"Scope & eligibility criteria for Startup India Seed Fund needs to be further expanded"
While the global pandemic brought economies to a halt and massively disrupted businesses, it has also fuelled start-up dreams and we even saw several Indian start-ups achieve Unicorn status during the pandemic period. The times have never been better for the budding entrepreneurs to give wings to their start-up dreams.
The Government, too, has come up with various schemes to support its ‘Vocal for Local’ drive. A case in point is the Rs 1,000 crore Start-up India Seed Fund announced by Prime Minister Narendra Modi during the Start-up India International Summit 2021 held earlier this year.
Adgully has been turning the spotlight on the entrepreneurs who fought against all odds to bring their dreams to fruition in our special series – START-UP STARS. We at Adgully wholeheartedly support the ‘Vocal for Local’ movement and over the next few months will be featuring all local/ homegrown businesses, brands and Apps.
Vikas Chandrawat, Co-Founder & CPO, Vahak and Karan Shaha, CEO and Co- Founder, Vahak, graduated from IIT Kanpur in 2015 right after which they started their careers as consultant and business analyst, respectively. In 2016, one of Shaha’s family members apprised him of the multiple problems in the road logistics industry. As freshers from college, they were passionate about creating an impact by addressing sector-specific problems. This motivated them to start a company in 2016, which further left them with no option but to work at the ground level. During those two and a half years, the duo met more than 1,000 transport companies and individual lorry owners. This experience gave them deep insights into the problems and helped the duo understand them better. To solve these issues at scale and for every single transport SME in the country, they launched Vahak in February 2019.
Since inception, Vahak has witnessed a good rate of growth and market traction. They are currently catering to about half a million transport companies. The journey started from Raipur, Chhattisgarh, and both of them onboarded their first 500 transport companies through local networks in the area. Subsequently, they started witnessing organic referrals and the numbers rose sharply to cross the 10,000 transportation companies-mark in the first 6-7 months. That’s when the duo realised that they had built something really transformational and the market lapped it up. Subsequently, they moved their operations to Bangalore and the headquarters to Singapore and started developing their teams and technology.
In conversation with Adgully, Karan Shaha, CEO and Co-Founder, Vahak, speaks about the fascinating journey of Vahak, the core preposition of the company, the deep research and networking that went behind the scenes to onboard 10,000 transportation companies in the first 6-7 months, and much more.
What need gap did you want to fulfil with your start-up? What is the core business proposition?
Vahak’s major customers are transportation companies and lorry owners. Consequently, there are two major gaps that we address.
First, the industry lacks a proper business communication channel. Most of the deals are fixed over phone calls and the SMEs are totally dependent upon these for price discovery and to understand the market demand and supply on a daily basis. This wastes a huge amount of their time and limits the reach and network of the business, which ultimately results in lower lorry utilisation and highly fluctuating rates.
Second, there is a trust gap in the industry. Almost 100% of the industry players are working offline and have no online presence. Thus, there is some reluctance among players in terms of dealing with the unknown and non-verified players since the risk and transaction amount is higher. This factor hugely limits the lorry utilisation in our country, as SMEs and owners usually wait for a long duration to get their next business lead.
Our online network is built on the back of cutting-edge technology. We have an All-India Live Transport Marketplace App for Load and Lorry Booking. The app enables customers to directly connect with trusted transporters and truck owners across India and book trucks, trailers, and loads on shared vehicles, etc. The marketplace also helps transporters to create an online brand for their business, generate leads, and increase their revenue generation. Vahak also connects lorry owners with lakhs of transporters, enabling them to constantly get new loads. They are thus, able to run the vehicle for up to 25-26 days in a month and earn significantly higher revenues, with the shippers also getting better prices. This continuous work flow ensures better financial security for the transporters. Our platform also helps achieve market stability since the consistent monthly load ensures fair market price.
How did you identify your TG? Did you carry out any feasibility study prior to starting your business?
Our ground-level experience helped us clearly understand different stakeholders and user personas operating in this market. The first 500 transport companies were onboarded by us through personal meetings, which helped us gain highly valuable insights from our users initially.
