I had first interacted with Sagar Yarnalkar—co-founder of DailyNinja—in early 2015 while he was working on a ride-hailing aggregation app, Scoot, and I was sourcing deals for Global Founders Capital in London.
After our first call, I was impressed by his product vision and ability to hustle. Two years later, I was excited to see a deal involving a milk delivery subscription startup, DailyNinja, being run by a familiar team. Subscription-based business models were interesting as logistics and payment collection were becoming easier with the advent of digital payments and auto-debit tech.
From a macro perspective, my only concern was that the hyperlocal space was in the midst of a funding winter. With 12,000 active households and strong customer loyalty with a zero churn rate, DailyNinja’s traction was impressive. The unit economics looked sustainable as they were leveraging an existing network of milk vendors for delivery, and customer acquisition costs were low.
However, I didn’t pull the trigger as DailyNinja would require considerable scale across multiple cities to turn profitable and I wasn’t confident if the required funding would come through. After I passed on the opportunity, DailyNinja raised $3 million from leading venture capitalists such as Sequoia, Matrix, and Saama. The business has grown fivefold in two years to 60,000 users.
Moreover, strategic players such as Swiggy and Big Basket are keen to acquire hyperlocal startups to complement their logistics network. The lessons for me from this are to place more emphasis on a startup’s track record in providing customer delight, instead of guessing their ability to scale. If the unit economics work and the founders are tenacious, the funding will come. I’m happy to be proven wrong and hope to see DailyNinja continue its growth.
Aditya Damani is founder of Credit Fair and an angel investor.