team. In terms of expansion, it plans to strategically hire and train talent that is well-equipped to handle the immense potential that this model offers, as well as to support the initial traction.

“We are moving towards enabling the non-IT industry to adopt AI/ML in the most efficient and faster way. We are talking and discussing about things around our vision on a day to day basis either individually or in a group. Currently we are targeting supply chain in FMCG and perishable goods industry and moving forward we have plans to move into other verticals as well,” Vishwakarma said.

With cloud kitchens and food delivery ruling the urban landscape, restaurants in Indian have had to focus on efficiency — not just in terms of costs, but also in wastage and inventory. 

And as cloud kitchens introduce the millennial and the Generation-Z population to newer cuisines and tastes, the range of fresh produce and raw materials needed for restaurants has grown tremendously. And to meet this demand, food supply chain startups are striving to solve the distribution of raw materials, packaged food items, fresh produce and more. 

According to Statista, India’s food and beverage industry makes up around 40% of the country’s packaged-goods market. Further, the food and beverages industry’s market size is estimated to reach around $46 Bn in 2020. 

Within the growing market, a big trend is towards health-consciousness epitomised in the rise of fitness and wellness startups such as HealthifyMe, SARVA, Curefit and health food brands such as Healthie, EatFit, Grab A Diet and more. And while many of these are targeting holistic wellness and nutrition, one of the fastest-growing categories within the health food space is healthy beverages.  

New startups such as cold-press juicery Raw Pressery have attracted funding from marquee investors like Sequoia Capital. Similarly, Hector Beverages’ brand Paper Boat has earned backing from A91 Partners. 

Both are pre-packaged and have differing shelf-lives, but are ready to consume, so while restaurants can definitely sell them, it doesn’t create real differentiation for them. What does give restaurants an advantage are custom-made cold or frosted healthy beverages, which often help create a stronger brand connect with consumers. 

That’s the advantage that LQI (Life Quality Index) wants to give restaurants, along with cost-savings such as improved inventory visibility and low wastage. Gurugram-based LQI’s proprietary technology for making frosted beverages from fresh ingredients (no added colours or preservatives) promises a shelf life of three months for the raw material, that can be made into custom beverages by restaurants and food chains.

LQI’s fresh concentrates or come in three categories including fruit juice, smoothies, and milkshakes — which can be mixed with water, soda, curd or milk, depending on the drink type to make an instant drink, much like the famous beverage brand Rasna, but unlike Rasna, which uses artificial flavours, LQI only uses fresh ingredients for its products. And solving this challenge of getting food inputs with fresh and natural ingredients and long shelf life has helped LQI get a competitive advantage over ready-to-drink brands. 

The Delhi NCR-based company was founded by Palak Kapoor, Shubham Khanna, and Kapil Kumar in 2016. LQI has recently raised a $200K seed funding round led by Madison Capital along with a clutch of investors including popular Indian singer Sukhbir Singh; COO of Adani Reality, Shyamrup Roy Choudhury; Vice President of OLA, Rahul Maroli and others. It had raised angel funding from Innov8 founder Ritesh Malik in 2016. 

Through its manufacturing plant in Arjangarh, LQI manages the entire process from raw material procurement to dispatch of frosted beverage packets. The company claimed to have earned $35K in revenue last year. 

The Tech Behind Tasty Drinks

On the face of it, the beverages market might seem basic to observers with no real technology involved, but there is, in fact, a lot that goes on behind the scene, primarily to make these beverages market-ready. And this also determines the distribution strategy for beverage brands.

While Raw Pressery uses fresh fruits to make cold-pressed drinks with a shelf life of 21 days (no preservatives), Paper Boat depends on nature-identical flavours and high-pressure packaging to offer a shelf life of four to six months (without adding any preservatives). 

In the case of Raw Pressery, the churn rate for new orders is high and naturally, the brand’s products are a cut above the rest in terms of pricing. For Paper Boat, the technology that helps keeps its juices safe for months, allows it to have a more traditional supply chain for beverage distribution. So Raw Pressery ties up with restaurants, delivery companies and supermarkets to sell to customers through food and hyperlocal delivery orders, while Paper Boat goes for a more traditional retail experience like Coca-Cola or Pepsi might. 

LQI bypasses these routes and goes straight to restaurants. Its manufacturing tech allows it to create mixes without preservatives or other adulterants, and it sources raw ingredients and fresh produce directly from farmers. Kapoor said the company procures so-called ‘Type B’ fruits from farms in bulk quantity — these might not look good and are hence rejected by retailers, but are of perfectly good quality. 

Liquii uses a patent-pending process of deconstructing fruit into juice and pulp and reconstructing it back in a zero-oxidation environment. “Along with this, we use a 100% recyclable barrier packing with a unique polymer to prevent the product decomposition happening due to change in temperature. This is further coupled with the blast freezing technology to deliver fresh products to our consumers,” Kapoor added

Its client base of over 100 restaurant chains includes the likes of Pita Pit, Innerchef, Burgrill, Wat-a-Burger, Doner and Gyros, Coffee Bond and others. Kapoor said LQI wants to expand its B2B client base to around 500K outlets in another year.

The B2B Route To F&B Success

Currently operating on a business to business (B2B) model, LQI aims to ease the process of inventory management in food and beverages sector. Talking to Inc42, LQI cofounder Kapoor said,  food chains have to maintain raw material inventories at all their outlets, at all times — this increases the risk of material wastage as most of these ingredients are perishable goods. 

“It could be a possibility that all the raw material gets utilised by the day, but there’s also a possibility that it will all go to waste,” she added. 

With LQI, restaurants don’t have to worry about wastage of raw materials. If a brand orders 300 smoothie packs from LQI, they will have a clear picture that 300 packs will make 300 smoothies, neither 299 nor 301, thus saving their inventory costs. LQI packs also help businesses to save talent cost, as they don’t have to invest in hiring a special person or chef to prepare smoothies. 

Kapoor also added that LQI packs allow restaurant chains to standardise the taste and quality of their drinks across locations, along with the option to ask for customised LQI packs. On choosing to sell to businesses instead of directly to consumers, Kapoor said that the problem is that the beverage industry has huge competition in the consumer space, and underlying factors such as shelf cost, distribution and margin were among her other concerns.

“We wanted to first create some brand recognition for LQI and then look at other plans to expand in the B2C space.  Wherein we would like to create a separate range specially designed for kids and more,” she added. 

The Competition From Big Brands And LQI’s Advantage?

Of course, the point about competition is the biggest barrier for LQI. Startups like LQI come up against conglomerates such as Dabur (Real Juice), Coca Cola, Patanjali, and PepsiCo (Tropicana) in India. Despite being one of the world’s largest beverages market, the key to success is distribution, which these bigger brands have established already. 

New-age startups also come up against the challenge of affordability due to the high dependency on high-quality products — in the case of LQI, it’s the fresh raw materials —  or the high cost involved in packaging innovations. And this cost will only go down once the startups achieve scale and expand their market share in India. That’s the vicious circle that beverage startups in India are trapped in. Without scale, the cost of production cannot be managed and as a result, healthy beverage brands still remain a premium proposition for India’s middle-income consumers. 

LQI’s advantage is that it’s not yet looking at the ready-to-drink market, and is, in fact, going after the middle layer in the food chain with restaurants. This allows it to achieve greater pricing flexibility. Its fruit packs are priced at INR 40 per unit, milkshakes between INR 50-55 per pack and smoothies will cost restaurants about INR 62-65 per unit, and the selling price of the beverage absorbs this cost, while making sure that restaurants don’t over-order produce and thereby waste it, or price their healthy products out of reach of average consumers. 

ClearTax was recognised as one of the 42 most innovative Indian startups of 2018 by Inc42’s 42Next list.

It was a particularly hot day in Delhi, during the summer of 2010. Raja Ram Gupta – a partner at an accounting firm – was having a deep conversation with his son, Archit Gupta, who was then an engineer at Data Domain in the US and was visiting his parents. The conversation was about the complexities of the government’s recently introduced online tax filing portal.

Archit learned that not only an average taxpayer but also professionals like his father struggled to find their way around the portal. The issues were deep-rooted, such as Microsoft Excel-based tools, XML formats, etc, and could really use a solution.

Discovering a lacuna derived business opportunity here, Gupta’s entrepreneurial spirit kicked in. Within six months, on the July 19, 2011, he launched ClearTax, a fintech startup that offers solutions for income tax filing online. He, however, had a mere 11 days before the deadline for tax filing ended that year. With no marketing budget in his arsenal, Gupta simply relied on emails to friends and acquaintances to try out the new product.

To his surprise, within two hours of the website going live, ClearTax registered its first user. Eventually, in those 11 days, ClearTax had almost 1,000 people filing taxes. With this early momentum, the company looked at corporates, SMEs and chartered accountancy firms for filing corporate tax returns.

