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From Ending Up In SaaS By Accident To Facilitating $6 Bn Retail Sales Through Its Platform: The Capillary Technologies Story

From Ending Up In SaaS By Accident To Facilitating $6 Bn Retail Sales Through Its Platform: The Capillary Technologies Story

This quote sincerely earrings actual, even though it won't precisely placed you on a instantly course in the direction of itself. At least, that’s what passed off with Aneesh Reddy, Krishna Mehra, and Ajay Modani – founders of omnichannel engagement and trade answer business enterprise Capillary Technologies. The 3 of them shared a common alma mater in IIT Kharagpur, but extra than that that they had a commonplace itch – starting something in their own.

While Aneesh and Krishna have been wingmates, they used to stay within the equal floor lower back on the IIT campus, Ajay turned into junior to them and from the same hostel. Together, Aneesh and Krishna had even installation the E-cell together in 2005, hoping that sooner or later they will be beginning out on their personal too.

However, they did want one inebriated nighttime to cement their path to entrepreneurship. Recalls Aneesh, “We met up on Krishna’s birthday on January 20, 2008. Krishna have been running with Microsoft whilst I were running with ITC. Ajay, in the meantime, labored with a metal employer. We met up, got drunk, and decided we should start up now!”

While alcohol may also have been the tipping factor for all of it, the fact of the matter was –  they had been slightly out of college and did now not have 1,000,000 greenback idea of what they desired to do. So they decided to shop INR 6 Lakhs -INR 7 Lakhs every, for my part, after which quit. And due to the fact they did not have a extremely good enterprise idea, they determined to go the VC way!

“We decided to pick out two sectors which had been doing nicely and developing and to do something between them. So we commenced studying up those Mckinsey reviews. Krishna stop in August 2008 and I cease in November 2008. We figured out that the 2 sectors that had been really developing massive in India all through that point have been retail and mobile. So we zeroed in on doing something among the 2.”

And that’s how the trio hit on their first concept in September 2008- Dealhunt– an SMS-based service which enabled consumers to seek for the great offers round them.

The Dealhunt Chronicles: Of Calcutta Traffic Police And Managing Durga Puja

The trio decided to startup in Kolkata and the cause became easy.

“We have been in Kolkata at that point and figured out that it's far the most inexpensive region to do whatever in lifestyles!” explains Aneesh.

Of direction, being close to Kharagpur, confident them of the first-class interns or element-time people to return to  work for them. The Dealhunt version was easy – any customer may want to SMS a quick code specifying he needs a deal on something and the group might send a response specifying the close by shops wherein it changed into to be had. For this, the crew spoke to plenty of retail shops and employed 5-six human beings to meet them.

But what have become the turning factor inside the Dealhunt tale changed into that, as a pilot to test it, the team needed to get the short code number out to the users. And, someway, between speakme to mobile operators, a touch brought them to the town visitors police that become seeking out a comparable service to man traffic in the course of Durga Puja (Pujo) celebrations.

Explains Aneesh, “The site visitors police desired us to construct a provider beneath which – at some stage in Durga Puja days people could SMS a quick code enquiring about site visitors blockades in on unique course and would get hold of a message lower back identifying all the traffic blockades on that direction. We agreed to construct that thing to truely see what number of human beings will use it. It was a serious use case of finding out what number of human beings simply could strive get statistics on SMS.”

So, the team camped inside the visitors manipulate room of the police and built out the tech. Because it became executed through town police, all mobile operators despatched SMSs to all their customers about the effort. The carrier became heavily publicised, almost 1 Cr SMSes have been sent out. And but, after this tons PR, most effective approximately 5K human beings messaged for updates in those 10 days.

Capillary Technologies: Stumbling Into SaaS By Accident

The group had learnt their lesson – this SMS-primarily based business version changed into now not going to work.

Says Aneesh, “That changed into the time we did our first and only pivot. Although mobile turned into getting massive, people were no longer looking for data through SMS. So we went returned to stores to recognize what they want. Their court cases were that their customers were now not coming lower back, stroll-ins were low.”

