A corporate wallet to simplify business payments and expense tracking: The Happay Story

B2C wallets like Paytm and Mobikwik are known well enough. The B2B wallet story, however, is still in its nascent stage. Happay is that wallet which helps companies manage their expenses through employees, using corporate wallets.

Varun Rathi and Anshul Rai were classmates at IIT Kharagpur. They worked for 2 years before they started up. After toying with different business ideas, they zeroed in on payments, and thereafter, quit their jobs.

Happay started as a platform for splitting payments or transfer money through its wallet. However, the team, even with over 2 lakh registered users, was unable to find a good revenue model. They pivoted to address B2B payment management hassles. They have tied up with Ratnakar Bank to issue corporate cards which double as expense management system for the company. The companies can issue these cards to all their employees, and, at the back end, track, or even cap the permissible amount for each card.

Here is an excerpt from Varun’s interview with iSPIRT:

Why did you Startup?

VR: “I come from a business family and so, I think I inherited the urge to start something of own business. It was different from a typical Marwari business, because I wanted to make a technology business that was scalable”.

Why did you choose to address payments?

VR: “The payments market in itself is globally very large and scalable. So even if you solve a small problem in payments, it can go big.

Last 5-10 years have seen a lot of sourcing through wallets. So we thought this was the problem we should solve. Our solution was quite a hit between students and young professionals. However, there was no strong revenue model. Also, we had to go to all vendors and get them to accept those payments through our instrument, which was proving difficult.

On the other hand, a lot of businesses would come to us looking for payments solution. There was no product that would address their issue. So we decided to pivot.”

You decided to pivot from B2C to B2B. What were your major challenges?

VR: “First biggest challenge was to unlearn whatever we had learned and focus exclusively on talking to customers which we didn’t do with the first product.

The first product seemed more intuitive to the team, as we ourselves were the customers. This time around the team talked to over 1000 customers to understand their problems.”

As for aligning the team, Varun shares, “Our team was very young, with no one with more than 2-3 years of experience. So they were open to learn new things. Besides, it took us 9-10 months, to come up with the new product. This gave enough time to the team to align themselves.”

Next challenge was in terms of requirements of the business. “With a B2B product, we realized that businesses needed handholding at every step. Where we scaled to 2 lakh registered users with just 5 members in the team, this time around, we ended up hiring for different teams, taking the number of employees to about 100.

We hired the first person that could give a demo to the customers. Then we needed someone for lead generation, as the product does not automatically reach the target audience. Even after a customer is acquired, we needed to hire for relationship management and customer support. The customers even after signing up would not take the next steps themselves.”

What are the challenges in coming up with an expense card? Why have other expense management companies not done it?

VR: “ Getting such a card and its integration in place, is a difficult process. It requires a license, partnership with the bank, a certification with VISA, and a strong technology team to support all of it. It takes about a year to complete just the processes.

We were in the business of payments, from the start. So our initial aim was to develop applications over the payments platform. We first solved the payments problem and then later on built expense management software over it. Other players made the software and started selling it. They never had the intention of going deeper into the payments problem.”

How is scaling a B2B business different from a B2C?

VR: “There are both pros and cons. B2B is slow and time taking but steady. There are some safe landings in between, so I cannot go down all of a sudden, as is the case with B2C. I can become an overnight success in a B2C product, with maybe some good PR but that can go away in a second, as it is very fragile and there is a lot of competition. In B2B, customers don’t sign up that fast, but they give you time. Once you have their trust, even if something is not perfect, they give you a month or 2 to make it right. That gives more stability to the business.”

What are the 3 things you wish you knew before you started?

VR: “Launch soon: One mistake we made was not launching the product soon. We, like most other companies, were trying to build a perfect product. But the sooner you take it to the customer; the steeper is the learning curve.

Talk to your customers: We assumed what our customers needed and built the product around it. Customers don’t know what they need till they see it. So let them see it.

Making the team will take time: Time required in hiring and nurturing team is very high. It takes almost 50% of our time. We didn’t account for it from the start and this has come across as a major learning.

What is your advice to other people starting up right off the college?

VR: “Understand the market first. If you start fresh out of college, you can take more risk. In terms of technology, you can stretch your limits, as you don’t have any responsibilities. But scaling brings problems. Hiring, building and managing the team and responding to the market needs more finesse. Understand the market so that you have at least some idea of how to respond.”