It was at a hackathon that Gupta hosted for fintech giant Paytm in September 2011 where he met Srivatsan Chari and Ankit Solanki. The meeting struck a chord with him and he offered both positions at ClearTax. The team was working really hard and towards the evolution of ClearTax and their effort was vindicated in the rapidly-burgeoning user base.

Steering Clear Of Taxing Obstacles

After completing his Btech from IIT Guwahati, Gupta moved to the US to pursue his Masters in Computer Science from the University of Wisconsin-Madison. He then went on to work as an Engineer at Data Domain. Therefore, moving from the realm of Computer Science to tax filing and finance technology was a major shift for Gupta. This, coupled with his moving to India to start a brand new company in a domain he was unfamiliar with, was a huge challenge for him.

“It was a long and lonely journey before recognition came to ClearTax. I had to survive three years with the savings that I had accumulated from working in Silicon Valley for three years,” says Gupta.

Although the initial performance of the company offered the much-needed confidence assurance to the team that they have created something of value. However, the venture capitalists did not see value in an Indian product that was not meant for US clients. An entirely exclusive Indian product failed to attract the venture capitalists, Gupta claims.

He spent many sleepless nights and difficult weekends pondering upon how to realise his long-term vision and goals for ClearTax without money. Moreover, the constant reminders from his friends over at the Silicon Valley regarding the lucrative opportunities available for him if he moved back to the US, weren’t helping his anxiety. “As an entrepreneur, it became important to ignore all the noise around, especially when you are not doing well. I and my family found it hard to make even relatives understand that I was building a business,” states Gupta.

But, there was light at the end of the tunnel. During the summer of 2014, everything changed for ClearTax.

The Y Combinator Boost For ClearTax

In 2014, the renowned Silicon Valley-based startup accelerator Y Combinator selected ClearTax to be part of its accelerator programme. Since then, there has been no looking back for the team. Not only were they the fifth Indian startup to be funded by YCombinator, but it was also the accelerator’s first startup that focused exclusively on the Indian market.

The YC backing proved to be a massive boost to ClearTax’s growth trajectory. ClearTax received its series B round of funding of $50 Mn (INR 400 Cr) from Composite Capital after being in the business for over seven years. The company has previously raised a combination of a little over $15 Mn in a Series A round and angel funding. The investors include Y Combinator, SAIF Partners, Founders’ Fund, Sequoia Capital and PayPal co-founder Max Levchin.

Apart from the financial gains, the entire YC experience also helped the team garner invaluable lessons that helped mould the present-day ClearTax. “A key principle Y Combinator taught us is to build something that people want. At ClearTax we always work backwards from customer needs. We have a strong customer insights team continuously working to drive meaningful insights about customer pain points,” says Gupta.

“Another important principle taught to us during YC days was “Launch now”. Sometimes businesses put too much effort into finding the perfect name for the product or perfect solution to a problem. YC mentors always asked us to focus on launching an idea in the market. Because the best way to learn is to test the product in the market,” he adds.

Modus Operandi And Revenue Streams

ClearTax offers software that helps individuals, businesses, organisations, and chartered accountants with their tax-related and compliance requirements through various products.

1. Tax filing – ClearTax is a product designed for individuals to prepare and file their income tax returns in a fast and efficient manner while maximizing their tax deductions.
2. TaxCloud – It is a web and mobile-based ITR and e-TDS Software which helps CA firms & enterprises across India manage their practice. The software help CAs check the filing status of their clients anytime and from anywhere. It has features like automatic selection of the correct ITR form. The software will also import the TDS, TCS, Self-paid tax entries directly from the form 26 AS, thereby eliminating any manual data entry. It allows direct e-filing with digital signatures and easy revisions.
3. ClearTax GST – According to the company, its ClearTax GST Software is India’s first ready-to-use GST-compliant billing and filing solution.
4. ClearTax Invest – ClearTax Invest offers a mutual fund investment platform for wealth generation and tax saving. Customers can choose from various handpicked investment plans along with complete guidance on mutual funds.
5. CA & legal services – ClearTax chartered accountancy and legal services offer a marketplace platform for financial & compliance services, catering to 300K businesses/individuals.

According to the company, “When the government announced the massive indirect tax reform with the introduction of GST, we realised that the businesses were unsure of its implications and compliance requirements. We decided to build a product to simplify GST for businesses. The product quickly became the largest GST solution in India with over 80K businesses adopting it and 8% of India’s GST returns being filed through it.”

ClearTax provides a complete suite of GST compliance solutions which also includes e-way bill for movement of goods, allowing companies to generate e-way bills and goods transporters benefit from a reliable mechanism of filing invoices and calculating tax liabilities. This solution is largely beneficial for large and mid-sized companies, with whom ClearTax works on an annual fee model and claims to have a user-retention rate of 90%.

“Other than GST, we also generate revenue in our managed services business wherein businesses can connect with CAs for compliance, company registration, and other services for a fixed fee,” states Gupta. However, the company declined to comment on its revenue projections for FY 2019-20.

Clear The Path, ClearTax Coming Through!

Currently, ClearTax is used by over 5 Mn Indian taxpayers to e-file their tax returns. As per the company, this makes ClearTax India’s largest player in the space. It claims that the ClearTax GST software is used by 6 Lakh businesses, 60K CAs and tax professionals, and over 1000 large enterprises.

As of March 2019, ClearTax had a total employee strength of over 650. It plans to double its 125+ product and engineering team in the next 12 months. Last year, ClearTax was recognised as one of the 42 most innovative Indian startups of 2018 by Inc42’s 42Next list.

Keeping in line with the ever-increasing smartphone and mobile internet penetration in India, the company is working towards becoming a mobile-first company. In the consumer businesses, It is expanding its invest product with a mobile extension that will further facilitate taxpayers with tax filing, investing and other features.

In the B2B space, the company is building a new GST product. “Given the new GST is suggesting changes wherein companies are expected to face cash flow challenges with ITC (Input Tax Credit) dependent on vendor compliance. Our new GST product lets companies match their purchase data effortlessly and even follow-up with suppliers to ensure timely compliance,” says Gupta.

Additionally, the company is also planning to introduce products for the SME segment.

Standard Deduction Of Competition 

According to the statistics released on the Income Tax Department’s e-filing website, income tax e-filings in FY 2018-19 dropped by more than 6.6 lakh; a rare occurrence in the recent history of tax filings. The number dropped to 6.68 Cr in FY2019, down from 6.74 Cr in FY 2017-18. However, the number of registered e-filing users has increased by 15% in one year — from 7.36 Cr in March 2018 to 8.45 Cr in March this year.

The market is also getting increasingly saturated with various portals and platforms that facilitate the tax filing process. ClearTax considers the government portal as its most potent competitor when it comes to ITR filing. H&R Block and Webtel are some of its other significant competitors in the tax filing space. In the GST space, ClearTax competes with Cygnet, Tally, and computax. Its mutual fund platform competes with Paytm Money, ETMONEY, Groww, Zerodha and others.

Gupta, however, remains unfazed by his competitors. He believes ClearTax’s exceptional UI and intuitive software sets it apart from its competitors. “We not only offer services but also educate our customers, we employ tools such AI aided investment planner which will help guide them to a fiscally secure future,” says Gupta.

According to him, educating the people regarding the importance of tax compliance would help change the preconceived notion that filing taxes is a complex process. “Tax compliance is a major growth factor for the economy and a big part of every taxpayer’s life. It shouldn’t have to be dreaded – one needs to know what they are paying and why, and the recourse in case something goes wrong.”

Invoice processing which may involve not only multi-organisations but a slew of their departments right from purchasing, accounts to others’ marketing, operations and more is not as easy as it might appear.

Even today, when numerous software solutions such as SAP electronic invoicing, enterprise resource planning (ERP), RPA (robotic process automation) and many other solutions are available and being used by companies across the world, according to various studies, 90% of invoice processing remains manual.

The scale of invoice processing could be understood by the fact that in 2019 alone, over 550 Bn invoices have been estimated to be generated. The average amount spent on every invoice varies from $11 – $15 per invoice. With so many invoices at play, that’s a huge expense for business as a whole as well as a time-consuming affair.

With automation changing business processes across the board, there have been similar solutions for invoice processing too, but their efficacy is questionable.

That’s what serial entrepreneur Vaideeswaran Sethuraman, founder & CEO of PARAM Network wants to change. PARAM’s blockchain solution claims to not only reduce the per invoice cost by $6 — roughly by half — but it would also automate the entire process while bringing in transparency. This also cuts down the turnaround time and complexity of the verification process in invoice processing.

Founded in 2017, PARAM Network’s blockchain tech which manages e-invoice processing and records digital receipts on-chain, is backed by renowned names in the industry like Sunil Rao, Nitin Sharma, Jaspreet Bindra, Richard Kim and Phil Windley.

Speaking to Inc42, Sethuraman stated that there is a slew of wrong practices in the existing system that must be corrected. And, that blockchain is the most viable means.

