Hyderabad: Starting his own enterprise occurred to Abhishek Nayak when he was in the third year of college. But, unlike most entrepreneurs who prefer gaining some work experience, and some savings in the process, before taking the entrepreneurial plunge, Nayak decided to take the big leap immediately after graduation. “I knew that I would enjoy being an entrepreneur because I had very diverse interests and skills,” says Nayak.
Together with Arpit Mohan, a batchmate at BITS Pilani, he co-founded Gharpay Technology Services Pvt. Ltd, the holding company of Gharpay, in January 2011, a month after graduating. Mohan, who graduated in electronics, is the company’s chief technology officer, and Nayak is the chief executive.
A biological sciences graduate, Nayak chose not to sit for campus interviews at Birla Institute of Technology and Science (BITS) in Pilani while his classmates picked up cushy jobs. Instead, he ended up spending the final semester of college conceptualizing and planning different business ideas, one of which he intended to launch after graduation.
His first venture was a chance discovery.
“I got the idea after seeing my father struggle with online payment options,” says Nayak. Sensing a business opportunity in providing cash-on-delivery services to a market that is yet to trust online banking transactions, Nayak enquired with some e-commerce entrepreneurs. None had a reliable cash-on-delivery (COD) provider.
“It seemed like there was an untapped demand for COD,” Nayak recollects.
Nayak and Mohan met at the entrepreneurship club at BITS-Pilani, where they picked up “valuable lessons” on networking, market research, product development and doing sales. These takeaways came in handy when they founded Gharpay in Hyderabad, a city, Nayak says, was a natural choice given its proximity to Bangalore, Mumbai, Chennai and Pune—which are all “an overnight train journey away.”
The activities at the club coupled with some hands-on experience of working on small projects during holidays helped them get their feet off the ground in the initial days. “I knew what has to be done in the early few days,” Nayak says.
The initial investment came from their parents. Both Nayak, who hails from Visakhapatnam, and Mohan, who grew up in Muscat, Oman, borrowed Rs.5 lakh to bootstrap the firm, and began operations from a rented residential apartment.
Put simply, Gharpay, which means at home in Hindi, is an offline payment service for any digital product such as travel ticket, insurance or movie ticket. Its business model was simple. Gharpay would collect payments from customers who place online orders from websites of Groupon, Thomas Cook and Naukri, and would credit the amount to the respective company.
Gharpay charged a transaction fee (the firm’s revenues) on every cash-on-delivery order successfully executed. On an average, Nayak says, they pocketed about 2.5% on each successful transaction.
Gharpay only dealt with digital products, which meant they couldn’t work with brands such as Flipkart, Snapdeal, Myntra and other e-commerce providers who did roaring business selling goods online. The fledgling firm didn’t have the wherewithal to deliver tangible goods at the doorsteps of customers.
The big break for the two founders came when they met executives of venture capital firm Sequoia Capital at a conference, and pitched for a seed investment. Sequoia along with Sierra Atlantic Inc. founder Raju Reddy invested an undisclosed amount in the company. Two early stage seed funds, Blume Venture Advisors and Kae Capital joined the firm in the second round.
The investors, represented by a single member on the board, gave the duo strategic inputs on the market, product pricing, helping Gharpay ink more service agreements with clients.
Like every other startup, Gharpay too faced some challenges. It took time for the duo to sell their idea especially to mid and large-sized clients. Sales cycle, or the time taken to ink a service agreement from the first meeting or call, was typically 4-5 months for the bigger clients, and shorter for the rest.
“Sales is harder than you imagine it to be,” says the 26-year-old.
Another challenge was to drive repeat purchases from end-customers they had serviced, and also find newer clients to buy Gharpay’s payment system. “This is a challenge faced by all payment companies and we are trying to solve it by targeting consumers with relevant ads based on their buying profile,” says Nayak.
The result is ClinkNow, a marketing platform for advertisers to target consumers who shop using debit and credit cards.
ClinkNow is the team’s second venture after they sold Gharpay to Gurgaon-based SSN Logistics Pvt. Ltd’s Delhivery.com for an undisclosed sum in June last year. Gharpay’s brand, its business, and its 60-member operations team also changed hands as part of the all-cash transaction.
Surprisingly, unlike most entrepreneurs who find it too hard to let go of their first companies, Nayak and Mohan were more practical when they decided to sell Gharpay. “The business model wasn’t very scalable and we didn’t see potential for becoming a highly profitable company in the near future,” Nayak says. “Ideally I would have wanted my first venture to have been a good story but it didn’t turn out that way.”
The investors of Gharpay, Sequoia, Blume, Kae and Raju Reddy continue to remain invested in ClinkNow.
ClinkNow is currently working with an Indian bank based in Mumbai and is also piloting the product with a few other banks.
Surprisingly, for someone whose first venture involved making money through offline payments, Nayak and Mohan’s second venture relies heavily on card transactions. ClinkNow is a buying pattern analysis tool, which sits on a bank server and analyses transactions to help retailers target customers according to their purchase patterns.
“We are seeing exciting performance of ClinkNow,” the 26-year-old says.
Mint has a strategic partnership with National Entrepreneurship Network, which hosts the Tata First Dot awards.