Corporate wallets address a very crucial bottleneck in managing expenses in an organisation. We wish Varun and his team at Happay, all the success.

 

Making SMEs loans a breeze with Capital Float

Typically, choosing to finance the SMEs looking for working capital loans, is not easy. First, the SMEs have smaller ticket size. Then they expect quick service and have high operational costs associated with it. ProductNation interviewed Shashank Rijyasringa and Gaurav Hinduja who started Capital Float in early 2013, a digital finance company that serves the loan requirements of SMEs in India.

Shashank having worked with McKinsey and Bain, has a background in creating, and packaging financial instruments. Gaurav on the other hand had grown and sold his family business before they met at Stanford as classmates.

“We were looking to address financial inclusion. We observed how the fin-tech space was being disrupted in US and China, and saw the huge opportunity in India. With 48 million SMEs, second just to China, with 50 million, India needed lenders who would tailor their offering to the needs of the customers. The rate of interest by the banks was much higher than expected. Also, the loan disbursement ate up a lot of time. So this need was largely catered to by the informal sector”, says Gaurav.

Registered as an NBFC with RBI, they started with an instrument for invoice financing (building loan product against invoice of blue-chip companies). The duo gradually evolved their products to provide working capital loans for SMEs. They developed underwriting models which address the specific scenarios of the SMEs.

“There are 2 broad categories of sellers coming up on eCommerce portals. First are those who sell on platforms like Zovi and Myntra, where the sellers are also the manufacturers. Other category includes retailers who sell on sites like Snapdeal and Paytm. They generate a huge demand for loans available at short notice periods with minimum hassle. That is where we found our sweet spot”, shares Shashank.

Here are some excerpts from the interview:

How did you overcome the problems of traditional lending?

SR: “Firstly, our experience came in handy. My in-depth knowldge of micro-financing, packaging and selling loan instrument meant we could build the right services. Gaurav with his experience of running a business out of India, knew how to deliver the services we wanted to build.

Secondly, we met with our customers to understand what their problems really were. To a small business owner, every hour spent off the floor is an hour wasted. We came up with innovative methods like allowing same day approvals and providing loan facility over phone and laptop. These businesses needed greater accessibility and straight-forward procedures. They wanted someone who could understand the value of their time.

Third, and definitely the most crucial point was that we adopted trial and error method. Like any startup, we didn’t know exactly how things would work. We were building our instruments in-house. So we had to fail fast and experiment quickly. With agile methodology, today, we can deliver new loan products in 2 weeks. A bank would take about an year to do the same.”

How is the policy environment evolving in India, with respect to your industry?

GH:  “The Mudra banks for refinancing are a welcome move. With 950 million Aadhar numbers issued, allowing eKYC, is it much easier to issue loans. The Digital India initiative to create better internet connectivity will help us reach a much larger customer base.”

They are leveraging the Indian stack to refine their instruments and are growing with it.

How difficult is it to get payback of loans?

SR: “SMEs are the most financially aware and responsible segment, since they always manage their finances tightly. Also, our screening process mitigates high risk customers, allowing us to cater to the needs in minimum possible time frame. So that’s not much of an hassle.”

What would be the 3 lessons you have learned from your journey?

GH: “1. Perseverance – One needs to believe that the idea would work, when no one else knows if it will. It is important to stick to that optimism and keep trying to find the exact fit.

  1. Strong fundamentals – From the first day, the business needs to know where its money will come from. The cash flow should not be dependent on where one is, in the funding cycle.
  2. Rounded team – Build a great team if you want to build a great product. A strong team stands by you to make it possible.”

What would you say to the entrepreneurs starting up fresh out of college? 

SR: “There is no right time to startup. Whenever you get passionate about a problem and see a large market for it, go for it. Here are my 3 tips:

  1. Address a big problem. If you go after a problem which is not so big, it may not be worth all the effort. India provides huge opportunities with really major problems that need to be addressed.
  2. Maintain discipline. Whatever you do, think big and build for the long term.
  3. Understand your responsibility. As you grow your team, you need to realise that families of your employees are getting dependent on you. It is essential that you take your decisions wisely.”

What are the mistakes you wish you did not make?

GH: “We were too slow in the start. We should have been aggressive, and believed in ourselves more. We thought people might not accept a technological solution. We have realized however, that technology has to lead the change in society. Invest in constantly being disruptive and you will definitely make a difference.”

We thank Shashank and Varun for sharing their insights on the FinTech sector and wish them the best for their journey.