Data Must Be Democratised

Talking about the status quo, where data mostly remains with the fiduciaries, Sethuraman who had set up Divum Corporate Services in 2008 and worked with the likes of Amazon, L&T, Microsoft and Google, explains that this is not the right approach. He gave us the example of regular Starbucks customers who visit the chain often. “Suppose you want to recollect the entire transactions that you have made at Starbucks. It’s your data. It’s your money that you have paid; yet, you can’t have it until and unless you have every slip of the payments made.”

Prima facie, this may not look crucial to customers, however, this knowledge is crucial for B2B businesses, where transaction records help companies raise loans, insurance etc from banks and other companies. It takes a lot of time and effort for businesses to recollect all the transaction records, and also for banks to verify those records.

Sethuraman further spoke about how Google and Facebook are making huge profits with this data. “However, as a user whose data is monetised, I don’t earn any money in return.”

He argued that users too should have access to their data and blockchain fills the gap.

“It’s the companies who’re having all the data. I don’t have ownership and access to my own data. Data has not been democratised.”

Trust Deficit Not Good For Business 

Invoice processing involves multiple parties. There’s no automated authentication for checks and balances, said Sethuraman. “Most of the existing SAP, SaaS solutions are adopted for inter-departmental requirements. The invoice processing by most of these companies is done through emails and by scanning each and every invoice either manually or through RPA to fit their SaaS mechanism.”

Besides, it being a costly and time-consuming affair, the next question is, how can one trust these invoices that have come through several channels? He uses the example of a multi-party deal with levels of customers, and the big trust issue involved in payments and reimbursements.

“Since the payments you receive have limited information, it’s actually a cumbersome process further to find out who hasn’t made the payments. Which is a problem, if you raise ten invoices to different parties and you receive payments from only nine companies,” Sethuraman added.

‘Blockchain Is The Only Solution’

Blockchain comes to the rescue to solve the trust deficit in invoicing, as the original encapsulated block can never get deleted. It is the perfect fit multi-party collaboration, Sethuraman believes. PARAM records digital receipts on-chain, and construct knowledge graphs that would help further decentralise other applications.

According to Sethuraman, the transactions on PARAM are well-structured on-chain for querying for any kind of data. Every single node on the network has got two databases — a public database and a private database. The public database shares only a hash and it’s the private database which contains the invoice. The hash is circulated across the nodes for everyone to witness the transaction; however, the invoice transfer occurs only peer-to-peer. For the private database exchange, thus, a separate connection is created, based on the Secure Token Transfer Protocol (STTP).

“In case you are interested in raising loans from banks based on the transactions you did. You don’t need to provide all the documents, nor banks are required to spend a significant amount of time in its verification and validation, The entire record could easily be fetched from the public database such as whether the transactions occurred on the given date or not.”

Sethuraman contends that PARAM’s solution takes care of a range of transactions that happen pre and post-payment. Businesses and vendors can do transactions with many players simultaneously. The company has also created a free wallet for end consumers.

PARAM Network’s Blockchain Business Model  

Set up in Q4 2017, it was only in Q1 2019 that PARAM launched a blockchain-based e-invoicing solution. “In Q2 and Q3 2019, we did a slew of pilot projects with MNCs and we are about to enter into a big contract with a global auto manufacturer and some other ecommerce players too. The commerce players we are in talks with raise a minimum of 10K to Lakhs of invoices per month. Our solution is instant and doesn’t cause any delay.”

PARAM charges businesses based on the number of invoices shared. The company is currently working with a slew of companies and sees a huge scope in B2B, B2G and G2B areas.

Just like in the case of Bitcoin and cryptocurrency startups in India, despite policies and efforts from states such as Telangana, Kerala to focus on blockchain-based solutions, there has been a slowdown in blockchain projects. Some of the biggest projects such as Bankchain, IndiaChain, have not turned out as announced. In this situation, can PARAM change the wave with its practical application of blockchain!

Why Use A Permissioned Public Blockchain?

Sethuraman calls PARAM a permissioned public blockchain. “We feel the world is not yet ready to adopt permissionless blockchain. For the public network, we have used Ethereum 2.0 while the private blockchain is based on Quorum.”

However, given the fact that blockchain startups and their projects have failed to achieve wide adoption in the Indian market, how prepared is PARAM in this regard?

Responding to the harsh reality of blockchain startups in India, Sethuraman uses the ‘internet’ analogy. “There is private and public blockchain. Recent B2B developments have been more around private blockchain. However, most of the single private blockchain applications are failing. It’s the public blockchain which has the real potential. This could also be understood by an analogy of the internet and intranet. The intranet has been there for a long time and is good for communication within companies, yet the real innovation has happened on the internet.”

Digital lending has seen a massive growth in India led by technology advancements,  rising smartphone penetration and proliferation of financial and transactional data which has allowed fintech companies to create unique lending models. 

One of the fastest growing sectors in fintech, lending is estimated to touch $1 Tn mark in the next five years. Even so, a large section of the population is still left out of the credit market, simply because they don’t have enough data or bad credit history.  For example, students or independent creators and freelancers may not have a regular flow of income to justify being customers for lending companies. 

This means India’s lending market is now seeing innovative lending models that are making credit easier to access for digitally-savvy young customers, who have thus far been left out of the market. There’s a lot of variations in lending models too — from peer-to-peer lending by Faircent, Chqbook’s marketplace model to instant credit from Lazypay, Simpl, and Kissht. But not many are offering credit card-like solutions like slice. 

Having started life as SlicePay, and rebranding to just ‘slice’, Das Capital-backed payments card provider targets the young internet-savvy users including students, freelancers and young or inexperienced professionals. slice’s payment cards are tailored for the needs of students and young professionals between the ages of 18 and 29 years.

According to founder Rajan Bajaj, India’s young generation drives major consumption across products and internet services such as OTT platforms, food delivery etc these days. 

“Our addressable market size is 60 Mn youngsters, gig workers, freelancers, small business owners, startup employees, and graduate students, who are not using financial products like credit cards because either they don’t understand them or they don’t have easy access.” 

A slice Of The Digital Lending Market

Founded in 2016 by Bajaj, slice claims to be serving 180K active customers today, who make an average of 15-20 slice card transactions in a month. Out of which, 60% transactions are conducted at offline or retail merchants and the rest are online. Overall, the company is said to be nearing 1 Mn transactions on its payment card. 

Just last month, slice raised INR 20.5 Cr ($2.8 Mn) debt funding from Japan-based Gunosy Capital and the investment arms of Das Capital and Pegasus Wings Group.

In 2018, SlicePay raised funding in a Series A round led by China-based FinUp Finance Technology Group. And in 2017, it raised $2 Mn led by Japan-based Das Capital, Simile Ventures from Russia and few undisclosed angel investors.

Commenting on the company’s underwriting process, Bajaj said slice uses statistical models and machine learning to assess thousands of parameters and puts them into a selection model based on the company’s past patterns. 

Based on the application form, the company’s underwriting algorithms analyse factors such as applicant’s Facebook or Linkedin account, bank SMS history,  accommodation (rented, PG, hostel or staying with parents), and monthly house rent, among other data points. 

As a registered NBFC, slice can lend directly and it also works with other financial institutions such as DMI Finance, and Chaitanya India Fin Credit.

“Products like credit cards are a great financial tool but are too complicated to use for youngsters. So we figured if we could make a financial product that’s much simpler for them to understand and have access to, they would find it very useful.”

Partnering with RuPay, the slice card enables payments across 5 Mn merchants in India, both online and offline. Customers can use it for paying bills to lifestyle purchases such as travel, stay, food, dining and entertainment. 

The slice card has a minimum credit limit of INR 4K and goes up to INR 60K for students or INR 1 Lakh for working professionals and freelancers. Customers can also avail short-term cash loans for emergencies. 

It also brings no-cost EMI for high ticket purchases on ecommerce websites such as Amazon, Pepperfry, Myntra and other, where the interest rate ranges from 10-15% depending on the tenure. However, slice does not charge a processing fee or interest on EMIs for up to six months for customers on Amazon, Flipkart, MakeMyTrip, Yatra and other partners.  

India’s Digital Lending Boom

As per DataLabs by Inc42, the credit demand in India is projected to be worth $1.41 Tn by 2022. The estimated growth rate in credit demand is 3.73% between FY17 and FY22.

This has led to the growth of multiple lending startups in the country including LendingKart, PerkFinance, Aye Finance, ETMONEY, LazyPay, and Shubh Loans, among others. 

Between 2015 and Q1 2019, the total investment in Indian fintech startups was $7.62 Bn with a total deal count of 478. Out of the total funding, 50.13% or $3.82 Bn was in payments tech startups, followed by 25.49% ($1.94 Bn) in lending tech startups, according to Datalabs by Inc42.

In addition to this, other tech companies have expressed interest in entering the lending space. In July, Digital payments unicorn Paytm partnered with NBFC Clix Finance to enable digital loans for both its customers and merchants. On the other hand, ride hailing major Ola and ecommerce platform Flipkart were reported to be co-launching credit cards, in partnership with major Indian banks.

