Cracking a niche B2B market without funding: Valuefy’s Story

Valuefy was started in 2010 to empower fund houses to make informed decisions better and faster. Vivek Singal, a B.Tech from IIT Bombay and Sharad Singh, an MBA from IIM Ahmedabad worked together at Fractal Analytics, an analytics firm, before starting Valuefy.

On choosing to build a product like this, Vivek shares, “When we chose our niche, which was a B2B product for such a specific market, at the time when eCommerce was growing, it took a lot of faith. It was a slow journey, but definitely a profitable journey. Our clients have been very sticky and we are collectively helping manage over 100 billion dollars worth of funds at this point.“

Cracking B2B market without funding: Valuefy

Here are some excerpts from a conversation with Vivek:

Where did the story of Valuefy start?

VS: “Whole science around the portfolio management is a very niche play. Valuefy has been serving Indian players so far. To give you an idea, we are servicing 2 of the top 3 fund houses of the country. We have cemented our place in an Indian market.

We picked up analytics as a domain since number crunching was our forte, coming from our experience with Fractal Analytics. We were intrigued to find the frameworks and algorithms that helped the fund houses make decisions. We wanted to understand if there was any tool that they were using to decompose their performance, analyse returns, and understand what are the drivers.

There are some large global organizations that were working in this area, but they didn’t seem to respond to the change in technology to create more sophisticated agile tools. So they were placed as a middle office tool, but not a decision-making tool.“

What were your major road blocks in your journey, and how did you overcome them?

VS: “First off, it is very difficult to do a product strategy in this kind of a market. Our clients are very comfortable with excel as a tool where they can manage their reports on an ad-hoc basis, even though it can only give 10% of the information. Our study says that 60% of a fund manager’s time goes in understanding and processing the data which leaves them with very little time to analyse the performance and the portfolio. The problem is that they are so used to it, that it is very difficult to break this pattern and bring the adoption of technology amongst the fund managers.

Second, when we started, the markets were not favouring our product. We realized that the bigger clients were more open to it. Also, we think the international customers would have been more open to the product but the markets were slow.”

What goes into marketing such a niche product?

VS: “

  1. We have created a global advisory board. It includes people who have experience in the domain, people from our competition, also, people from the academia who are helping us with it.
  2. We have formed some key partnerships with global conglomerates. It helps as a marketing platform as well as a distribution channel.
  3. We started as a hosted product, but we have grown it into a SaaS based model, which has made it simple for us to integrate with the global companies and this will help sustain our global expansion.”

What is your advice to people who want to startup? 

VS:”

  1. Identify the market correctly. We served the Indian market for a very long time. While our market was global, we spent a lot of time on Indian markets first. So you will need to take the decision and define your market.
  2. Get the connect to the market. While you may be good at creating something, but a venture needs both a good product and good marketing and sales. So plan accordingly.
  3. Keep faith in your journey until you decide that you have given a fair chance to it.

People become a pendulum between deciding whether revenue generation is more important or increasing the valuation is more important. While valuations are sexier, I think if you want a sustainable growth and a strong business model, revenue generation helps create that solid foundation.”

Valuefy has definitely established that B2B businesses focussing on revenue generation and profitability can create a sustain an enviable growth. We wish Vivek and his team all the luck in their journey.

A payment gateway that onboards you in less than a week: Razorpay

If you are a startup looking for payment gateway integration and the process adherence is killing you, Razorpay might save the hassle.

Founded by Shashank Kumar and Harshil Mathur in 2014, Razorpay is positioned to provide you with a payment gateway solution within a week’s time. Shashank shares that his inability to find a gateway to accept international payments and the enviable ease with which it could be done in US, drove him to start Razorpay.

Here are some interesting bits from iSPIRT’s interview with Shashank:

What triggered you to start up?

SK: “My co-founder and I know each other from college days. After we graduated, we kept working on side projects, mostly for fun. For one of our side projects, we wanted a payment gateway to accept international transactions. However, it had a bunch of requirements like we should have a proper office space, past operational record as a company, fixed deposit of over 1 lakh, and more. Even after fulfilling those requirements, it would take 1 to 3 months for activation. Overall, we had a negative experience. We went online and found that most people, mostly startups, shared a similar experience.

There were 2 issues. First, it was a technical challenge. But more importantly, it was a startup challenge. The gateways, at least at that time (2013), were not ready to serve the startups. The issue needed to be addressed with a fresh mindset. We thought we could do something about it.”

RazorpayWhat has been the role of the accelerators in shaping your journey?

SK: “We started from Jaipur to save cost and were working from home initially. Soon we started looking for co-working spaces and came across Startup Oasis, which had come up as an incubator and a co-working hub. Other startups there were also our target market. So we got a lot of first had feedback on our product as we grew. The team at the incubator also made a lot of introductions for us.

When YCombinator happened, they changed our entire thought process on how the company needs to work. They helped with our initial launch, raising money, hiring, managing ESOPs, etc. Also, people took us more seriously now since we were a YC company. We were thinking in terms of how big the space is and taking care of our core business, while the accelerator helped us with the other roles.”