The trio spent any other six months conducting studies, meeting 50 branded retailers like BATA, Peter England, and the likes. The majority of them had proceedings that their identical shop sales have been down, they did now not realize who their client became. So, the crew constructed software program for them which enabled them to run their CRM on cellular numbers. And thus, Capillary Technologies’ first product was launched in March 2009. But, on account that this befell after the bloodbath of 2008 and the recession become nevertheless ongoing, many outlets expressed their lack of ability to shop for servers to put in software and paying an prematurely license price. Instead they wondered  couldn’t the crew fee a in keeping with month price as a substitute?

“We felt, at least, the customers are extreme approximately paying, so permit’s price a in line with keep/in line with month charge. So that’s how we absolutely were given into SaaS! So, essentially, we ended up in SaaS through accident as opposed to via any extreme plan!” he provides, with a laugh.

Left with out a other choice however to price a according to month free, Capillary Technologies determined to host the software program on Amazon servers so that the shops don’t have to spend their cash on these servers.

Today, the omnichannel engagement and trade solution employer is helping stores and customer packaged goods (CPG) clients interact with their customers throughout channels and transact across channels in over 30 countries. Leading manufacturers which includes Unilever, Walmart, Landmark Group, Madura Fashion, Arvind Brands, Redtag, Calvin Klein, Gap, Courts, Clarks, Starbucks, Pizza Hut, and Puma paintings with Capillary to drive retail excellence.

Monetising From Day Day One: Making $6 Bn In Retail Sales Possible

Capillary has stuck to monetising from day one, with regard to its enterprise model. In fact, as Aneesh jokes,

“The internal joke in the organization is – we in no way wrote a line of code before a person paid us for it. We monetised from day one. In India, nobody likes to say no prematurely. So, our qualifying criteria to recognize whether a client is severe, is whether he will pay up how an awful lot ever small the amount be.”

So, from day one, the SaaS startup has charged a in keeping with keep/in keeping with month rate. As some distance as traction is worried, Aneesh claims, “We do kind of $6 Bn of retail income for numerous shops on our platform. In any sense, that’s between 8%-15% of organised retail in India.”

Now present in 30 countries, with a stronghold in India, Southeast Asia, and MENA, it has about 200 massive paying customers and any other 500 small clients. Aneesh provides that ninety five% of the sales come from the big clients and the patron churn has been much less than 10%, inside the last few years.

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Commenting on how it is also slowly making inroads in China, he says, “We entered China ultimate 12 months, it is nonetheless an upcoming marketplace for us. In an employer enterprise, it takes two years to get to your first 10 referenceable clients. So for us, China continues to be in that first phase.”

Luck By Chance: Winning The QPrize Challenge

2008 was a tough year for  startups – mainly whilst SaaS become infrequently the phenomena it's miles now these days. According to Aneesh, there had been two milestones in Capillary’s journey which helped to play the percentages stacked in opposition to it. And one of those was only good fortune through risk.

Referring lower back to the putting in place of E-cellular at IIT, one of the measures Aneesh and Krishna instated become that the E-cellular might supply $22k-$29K (INR 15 Lakhs-INR 20 Lakhs) to capable startups, as a tender mortgage and could get 3% of the enterprise in go back. Naturally, after they installation Capillary, the primary issue they did become to head again to IIT and choose up that $22K (INR 15 Lakh) mortgage. That saw them through the primary 12 months.

By the stop of September 2009, they had been running extraordinarily low on finances. The crew had barely two months of runway money left to preserve and hardly ever had a contact/investor to approach for raising investment. Added to that become the reality that, in the ones days, angel making an investment itself became some thing of a nascent phenomenon. But as luck could have it, through a friend at Qualcomm, they have been apprised of the QPrize undertaking – Qualcomm’s annual business plan mission which become launching globally.

Recalls Aneesh, “We implemented at some point before the cut-off date changed into about to shut. We gained within the India undertaking and came 2nd globally. As a result, we gained $73K (INR 50 Lakhs)! It become a providence, given the reality that we had survived a 12 months on a trifling INR 15 Lakhs. That turned into our first real large turning point. Suddenly, we had the urge for food to head and hire quite a few good people.”