The fintech sector has immensely benefited from the successful adoption of Aadhaar-based KYC, UPI and other eKYC. While this has made it easier for fintech startups to assess risk for potential customers, the need to access private user data such Aadhaar-linked bank transactions, activity on social media accounts to decide user’s creditworthiness as in the case of slice, poses a lot of risks about data security, sharing, storage and extent of collection. 

Digital Lending Moves To Tier-2 India

But a lot of this growth is in Tier 1 cities or metros, where already the competition for digital lenders is very high. Nearly all such startups are gravitating towards Tier 2 and 3 markets. 

“Traditional credit card players and digital payment platforms can be considered our competitors. At the same time, we are very early in terms of the overall market potential and some very large companies will potentially emerge in the next few years in the payment space. We are already seeing some signs of it,” Bajaj told Inc42.

With 300K users on the company’s waitlist, slice claims to be growing at a rate of 15-20% per month, and reported revenue of INR 9 Cr in the last fiscal. Currently, it is present in 12 cities including Bangalore, Pune, Chennai, Hyderabad, Delhi, Jaipur, Manipal, Coimbatore and Mumbai among others. 

According to Bajaj, the majority of its customers are from metro cities, however, they have plans to further expand its reach in Tier 2 and Tier 3 cities soon. 

In order to acquire new users, slice uses customised distribution channels for different types of users. For college students, it focussed on building a campus manager community in each college to be evangelists.

For salaried professionals, slice uses digital marketing campaigns to reach the audience. And it’s also partnering with startups and small businesses whose employees fit into its target audience.

Talking about the company’s marketing split, Bajaj said that 60% of slice’s customers come through referral basis which is word of mouth, while there’s an equal split of the rest between customers that are signed by agents and merchant and those who come on board through digital marketing.

Further, the company is now hoping to touch 2 Mn customers in the next two years along with expanding to 24 cities in the next two years, many of which will be in Tier 2 and 3 cities. And in these cities, credit card usage is even lower than in the metro cities. 

The payment card model that slice has deployed — which have repeat-use potential in retail and online transactions — is likely to attract more audiences than simply digital loans, which are generally for larger one-time expenses. Some would contend that loans have a higher degree of repayment failures than credit cards, which can be self-managed.

“We stand out by sharply focusing on creditworthy youngsters who are going to be the prime future. They are already driving majority of the consumption decisions in their homes. The average age of our customer is 21 years. Being an early mover gives us an edge over the others.”

To celebrate India’s rising startups, Inc42 is profiling a new soonicorn every Friday in the Inc42 UpNext: Unicorns Of Tomorrow series. For the next few months, we will be speaking to founders and cofounders at these potential unicorns and shining light on their journeys and growth stories. We begin the series with a look at local home services marketplace UrbanClap.

Gone are the days when Indians — even in the large metros — had to wait days on end to get a leaky tap fixed or fix the fan ahead of the summers. Home makeovers and improvements are never more than a tap away these days, just like food, groceries or shopping. Just like small restaurants have seen an uptick in reach thanks to food delivery apps, a city’s disparate local service providers such as masons, electricians, repairmen and more have also found a digital home.

Riding on the high adoption for consumer services, UrbanClap has become THE marketplace for home repairs, maintenance and beauty services across India’s major cities. Founded in 2014 by Abhiraj Singh Bhal, Raghav Chandra and Varun Khaitan, the company has adopted a marketplace model similar to Uber, Zomato or Fiverr, and has constantly tailored its services to meet the demand in the market. UrbanClap offers beauty treatments and spa services at home, appliance repairs, plumbing, maintenance, carpentry, cleaning, and painting services.

With volumes touching 6 Lakh requests per month, running operations can be hard but not impossible. But it’s tougher to build a platform which treats both users and service providers with empathy with standardisation. This why UrbanClap has taken to integrating artificial intelligence engines into all its systems, but before that the marketplace dealt with a slew of problems along the way. 

UrbanClap cofounder and technology head Chandra told Inc42 that the company does a lot more than simply listing professionals and customers. It solves for standardised pricing and catalog, skilled training, product warehousing, and financial-success of the professionals.

Building A Bulletproof UrbanClap

Chandra went deep into how UrbanClap scaled up its software, decided on the monolith vs microservices debate and how the company has used team culture to build what he called “bulletproof platform”. From beauticians to plumbers to electricians to massage therapists, UrbanClap’s platform handles many different services across India, itself a rather fragmented market. So what goes into designing a platform with so many variables?

Chandra said that the long list of categories like beauty, home, painting, international etc are not separated on the engineering side, which reduces the complexity. “These platforms serve as the infrastructure for every category. Think of training as a platform, finances, product procurement, standardisation and pricing engine, market access as a platform. So now any category can plug into this and utilise this platform.” 

This has allowed the five-year-old startup to scale up rapidly and adapt to the changing trends in the market.

“For example, if you take the training. Training is a huge problem. Because we have very skilled tasks such as plumbing or ac technician, as opposed to say delivery. We can ‘techify’ training and even make evaluation tests.”

Unlike a ride-hailing startup, where the driver comes pre-trained more or less, for UrbanClap, one of the major investments in training and skilling people to fill the services gap. And top-quality talent becomes harder and harder to find so training has to get nuanced. UrbanClap aims to train a million professionals in the next 5 years to meet the demand in Tier 2 and 3 cities. “We have 20K professionals whose 100% revenue comes from UrbanClap,” Chandra added.

In addition to its training programme, the company is now working with government entities such as the national skill development corporation (NSDC) for the mobilisation, training and certification of service professionals across India. It currently has around 20K service partners, and daily, it fulfils 25K – 30K services in a day.

As cofounder Bhal told Inc42 in an earlier interaction, “The one thing that has helped us thrive is a very sharp focus on the quality of experiences, both for our service professionals as well as our users.”

The Logistics Of UrbanClap

Even if 1% of our users register unsatisfactory service, thats 6K unhappy customers in a month.

Chandra reiterated how it’s not just about having the service partners on board. There are some logistics challenges as well such as making sure the assigned service person is reaching the user’s house at the assigned time. Chandra claims UrbanClap has solved it to a certain extent.

“If you see any of the new marketplaces (food delivery, ecommerce or ride-hailing) it seems like a solved problem but in the beginning, it was a huge issue. Now it looks like a piece of cake but it takes the ecosystem a lot of time to adapt and it takes a lot of structuring and innovation to make it seem like a sustainable model. And it only gets worse when it scales.”

That scale is something UrbanClap is dealing with now. It inched closer to the unicorn club with the $75 Mn Series E funding round led by Tiger Global with participation from existing investors Steadview Capital and Vy Capital. With the round, the company is within touching distance of the unicorn status that many startups yearn for.

UrbanClap reported operating revenue of INR 116 Cr in FY2019, which is a 150% rise in comparison to last year. It reported fulfilling 3.3 Mn service orders in FY19, which is a 3x growth. And this growth in usage has come with technical and technological challenges.

Chandra circled back to the problem of service partner arriving on time. “For a service partner to show up on time, it takes complex math to understand what their behaviour has been in the last few months, and what kind of jobs they like; do they travel to the location of the service request? What is the acceptance ratio? We analyse this through prediction engines.”

With its tech and prediction engines guiding the scale-up strategy, UrbanClap is on track to hit 7.5 Mn service orders for FY19 with an annual revenue run rate was pegged at about INR 200 Cr.

The Orthogonal Approach To AI Systems

Some problems are harder to solve than others. “Matchmaking became one of the most complex systems for us. This is the heart of the problem we were solving. It’s tough because it needs to take into account every single data point, when and where to take demand, time slots, people’s behaviour and more”

The art in artificial intelligence comes from how your different systems interact.

Chandra explained that UrbanClap uses an algorithm for availability, another for predicting if the service professional is likely to take leave on that day, and yet another for the rating and quality assessment of professionals. “So they are all orthogonal systems, each has a different metric it is optimising for. Then there will be one papa (father) system, which takes these predictions and turns out a super prediction of what is right for the top-level business metrics’.”

These systems have helped UrbanClap streamline its operations and now the company is shutting down its other non-core businesses, including wedding services and photography. But it will scale up its operations for home services and beauty, cofounder Abhiraj Bhal said recently. UrbanClap is also planning to introduce luxury services to compete with high-end luxury spas.

One big debate in engineering is how should teams be structured, which actually percolates down to culture. Chandra described an assembly line-like system of passing down values and vision. “This is a factory setup, that means every team makes one part of the solution and passes it on. I think this is a non-ownership model, there is autonomy.” One big debate in engineering is how should teams be structured, which actually percolates down to culture. Chandra described a pod based structure at UrbanClap where designers, product managers and engineers work on problem statements. “Missions drive org structure, which means every team is independent and fully equipped. We solve for cross team dependencies by having a high bar on engineering design. I think this drives most ownership, there is autonomy,” he added.