What were the challenges that you faced in your start-up journey and how did you overcome them?
There are multiple changes that an entrepreneur faces in their journey, and that was the case with us too. Being graduates, we did not have a deep understanding of the logistics market, and that was the first and foremost challenge. We also faced fund-related challenges in our initial days. However, I feel these hurdles are a part of the bigger journey. One should strive to overcome and learn from them, which I believe is at the heart of entrepreneurship. Vahak has also been able to successfully scale and overcome the challenges for the transportation industry as a segment.
What were the clearances that you required for your venture from various authorities?
As a start-up, we created a private limited company and got registered with the Government of India as a start-up, which was not necessary. No other clearances were required apart from that.
Funds/ finance is the prime issue of almost all start-ups. What can the industry and the Government do to address this issue and ease the capital requirements of start-ups?
The start-up ecosystem as a whole is growing rapidly and so is the number of angel investors and VC funds for very early-stage companies. The government has launched multiple incubation centres and funds for start-ups, which provide a huge push and motivation for anyone looking to begin a company. Overall, the push towards Make in India and digitisation is sure to help start-ups in a big way. Looking at things from the transportation sector perspective, I believe that the government needs to streamline operations by simplifying formal registrations and according support to the transport industry. For India to become a global manufacturing hub and economic superpower, the transport sector has to rise. Thus, by registering the start-ups digitally and with less red-tape, a conducive environment can be created. This will help make more start-ups eligible for funding and other incubation support, and soft business loans. This will go a long way in boosting the morale of the start-up economy.
Prime Minister Modi has just announced a Startup India Seed Fund. How do you see start-ups benefiting from it?
This is a highly encouraging move for start-ups in the early stage as they can benefit from it in a huge way. It reduces the entry barrier for anyone looking to start a company. Being a home-grown B2B logistics marketplace, Vahak is building a technology-driven logistics ecosystem. This is in line with the government’s vision of Local for Vocal and Digital India. The scope and eligibility criteria for the Startup India Seed Fund needs to be further expanded to bring as many entities under its coverage as possible. Seed funding is essential, and many high-potential innovative, first-generation entrepreneurs fail to grow due to the lack of funds and complexities involved with financial support from government institutions. I hope the dedicated Startup India Seed Fund will help bridge that gap.
How is digital helping you further your business?
Digital has helped us tremendously. Since we started in February 2019, we witnessed the impact of COVID-19 very closely. While the transportation sector was hit hard and operations were adversely affected after the outbreak, especially during the lockdown, we saw a tremendous surge of activity on the Vahak platform. The lorry owners and transport companies were not able to conduct their business through conventional in-person interactions and their offices, etc., were closed. At the same time, they desperately needed business. This compelled them to come online and look for digital means of business generation through a high potential platform like Vahak. We saw an increase in various parameters such as onboarding numbers, daily activity, average user daily activity and so on.
What were your key learnings so far? How do you see the start-up ecosystem progressing in 2021?
Now that the second lockdown has also been lifted, we are looking forward to rapid digital adoption by the transporters and increase in activity on our platform. The transport companies are realising the potential that digital presence and networking through a platform like Vahak offers them. They are able to access lakhs of verified lorry owners and as soon as a load is posted on the platform, within seconds they can secure a deal. Similarly, the lorry owners don’t need to wait for the next load as they are almost instantly able to login and get a new consignment. This eliminates uncertainties at all levels, making the entire process smoother for them. This is an example of how digital technology has been revamping one sector and I foresee the overall start-up ecosystem in all areas such as e-commerce, healthcare, education, manufacturing and other industries grow quite rapidly in the post-lockdown phase as well as in the years ahead.
What would be your message for the budding entrepreneurs?
A business in any vertical can be successful as long as it effectively and economically benefits the target audience. It is important to properly understand the customer/ end-user’s needs and pain points. This will help in creating a solution that resolves the existing and future challenges of the segment through usage of the right technology. Thus, as long as a business is built with the right research and approach as well as technology integration, the chances of success will always be higher.