Added to that, Qualcomm Ventures did a number of PR for Capillary, so  a bunch of angels started out drawing near them. So from walking the company on their own credit playing cards, the team ended up raising $500K in about 3 months.

The Rajan Anandan Connection

The 2nd turning point came with the addition of Google’s India Head Rajan Anandan as an early advisor and investor in 2011 – when Capillary slowly started expanding the world over, first to UK after which to Singapore, it realised that the half of a million it had raised would take it nowhere. So, it went lower back to VCs for raising more money. But because of the nascent degree of SaaS in India, it were given extraordinarily negative valuations. It become then that a person related the team to Rajan.

Recalls Aneesh, “I bear in mind while we met him, we had been cocky enough to inform him prematurely we wanted a minimum commitment of INR 50 Lakhs!” But the cockiness paid off,as Rajan turned into inspired by way of the paintings the team became doing. As a end result, he introduced them to a gaggle of friends and Capillary ended up elevating any other $500K at a $9 Mn pre-valuation. But more than the cash, it turned into having Rajan as an marketing consultant that become the huge turning factor.

Explains Aneesh, “He has helped us assume thru in building a big stack commercial enterprise. For example we used to pitch the product to marketing parents. Since we had technology in our call, people would wonder why are we coming near advertising and marketing? We had been severely thinking of changing the call of the agency from Capillary Technologies to Capillary Marketing Solutions. Rajan informed us we have been going nuts! And defined to us how there’s gigantic value to building a era organisation.”

So it is no marvel that ultimate month, in December 2016, Rajan also joined the board of Capillary Technologies. Of course, the firm has also advanced to raising finances from marquee buyers inclusive of Sequoia, Norwest Venture Partners, and Warburg Pincus, and American Express Ventures. Last September, Mumbai-based totally undertaking debt fund InnoVen Capital also prolonged a mortgage to Capillary.

Building A Multi-product SaaS Company In Asia

When it comes to the competition, Aneesh believes that Capillary easily has the nice product in the market for Asia. He provides, “When you promote to enterprises, you compete with the nice inside the marketplace and across the world as nicely – which includes with SAP, Oracle, and Microsoft.”

Added to that, smaller startups try to win on fee. But he claims that manufacturers strive the ones out and then circulate to Capillary because of the prevalence of the product. To substantiate this, he says that the average ticket size has grown 8x instances from the time of inception. He provides, “Today, huge companies, CIOs, everyone is transferring to shop for Saas. In 2012, there have been likely best  or 3 corporations in India which had crossed million greenbacks in SaaS sales. In 2016, there had been 50 organizations who had done so.”

It is because of this that Capillary is doing all it can to garner a huge piece of this developing starvation for SaaS – and one of the approaches it is doing so is through acquisitions. Last year, as an example, it acquired ecommerce platform SellerworX, entered into strategic partnership with DataWeave, and additionally picked up a minority stake in on-web page customer engagement suite WebEngage. The yr before, it obtained virtual trade answer issuer MartJack.

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Explains Aneesh, “I consider that Asia is an underserved organisation software program market. There are a variety of white areas in technology which a whole lot of those companies have, which no person is addressing these days. So, there may be great capability in constructing a multi-product SaaS organisation in Asia. So, a majority of these acquisitions we have executed and will do are products that our existing purchaser set will be interested by.

“For instance, in 2015, we had been a unmarried product agency – we had one patron engagement product for retail. We requested ourselves, ‘What if we ought to go to seven to eight merchandise as a employer that could salvage some other $100K for a customer every 12 months?’ We realised, not all of it's miles going to come back from building merchandise ourselves Some of it's miles going to return thru acquisitions.”

Meanwhile, internally too, the 250-robust tech crew is focussing on building products on system mastering and video analytics. Adds Aneesh, “The facts you may accumulate on an internet save is so much higher than an offline save. So one subject we're running on is how close we will get the offline keep to the online store. The middle of what we do is all statistics. We also are making an investment on a product on retail insights.So, basically, we aim to make omnichannel as statistics-wealthy as possible and use that facts thoroughly to make analytics people independent.”

Translate that to numbers, and he says the purpose is to hit $50 Mn in run fee by means of March 2018.

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