Artificial intelligence is not just allowing startups to automate parts of their operations, but also scale up sustainably. Chandra said UrbanClap has had to account for this as well, but it’s not a problem fully solved. “We have to keep going back to the drawing board all the time. Different scales have different designs. Every time we reach a significantly higher scale we need to rejig because each of the underlying systems become too complex and has to be broken down.”

India has more than 120 Mn online shoppers (as of 2018). Today, with an added layer of multiple payment options, with the advent of fintech players, the checkouts on online platforms are faster than ever. However, a lot of engineering goes into the process from the time a customer checks out to the actual transfer of money to the merchants or sellers. And the time lag in this reconciliation in the accounting ledgers is a big pain point for businesses, since it results in lack of clarity about the revenue earned and the revenue pending.

Thanks to the rise of fintech business models and the application of artificial intelligence, machine learning and data analytics, tech startups are able to intervene and help businesses bring in efficient reconciliation methods. Bengaluru-based fintech SaaS startup Recko is looking the disrupt this space.

“The finance department on the merchants’ end is continuously dealing with this complexity of matching the right amount to right order, returns/ replacements and a lot of orders also move between months. All they have excels, spreadsheets and traditional ETL (extract, transform, load) tools which are cumbersome and error-prone. This is where we come into the picture,” said Saurya Prakash Sinha, Recko cofounder and CEO.

Built around the purview of offering financial security to the companies with high volumes of transactions such as ecommerce platforms, insurance providers and banks, Recko aims to automate the entire reconciliation process. Being an independent third-party transaction reconciliation layer, it ensures that each transaction is accounted for and all settlements can be done in a timely manner.

“This also helps when customers have to be refunded as we use many different ways to make a single payment these days (including wallets, vouchers, gift cards, net banking and CC),” added Prashant Borde, cofounder and CTO at Recko.

As claimed by the founders, Recko reconciled transactions worth $2 Bn in the first 12 months of operations. Their clientele includes companies such as Grofers, Dunzo, FreshMenu and Meesho. It also has several monetisation models in place based on volume and per transaction charges depending upon the requirements of the client. After raising seed funding of $1 Mn recently, the company is now looking to expand its team, scale-up operations and venture into unexplored sectors for new business.

Recko: Putting AI At Play

Being a new-age startup, Recko is primarily using technology to solve business problems in the area of payment reconciliation, with AI models playing a major role.

To understand this in a clear manner, let’s see the major gaps the company is trying to address:

• High volumes of unstructured data
• High manpower utilisation
• Lack of transparency and traceability of transactions
• Increased costs and time consumption in reconciliation

To solve these, AI comes into play at multiple levels. First, algorithms help in getting meaningful information and analysis from for than 80% of data, which is kind of crucial in financial domain, since, without data, fintech models would be running on low fuel.

Further, most companies often set aside a certain revenue error percentage to account for reconciliation write-offs because they can’t trace an error back to the source. To address this gap, Recko automates the reconciliation process, allowing the transaction data to be traced throughout its entire lifecycle.

It is able to do so by connecting with the payment gateways, banks and merchant order management systems through APIs and helping businesses track receivables and identify settlement discrepancies.

This helps in reducing the manpower investment by 50%-60% as claimed by Recko.

“We also create insights around data which is within or moves away from the baseline, affecting the behaviour of the regular transaction. This helps in understanding any positive or negative deviations in a timely manner, without affecting the end accounting processes,” added Sinha.

Tapping The Global Market Through India

Globally the key players in payment reconciliation market are Autorek, Oracle Corporation, Treasury, Datalog, Cashbook, Adra Software (Trintech), ReconArt, Inc., Fiserv, Inc., among others. Many are operational in India as well. However, like in many other sectors, a one-size-fits-all solution is simply not possible in the context of fintech in a diverse market such as India. Recko seems to be working on the same principle by targetting internet-based businesses.

Being focussed on solving payment reconciliation mainly for internet companies, India has been a good starting point for Recko, since internet companies are just starting to understand the challenges in reconciliation and are looking for ways to tackle it. “But we intend to build a global company and want to become the default solution in the market for transaction reconciliation. After India, the US market is what we have set our eyes on,” said Sinha.

However, for now, Recko is totally focussed on the Indian market. Sinha also emphasised on the fact that India offers volume and wherever there are payments, there lies data.

“Creating efficiencies at the reconciliation level will automatically create an improved payment infrastructure of the country. For us, things are much better now and team-wise also we are doing good. The idea is how fast we can walk, right.”

To celebrate India’s rising startups, Inc42 is profiling a new soonicorn every Friday in the Inc42 UpNext: Unicorns Of Tomorrow series. For the next few months, we will be speaking to founders and cofounders at these potential unicorns and shining light on their journeys and growth stories. We begin the series with a look at B2B marketplace, IndiaMART.

At the time of the 9/11 terror attacks in the US, IndiaMART, one of India’s first B2B marketplaces, served as a gateway for global customers to buy Indian products. The uncertainty which ripped through international markets post the terror attack saw IndiaMART’s business  slump and gave Dinesh Agrawal, cofounder and CEO of the company, the idea which would make it the nation’s largest wholesale online marketplace.

Agrawal, along with cofounder and cousin Brijesh Agrawal, turned his eyes to a bigger opportunity. A majority of India’s small-time manufacturers and wholesalers had no online presence. Small and medium enterprises and cottage industries badly needed a place to order machinery, raw materials and storefronts to sell their products. The Agrawals saw the gap and armed with a princely $10 Mn investment from Intel’s venture capital fund and pivoted to the domestic market in 2009. 

A decade onwards, IndiaMART holds 60% share of the country’s wholesale market according to KPMG, and it went public in June, one of the few tech companies in the world to have a successful IPO this year. 

Incorporated in 1999 by Dinesh Chandra Agarwal and Brijesh Agrawal, IndiaMART InterMESH Limited has 5.5 Mn supplier storefronts with listed 60 Mn products and 59.81 Mn registered buyers as of March 2018. The company earns 99% of its revenue by selling subscription packages to sellers. In addition, the company also generates revenue by advertising, sale of RFQ credits and payment facilitation service. It competes with the likes of Tradeindia.com and Alibaba India. Other players include JustDial, Google, Industry Buying, Power2SME, Moglix and Bizongo. 

The company had posted revenue of $74.7 Mn (INR 540 Cr) and operating profit of $6.6Mn (INR 46 Cr) IN FY18.

Over the last three financial years, the company has shown stability in its finances, a rare trait among internet companies which usually eschew profitability for quick growth. According to Dinesh keeping away from the new-age internet businesses’ way of doing things worked in their favour. 

“If the company does not make money, I don’t make money” Dinesh Agrawal, CEO IndiaMART

Humble Beginnings 

Dinesh, a computer science graduate from Harcourt Butler Technological University in Kanpur, started IndiaMART in 1996 after quitting his job in the US. Being a computer analyst he had a rough idea of starting something in software services and settled on building a platform for businesses to display their products via dedicated web pages. 

True to the style of many Silicon Valley giants like Intel and Hewlett Packard, IndiaMART’s story started at Dinesh’s house with the initial investment coming from his personal savings.

“I had purchased a flat in Delhi while I was working and set up my office in the flat in 1996. I had a saving of INR 40K and it was invested in the business,” he said.

At the time India had about 15K internet users and the excruciatingly slow internet speeds meant uploading and downloading small files would take several hours. Talking about his first client Dinesh said “We managed to get fast-food chain Nirulas as our first client. The deal was to develop and manage their website for an annual fee of INR 32K.”

In the early days, IndiaMART would provide website building services to its clients at a time when having a website for your company was still a novelty and not a necessity like today. However, the hallmark of a successful business is the one which shows you how it can be beneficial to you and then try and sell its wares. In a similar vein, IndiaMART started giving out free listings on its platform. Once a company profile was online, it would start generating business queries from potential customers from across the globe. Then Dinesh and his team would monitor the response and their sales personnel would apprise the company about the interest being created online.

“Having proved the value of web presence to the companies, we would then offer them a customised, full service to enable them to draw even bigger numbers for their businesses. This strategy helped us bag several clients. By the end of the first year (1996-97), we had a staff of nine and the firm recorded a turnover of around INR 6 Lakh,” Dinesh told Inc42.

On Scaling Up 

IndiaMART quickly grew and by 1998 had a second office in Mumbai with a staff of nearly 100 people. After the US terror attack on 11 September 2001, revenue fell by nearly 40% and it got tough to pay salaries none of the employees quit. This is a matter of great pride for Dinesh who told us that more than 100 of his employees have been with him for more than a decade. At the time of IPO, employees held 14% stake in the company.

“Several of the staffers who had joined us at the launch of the company are still with us,” – Dinesh Agrawal

After pivoting to the domestic market in 2007, the company re-evolved into its present form as a buyer-dedicated forum in 2011. 

“A buyer can post his requirement on the platform and our search technology can help him find the right supplier. We see a huge potential in this venture,” the founders had said at the time. The slow-but-steady approach clicked and by 2013-14, the company generated a turnover of around INR 200 Cr. The company also gained 130K active and paying subscribers.