What was your most prominent roadblock?

SK: “We went and talked to multiple banks for offering payments. However, since we did not have any prior experience they were averse to us. Given the failure rate of startups I think it is understandable, since they are accountable for everything. Slowly things are changing, but even now it is very difficult for banks to take early stage startups seriously.”

What would be your advice people who want to startup?

SK: “Pick up a problem that you yourself have experienced; that is the perfect place to start solving. If you become your own target market, it helps. Once you go deep into the domain, you will realize if the problem is big enough for you to solve it. It should be a problem that your network or peer group is facing so that you get your initial set of customers and are able to validate your product.

Have set timelines. It helps to know what you want to do. When we started, we had zero domain knowledge, but our vision was very clear. Once that is clear, one can define the current situation and set future timelines. It will take time to achieve whatever you aspire, but you need to put those numbers on paper first. Figure the knowledge gaps and put timelines against them. If one approach does not work, try something different and see how you get to it. The idea is to not get stuck and keep moving on instead.

It would be great if you could get a mentor at an early stage. Even otherwise, there are a lot of resources online that might help. The idea is to understand what problem exactly are you trying to solve, and then creating a framework around it. It gives a very reliable structure to be able to solve the problem.

Apply to accelerator programs. There application process itself will push you to answer questions, you thought you already had answers to.”

After having raised a round of funding, Razorpay has been aggressively growing in the market with encouraging customer response. We wish them a long and sustainable growth.

Getting loans for SMEs is now simple: Getfiscal #FinTech

Getfiscal was started in May 2015 to help SMEs manage their cash flows and simplify the process of raising loan. It already has about 100 costumers on the platform, and has helped raise loans worth over 1 crore. Before starting up, co-founders Aditya Tulsian and Baskar Ganapathy, were a part of the team responsible for launching Intuit’s accounting and tax software in India.

Here are interesting excerpts from the conversation with Co-founder and CEO, Aditya Tulsian, who shares what it takes to quit a good job and startup.

Why Getfiscal?

“When we took Intuit’s software to Indian SMEs, we found two things:

First, Indian businesses are not looking for full-fledged accounting software. They want a simple way to manage the basic cash flow – the money-in and money-out.

Second, whenever the business wants a loan, it is a big problem. In India the entire cash flow is being managed on excel sheets. It is cumbersome, time consuming. The amount of effort for a bank to underwrite a loan for 10 lakh is the same as that required for 10 crore, which made the banks completely ignore this segment. That’s where we wanted to create a simple but robust platform to help SMEs manage cash flows, and then use that data to enable an NBFC or a bank to give out a working capital loan.“

GetFiscalWhat was your inspiration behind leaving your job and starting up?

“For me, both my father and my wife have their own businesses. I was closely involved with them, right from forming their company to managing their finances. So it only seemed natural.

Second, we felt that the opportunity was so phenomenal, and both Bhaskar and I had spent enough time in this ecosystem in India, that we could quickly go in, use our knowledge and experience and create a business out of it.”

What do you look for in new hires?

“We are a team of 11 people at this point. We look for 2 things:

  1. We look for passion in the idea. The person has to believe in the idea because the journey is going to be anything but easy.
  1. We are looking for a person who is willing to learn. Though different flavors of this have been done across the globe, the approach that we have taken, where product led financing is the key, that is, we bring the small businesses on the platform and then help them get a loan; this has not happened. Therefore the team needs to constantly have a learning mindset.”

How difficult or easy is it to onboard the SMEs in India?

“Very clearly, they have a genuine problem of managing everything on excel. Excel though flexible, in the end is manual and very error prone. So we see a lot them adopting our platform, even if they do not need a loan.

We are solving for the entire value chain of financial management, for today, when one wants to create an invoice, he manages it on one excel sheet, and then tracks it on a different excel sheet, checks the status in the bank and then gives all this data to the chartered accountant who then files a tax. So there are multiple platforms that have to be touched for a single invoice. So the pain point itself is huge for them.

The other thing everyone losses their sleep is for money, and we are helping them get a loan. So it is simple logic to adapt it.

Now, onboarding has 2 aspects to it: mind set and migration.

To address the mindset issue, we are targeting SMEs who are less than 4 years in business, because that is where the adopters lie.

For migration, we provide a 5 minute mapping, where you can upload your existing excels. For majority of the existing software, you will have to go out and adopt their invoicing format, but not so with us.”

What tips would you share with the people who are looking to quit their jobs and start up?

“Everyone has his or her own journey, but here is what I think it takes:

  1. You have to have passion for the idea. If you don’t believe in the idea, there is no point in working on it. The passion can be for any reason; it could be for the huge amount of money, or it could be for the pain point, or you yourself feel the need for it.
  1. Before you start off, you have to think about a team. While working on the idea, also look for a team. They will help you not only when the chips are down, but they will also complement you. Only then you can go out and create a business, knowing that even if you are not there sometimes, things will be taken care of.”

The idea and its implementation so far looks very promising. We wish Aditya and his team, all the luck in their endeavour.

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.