“We would go to every trade fair, trade organisation, export promotion council we heard of across India. Our field sales force was spread across 77 different offices who would sign up suppliers and help make their catalogues.” Dinesh said.

A slow and tedious process, considering many small-time businesses in the country’s hinterlands would not have pictures or basic knowledge of what a web presence meant, IndiaMART executives added 60K products over a decade. 

What has been a palpable constant is Dinesh’s enthusiasm to champion the cause of small and medium businesses. Coming from a small town near the Nepal border, Dinesh knew how hard it was to run a business without actionable insights and visibility into macro trends in the market.

“One of the biggest challenges was that some of these SME owners have been family businesses for 40 or 50 years and they know how to handle a walk-in customer or a customer over the telephone. They do now know how to handle a lead coming over SMS or email or do a follow-up or converting an impression into a sale. So basically all the ways that new-age business is done. Converting them to a lead management mindset was a slow process,” he said.

Once the platform came into its own, the next big game-changer was putting up clearly visible pricing quotes. “It is very hard to was when you are in a remote village of UP to know what the current prices are in the wholesale markets of Delhi or Mumbai or Chennai. Now whether you are in Indore or Raipur or in Arunachal Pradesh you can see the ongoing prices,” he added. 

The Road Ahead

Explaining the rationale behind IndiaMART’s eagerness to go public, Dinesh said that firstly this increases the company’s credibility with customers and sellers as there will be proper scrutiny and audits every quarter. Secondly, its first investor Intel Capital and many employees have gotten a good exit.

Talking about the trend of internet companies shying away from IPOs, Dinesh opined that only five Indian companies have managed to scale operations without losses mounting to alarming levels in the last 25 years. (Naukri.com, Bharat Matrimony, MakeMyTrip, JustDial and IndiaMART)

“While banks would not touch some of today’s unicorns, they were all very welcoming of our IPO. There is a high demand for good tech companies. But for tech companies which are incentivising buyers to inflate sales it is harder as there will always be a big investor who is ready to throw a few billion dollars into your competition,” Dinesh said when asked about what are the reasons for the low participation of Indian startups in public markets. 

“For IPO a company needs a good revenue of about $100 Mn (not just Gross Merchandise Value) and close to profitability. It feels like being thrown into a completely different orbit,” Dinesh said.

The healthcare industry in India is said to be one of the fastest growing sectors backed by India’s rising income, health awareness, and access to insurance, but also due to the increase in lifestyle and stress-related diseases. The IBEF has estimated the Indian healthcare market to be valued at $372Bn by 2022.

In India, the doctor to patient ratio in the allopathy sector stands at 1:1596 (far lower than the 1:1400 WHO standard) and the country is ranked 145 among 195 countries on the healthcare index.

Tapping the urgent need for improved healthcare data and quality access to doctors, telemedicine startups have sprouted in many cities in India. Telemedicine startups essentially help patients get doctor consultations virtually through apps or web-based videos, chats and voice guidance. 

According to a Mckinsey report, India could save up to $10 Bn in 2025, by using telemedicine instead of in-person doctor consultations.

While, Practo has definitely become the most recognised player in the telemedicine space. Companies such as Lybrate, DocsApp, Medcords and mfine are also attempting to solve India’s healthcare problem in their own distinct ways. 

One of the major challenges in telemedicine has been the process of onboarding doctors and building patients’ trust in digital consultations. mfine approaches this problem through hospital collaborations which help  the company to ensure the quality of doctors, get access to a wide range of services and also drive patient’s trust because of the hospitals’ brand recognition, cofounder of mfine, Ashutosh Lawania told Inc42.

Bengaluru-based was founded in 2017 by former Myntra executives Lawania and Prasad Kompalli and later joined by Ajit Narayanan and Arjun Chaudhary. It counts SBI Holdings, SBI Ven Capital, Prime Venture Partners, BEENEXT, Stellaris Venture Partners, Alteria Capital and Mayur Abhaya CEO of stem cell banking company LifeCell, as its investors. It has raised a total of $22.9 Mn across three funding rounds.

mfine is focused on onboarding private hospitals within the range of 50 to 1000 beds.The company majorly wants to target 7000-8000 large hospitals which have pan-India presence, and offers all kinds of specialities and facilities. 

mfine currently has over 200 hospitals and 750 plus doctors across six cities including Hyderabad, Delhi, Bengaluru, Pune, Mumbai and Kolkata. Some of the notable partners include Sunshine, Apollo Bangalore, Cloudnine, KIMS Hyderabad, Fortis Mumbai and Sarvodaya among others. In the past 12 months, mfine claims to have touched 2,75,000 patients, handling an average of 1.5K consultations per day. 

The company operates on a B2C model, on every new lead generated whether online consultation or physical visit at the hospital, the company takes certain commission and a part of it is shared with the partner hospital. This means hospitals are incentivised to tie-up since it increases their patient inflow and also lets more people access its services, who would have otherwise not approached the hospital. 

Though the company did not share the commission rate it charges partner hospitals, each consultation is said to be priced between INR 500 – 800 for patients, varying with cities and the type of hospitals. It also offers health-check packages and a monthly subscription called ‘mfine ONE’, which includes a free baseline health checkup and unlimited access to doctors. 

Talking of the user demographic, Lawania said that 60%-65% users are from Tier 1 cities, while Tier 2 and Tier 3 make up for 30%-35% share of the company’s user base. The company plans to expand into 40 cities in India over the next couple of years through hospital partnerships to bring more top doctors onto mfine. Also, mfine agreed to the possibility of entering the health insurance space by partnering with existing players in the insurance industry. 

The Indian government has also been contributing towards improving access to healthcare growth with policies such as Pradhan Mantri Jan Arogya Yojana (PMJAY), which promised to provide health insurance worth INR 500K (roughly $7k) to over 100 Mn families annually.

Solving The Healthcare Bottlenecks 

Even after multiple attempts by the Indian government, the biggest gap in the Indian healthcare system is providing access to healthcare at the bottom of the pyramid. Most of the rural population in India find it hard to avail quality healthcare both because of geography and high healthcare costs. 

While, mfine’s model of collaborating with hospitals does allow it to easily onboard doctors and patients, thanks to the high-ticket consultation fees at large hospitals, access to healthcare services is again limited to high income families only, who already have access to quality healthcare. 

Contrary to mfine’s network of hospitals model is Medcords, which runs a network of local pharmacies which has helped the company to gain significant user base in the rural areas. Medcords told Inc42 in an earlier conversation that the startup chose not to partner with hospitals because that will potentially create a barrier for low income families. On the other hand, Practo tied up directly with medical practitioners and doctors to improve access. 

Responding to this, Ashutosh said that the company is currently focussed on building a cloud network of quality private hospitals. However, it is also considering partnering with public hospitals at a later point in time, which would greatly help increase the affordability. 

Ultimately that should be the end goal for most telemedicine startups that are hoping to improve access to healthcare. While in the urban context, partnering with private hospitals makes admissions and consultations easier for patients, it’s the rural population that is most in need of improved access to quality doctors and healthcare. 

While on our six-city tour of the Tier 2 startup ecosystem with BIGShift, we discovered several promising startups. This series will cover some of the most innovative startups. The first profile is of Zadd Bikes which has taken Chandigarh a notch up on the EV race in India.

With the rising problems of congestion and pollution, the push towards electric vehicles (EV) in India has seen massive encouragement from government, industry and startups. According to a March 2019 report by MarketsAndMarkets, by 2025 the Asia Pacific region will be the largest electric bike market. This is largely thanks to the initiatives of the various governments in making the right market conditions for the manufacturing and adoption of EVs.

In India, government schemes such as Faster Adoption And Manufacturing of Hybrid and Electric Vehicles (FAME) have not only promised funding to boost EV infrastructure but is making adoption easier with plenty of incentives. The government has allocated INR 10K Cr for a period of 3 years commencing from April 1 this year for phase II of FAME.

While charging and battery management are the two biggest concerns for EV startups at this moment, electric vehicles are solving many issues on the ground, including a crucial issue that often gets overlooked in the urban context.

Despite great public transport infrastructure, many Indian cities suffer from the issue of last-mile connectivity, which is used to get from home or office to the point of public transit and back. Startups such as Bengaluru’s Yulu and Bounce are looking to change that and Chandigarh-based Zadd Bikes is proving that last-mile is a problem in Tier 2 cities as well.

Zadd Bikes stood out among the many startups that Inc42 discovered on the recent BIGShift tour. The Chandigarh-based mobility startup impressed the jury with its business model, vision and emerged as winners of the BIGShift Pitch for the city. While the startup is still at a very nascent stage, it has earned recognition in the local ecosystem.

Its key tech solution is the custom electronic motherboard for the bikes that has the ability to receive over-the-air upgrades like smartphones or computers, which will keep it efficient, bug-free and updated. Zadd’s connected biking platform, comprising hardware and software, gives the rider data readings from the bike thanks to IoT devices and sensors. This also gives bike fleet managers and riders access to features such as bike system info, remote diagnosis, remote blocking of the system, anti-theft systems, infotainment modules, GPS navigation and more.

The Inception Of Zadd Bikes

When Aniket Bhardwaj and Shubham Goyal were still studying at Chitkara University, they realised a shared interest in the automotive industry. The Zadd Bikes founders started working together to build enough research for the venture through the incubation programme at Chitkara. Together, they built an IoT based anti-theft system for an ebike company in Canada, which introduced them to high-end ebikes. Realising that there was a need for such devices in the Indian market, the duo ventured out to start Zadd Bikes.

Founded in 2017, Zadd fulfils the last-mile commuting needs of people through smart and intelligent electric bikes. Headquartered in Chandigarh, it has already impressed Jugnoo founder Samar Singla who has come on board as an investor and mentor for its operations.

As more and more businesses engage bikes for deliveries and operations, the need to introduce electric two-wheelers for businesses is growing in the Indian context. Catering to consumers and businesses separately, Zadd Bikes currently has two models, X1 and Utility Mini.

• X1: With a sporty aesthetic, the X1 bike is equipped with the Zadd connected biking system. Built with carbon fibre and it has several accessories that can be bought separately by the rider. the startup The X1 is well-suited for commuting use-case in the urban environment, according to Zadd Bikes.
• Utility Mini: While the X1 is geared towards consumers, the Utility Mini caters to business applications such as cargo transport, food and grocery deliveries and more. This bike further comes with an adjustable handle and dual battery support for superior mileage, that’s suited for business customers.

Both products have safety features such as autonomous crash detection and SOS reporting system, on-board diagnostics to monitor the health of bike components and automatic rear and front lights for improved visibility.

To ensure optimal performance of their bikes, Zadd Bikes conducts a number of quality checks on its software and hardware. “All Zadd Bikes components are duly approved by the government and imply with all rules and regulations for electric bikes globally,” Goyal told Inc42.

“We have received a terrific response for both the models as connected bikes are a new concept in India especially cargo bikes,” added Bharadwaj.

Thanks to the custom motherboard, Zadd Bikes is able to remotely upgrade the firmware to incorporate changes and comply with new policy and law, especially as EV technology regulations are likely to be changed over the years.

Besides buying the bike from the company, customers and consumers can sign up for after-sales service packages that will deliver the right updates for the bikes.

The Challenge Of Building EVs In India

One of the major challenges for EV companies in India is the high degree of reliance on local manufacturing for government incentives. As India’s EV market is still developing, manufacturing for components, parts and batteries is not yet prevalent to a large extent in India. This means manufacturers have to rely on imports to get by, which limits how much incentives they can take from the government and pass on to customers.

Manufacturing the carbon fibre body of Zadd’s X1 is mostly done in China or Taiwan, and this was capital intensive, hence the fabrication is a major challenge for the startup. “It took us a year to develop the first prototype for X1 in the Chitkara University Makers Lab. And it was a thorough learning experience,” Goyal said.

While Chandigarh and Mumbai are major sources of revenue for the startup in terms of customers and sales, it has also signed up dealers in Thailand, Finland and Canada for distribution. This year, it is projecting a revenue of INR 1.5 Cr and says it is on track to hit INR 50 Cr in revenue in the next year.

A key factor in this expected growth will be local manufacturing. Based on the experience from X1, they started developing the Utility Mini, which is completely manufactured in India at a production unit in Ludhiana. The startup currently has over 200 pre-ordered bikes and is in the process of rolling them out from its production lines, it told Inc42.

With a focus on creating smart bikes for urban usage, Zadd is planning to launch a convertible electric trike — a three-wheeled pedal-assisted bike — for mobility and cargo deliveries competing with e-rickshaws and electric loading vans. “There is a ton of useful data that we are gathering to incorporate machine learning for the connected biking system to make it more autonomous and useful both for B2B and B2C customers,” Goyal told Inc42.

While on our six-city tour of the Tier 2 startup ecosystem with BIGShift, we discovered several promising startups. This series will cover some of the most innovative startups. The second profile is of Teacherr which has taken an initiative to help the educator community by providing them with a platform to share knowledge, attend workshops, find jobs and more.

It wouldn’t be a stretch to call educators the backbone of the economy. Without the right guidance and mentoring from an early age, individuals are unlikely to get motivated to innovate, question the status quo and solve problems.

And while technology has helped create virtual teachers through online learning and edutainment, what is needed is a solution that would help teachers and educators stay updated about the latest in teaching techniques, modules and new-age skills.

There are very few solutions that actually help the educator community directly, as most edtech solutions focus on the learners. This means the student-teacher ratio in India is woeful. At 24 students for each teacher, India lags behind Brazil and China who have ratios 19:1.

According to the data recorded by the government, India has vacancies for over 10 lakh teachers, but the qualification criteria often exclude a host of applicants. This data also reveals that educational institutions end up using the same educator for different subjects, regardless of the expertise.

With these systemic issues in mind, it was clear to Varun Beluguppa and Harsha Teja that something needed to be done. They learnt from their school principal the need to create a digital and global educator community. Joining them was former colleague Sonu Sharma, and that’s where the story of Teacherr begins.

The trio hit the road and visited over 150 schools to identify the most common problems for teachers and institutions when it comes to hiring, retention, engagement and skilling.

During their talks, they realised a lot of common problems amongst them all, “Schools and institutions were still posting ads in newspapers and it wasn’t fetching them the returns that they expected. Very few candidates turned up after looking at the ads. And the existing consultancies they took the help of used to charge very high,” Belugappa told Inc42 in a recent interaction.

Launched in June 2019, Teacherr is one of the only platforms in India where teachers across the country can connect and build a community based around the essentials for teachers and educators. Besides connecting with institutions and with each other, teachers can share tips, resources, find and seek opportunities, attend professional development sessions and workshops, and get exposure to new ideas and knowledge.

Solving The Problems For Educators, One Step At A Time

Starting with a small website that had job listings and vacancies for educators, Teacherr grew rapidly as more and more applications started coming in and visitors filled the site. While it was able to get schools to tell them what vacancies it had, the one problem was finding the right candidate. Even though it was getting candidates to apply, they didn’t meet the requirements of institutions.

So through an offline job fair, the founders looked to understand the hiring patterns of schools. Hosting the fair in Hyderabad, they invited more than 20 institutions and e-learning companies; over 2,500 teachers registered for the job mela and introduced Teacherr to the WhatsApp groups and communities of teachers. Building Teacherr around this concept, the trio delved deep into how online communities are created. They reached out to more teachers and were soon conducting skill development workshops for them.

All these efforts helped the startup understand and onboarding more teachers to create the Teacherr community. With their collective experience holding them in good stead, the founders brought 6K teachers to the platform in just 4 months.

Through the community approach, Teacherr is targetting four key areas — social networking, jobs, events and profile-building. Here’s what the platform offers educators:

• Home Feed: Here’s where the social networking happens — educators can connect with each other, discover videos, resources and articles, and learn content and learn from peers.

“We believe that the greatest ideas in the classroom are often restricted to the four walls. The feed page of our platform is one case where you can interact and ensure that your idea comes out,” Beluguppa added.

• Jobs: Teachers get a view of the local jobs and opportunities thanks to Teacherr’s partnership with institutions.

“What happens is that a lot of teachers do not like to work in institutions that are beyond 5 Km from their place. So we have job preferences displayed depending on the preferences, the distance, skillset and more,” the Teacherr cofounder said

• Events: Discovery of events and workshops happening nearby such as professional development sessions, training camps and more.
• Profile: Educators can build a complete profile to let others know more about themselves, just like any other social network. This helps teachers build a personal brand, post achievements, milestones and more. Through the profile, teaches can host events and invite other educators.

Additionally, Teacherr is working with a small team of academic advisors that conduct education training and workshops.

Currently, the startup claims to have helped over 90 institutions in Hyderabad with their hiring requirements, building a community of over 6K teachers and training over 1,500 teachers through workshops and skill development initiatives.

Teacherr: Growth Through Collaboration

In addition to that, it collaborated with Telangana State Innovation Cell to conduct an awards ceremony, where 16 best educators and innovators were selected and honoured. The initiative took all government as well as private schools from 33 districts of Telangana. Another partnership of the startup is with Osmania University, which has 75 different colleges in Telangana under them. With the university, Teacherr is launching Campus Ambassador programmes, which will allocate ambassadors to a region who will be responsible for building and running teacher communities within their region.

“Right now our focus is on growth because, at the end of the day, the talent solutions will work only when we have a lot of teachers on board. Currently, we have only captured 10-15% of the educator market in Hyderabad. We will be beneficial to the institutions only when we have a lot of teachers onboard and a lot of teachers are applying to their jobs,” added Belugappa.

While currently, it offers all the features and services for free apart from the workshops, from February 2020 it will charge institutions for posting a job on a freemium basis and will roll out subscriptions for educators to enhance their visibility and reach.

“With regards to the technology, we would be looking to boost scale and reach through the use of AI models and algorithms. We have a marketing strategy in place to retain users and we are ensuring that the algorithm is consistently in line with our recommendation engine. We are first testing these recommendations with the jobs listing part to enhance the experience for educators, before bringing it to our social networking feed,” the founder said.

With the aim of expanding to more cities within Andhra Pradesh and Telangana in the next two quarters, it has already identified nodes within various districts to drive forward its brand, run the communities and onboard institutions. It has also established networks within cities where it plans to expand its operations.

“This is our effort to give back to the educator community. While other names in the field only focus on jobs, our aim is to help with not only jobs but networking and skill development as well.”

To celebrate India’s rising startups, Inc42 is profiling a new soonicorn every Friday in the Inc42 UpNext: Unicorns Of Tomorrow series. For the next few months, we will be speaking to founders and cofounders at these potential unicorns and shining light on their journeys and growth stories. This week, we are featuring the beauty ecommerce startup Nykaa.

Which beauty brand do fashion designer Masaba Gupta, Bollywood actress Katrina Kaif, and supermodel Gigi Hadid (of Victoria’s Secret fame) turn to in India? Forget the big cosmetic brands that are probably shuffling through the mind’s eye — it’s actually Nykaa.

Nykaa needs little introduction in the Indian context. Nearly everyone who has shopped online is familiar with the brand. And it’s become synonymous with beauty shopping in the country. 

Claiming a 75% retention rate today and with over 1000 brand collaborations, the seven-year old startup is not only the premier destination for beauty and wellness products in India, but it’s also managed to enter the ultra-competitive, long-tail retail space. 

When Nykaa launched in 2012, the online beauty space had a couple of players such as Urbantouch and Purplle. Urbantouch was shuttered in March 2013 after being acquired by FashionAndYou. And while Purplle is still around Nykaa has a much higher brand recall in the beauty vertical. 

Speaking to Inc42 in 2017, founder Falguni Nayar said, “The goal was always to start in a sunrise industry, nascent and ready for a market leader. The beauty industry in India has always been fragmented, be it online or offline.”

While it has made its name online, Nykaa is looking to break through into the coveted ecommerce unicorn club with its strategy for the offline market. But how did the company get there and how is it charting a course for the next level? 

For CEO (retail) Anchit Nayar, the strong customer trust and brand recall are Nykaa’s biggest strengths. Anchit, son of Nykaa founder Falguni Nayar, has been leading the company’s omnichannel efforts. 

He told Inc42 that the Nykaa’s inventory-led business model allows it to ensure authenticity of products and competitive pricing. The other factor he said is the company’s ability to create a connect with its customers through relatable social media content. 

“This is different from Kareena Kapoor selling kajal or Aishwarya Rai promoting a shampoo, these are 23-25 years old girls who look and talk like the customer instead of speaking from a pedestal.”

Nykaa stands out from other ecommerce players because of its inventory model. Products are bought from brands and distributors, and then sold directly to the customers. Unlike a marketplace model, where third party sellers list products, Nykaa has a stronger hold on what it sells, which arrests counterfeit products from making it to the platform. 

Like Nayar said, content is also one of Nykaa’s strengths, and by this he was hinting at the digital content on social media and YouTube. Nykaa runs these channels through an in-house team of around 20 girls called the Nykaa Army. Essentially, these are beauty enthusiasts and help add the relatable, girl-next-door vibe which Nykaa’s customers have lapped up — Nykaa has a social media following of over 5 Mn users. 

These factors couple along with the company’s 150-strong customer service team and a delivery network across 70K pincodes in India, have built Nykaa’s brand reputation, Nayar said. And the next step is to replicate this trust in the offline market. 

Nykaa: Living In An Omnichannel World

This month, Nykaa announced the opening of its 55th offline store in Raipur, Chattisgarh. Since the launch of Nykaa’s first offline store in Delhi, the company has expanded its presence to over 20 Indian cities including Bengaluru, Jalandhar, Ludhiana, and Bhubaneswar among others.

“We have taken the call to be an omnichannel retailer because beauty is a category where physical trial is critical. We realised that if we want to sell premium products or even affordable products in categories like blush and foundations, colour matching is very important. So we realised that in order to give our customers a really holistic beauty experience, we had to build a physical retail distribution,” said Nayar.

Nykaa has stores in three formats — Luxe, On Trend and Kiosks. While Nykaa On Trend products are limited to trending and fashionable brands, Nykaa Luxe stores feature more premium and luxury brands such as Estee Lauder, Dior, Huda Beauty, and M.A.C Cosmetics among others. Besides women beauty, Nykaa also has a range of grooming products for men on the Nykaa Man website and app and an online community for beauty enthusiasts Nykaa Network. 

The main difference in the offline retail experience and the ecommerce channel is the products that are stocked. While Nykaa.com can easily list hundreds of thousands of products, the stores get a curated selection of 40-50 brands especially chosen for the location, city and outlet. These also include brands that Nykaa believes customers will want to try before buying.

Given this smaller selection and the fact that Nykaa is primarily an online brand, the split between online and offline orders is skewed towards the former. Ecommerce accounts for 85% of the business, but that doesn’t tell you the whole story. Nayar said when compared on the basis of brands that are available both online and offline, the revenue share is split down the middle at 50%. That’s an encouraging sign for Nykaa as it expands its retail footprint. 

But offline retail is not just about experiencing products — Nayar said the stores help customers discover new brands and also consult the in-store beauty advisors. Another insight that Nykaa drew is that for products that require application training the first time or for brands or SKUs that are new to the market, customers usually make the first purchase offline and later replenish the product via online orders.  

“That’s the power of an omnichannel business. Customers can buy something from our store and then they don’t have to come back to buy it again. We are giving them the convenience and choice to buy from wherever they want,” he added. 

The Future Of Nykaa: Competing With Giants

Nayar claimed that none of Nykaa’s competitors currently match this omnichannel experience in the beauty space. But there is definitely competition brewing in the horizon. 

Flipkart-owned Myntra too has been investing towards an omnichannel model and was reported to be planning multi-brand beauty products stores in Bengaluru.

Global ecommerce giant, Amazon had also hinted towards a potential omnichannel play, with its recent acquisition of a 49% stake in Kishore Biyani’s Future Coupons, the promoter entity of India’s second-largest retail chain Future Retail. Further, Mukesh Ambani-led Reliance Jio also announced the pilot launch of its omnichannel and hybrid ecommerce venture. 

In the online space, Nykaa has a new competitor in the form of Grofers-backed Orange Something, which is controlling manufacturing of beauty products and selling directly to consumers. But Nykaa has one key advantage. 

Nayar said that the company has reached the breakeven point and is able to fund its expansion plans through the cash flow generated from the existing business itself.

Nykaa has raised a total of $93.02 Mn in funding from investors such as TVS Capital Funds, TPG Growth, and Lighthouse India among others. That’s a relatively small funding amount for a company that’s on track to become a unicorn.

Grossing INR 1229 Cr in FY19, Nykaa aims to continue investing in the omnichannel business and has plans to open up to 100 stores in the next two to three years. New cities being targeted under these expansions include less popular locations such as Jammu and Bareilly among other Tier 3 and 4 cities. Is that a risk and is Nykaa expanding too quickly?  

“We have 16 Mn visitors on our website, visiting 55 Mn times a month. So there’s not really a risk for us here, because we already know which cities have more density of our customers,” he added. 

Beauty And The Tech

But beyond beauty, Nykaa is stepping into a bigger vertical — fashion. Nayar called Nykaa Fashion a natural progression of the Nykaa brand. Today, it has over 350 Indian and international brands across highstreet, designer labels and accessories. “Fashion is a much bigger market than cosmetics. For every single woman who buys a beauty product online, there are ten who buy fashion products,” he added. 

Fashion, however, is not the major focus for the company. According to Nayar, fashion is definitely a part of the Nykaa’s future plans but the company will do it in a sustainable way and if works great, company will keep building it or otherwise take a call on it.  

“We want to move away from the discounted product selling point of ecommerce platforms and instead bring women very fashionable and stylish clothing at a reasonable price. So it’s not going to be about filter by price, or filter by discounts but ‘filter by style’.”

Responding to moves such as Reliance’s plans to add virtual reality and augmented reality solutions in stores, Nayar said that Nykaa is primarily a tech company and everything it does have to be at the cutting edge of technology. He said customers can expect a few changes to the website and the app in the next couple of months. At the moment, it’s working to find the right partner who can add value to customers through such technology. 

“We are talking to some partners about AR/VR tools. But we are very focussed that it’s all about the customer and not about ourselves. Retailer just use it because they want to say ‘Look, we are using it.’  We have seen a lot of gimmicky AR/VR tools out there which don’t really help the customers, it doesn’t really add value.”

Correction Note | 14.53, November 15, 2019

• Nykaa’s revenue has been corrected to INR 1229 Cr from the earlier INR 1220 Cr, as per the company’s request.
• Some sections of this article have been edited post-publishing to fix typographical errors and improve clarity of language.