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Singapore’s Grain, a profitable food delivery startup, pulls in $10M for expansion
Cloud kitchens are the big thing in food delivery, with ex-Uber CEO Travis Kalanick’s new business one contender in that space, with Asia, and particularly Southeast Asia, a major focus. Despite the newcomers, a more established startup from Singapore has raised a large bowl of cash to go after regional expansion.
Founded in 2014, Grain specializes in clean food while it takes a different approach to Kalanick’s CloudKitchens or food delivery services like Deliveroo, FoodPanda or GrabFood.
It adopted a cloud kitchen model — utilizing unwanted real estate as kitchens, with delivery services for output — but used it for its own operations. So while CloudKitchens and others rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain works with its own chefs, menu and delivery team. A so-called “full stack” model, if you can stand the cliched tech phrase.
Finally, Grain is also profitable. The new round has it shooting for growth — more on that below — but the startup was profitable last year, CEO and co-founder Yi Sung Yong told TechCrunch.
Now it is reaping the rewards of a model that keeps it in control of its product, unlike others that are complicated by a chain that includes the restaurant and a delivery person.
We previously wrote about Grain when it raised a $1.7 million Series A back in 2016, and today it announced a $10 million Series B, which is led by Thailand’s Singha Ventures, the VC arm of the beer brand. A bevy of other investors took part, including Genesis Alternative Ventures, Sass Corp, K2 Global — run by serial investor Ozi Amanat who has backed Impossible Foods, Spotify and Uber among others — FoodXervices and Majuven. Existing investors Openspace Ventures, Raging Bull — from Thai Express founder Ivan Lee — and Cento Ventures participated.
The round includes venture debt, as well as equity, and it is worth noting that the family office of the owners of The Coffee Bean & Tea Leaf — Sassoon Investment Corporation — was involved.
Grain covers individual food as well as buffets in Singapore
Three years is a long gap between the two deals — Openspace and Cento have even rebranded during the intervening period — and the ride has been an eventful one. During those years, Sung said the business had come close to running out of capital before it doubled down on the fundamentals before the precarious runway capital ran out.
In fact, he said, the company — which now has more than 100 staff — was fully prepared to self-sustain.
“We didn’t think of raising a Series B,” he explained in an interview. “Instead, we focused on the business and getting profitable… we thought that we can’t depend entirely on investors.”
And, ladies and gentleman, the irony of that is that VCs very much like a business that can self-sustain — it shows a model is proven — and investing in a startup that doesn’t need capital can be attractive.
Ultimately, though, profitability is seen as sexy today — particularly in the meal space, where countless U.S. startups have shuttered, including Munchery and Sprig — but the focus meant that Grain had to shelve its expansion plans. It then went through soul-searching times in 2017 when a spoilt curry saw 20 customers get food poisoning.
Sung declined to comment directly on that incident, but he said that company today has developed the “infrastructure” to scale its business across the board, and that very much includes quality control.
Grain co-founder and CEO Yi Sung Yong [Image via LinkedIn]
Grain currently delivers “thousands” of meals per day in Singapore, its sole market, with eight-figures in sales per year, he said. Last year, growth was 200 percent, Sung continued, and now is the time to look overseas. With Singha, the Grain CEO said the company has “everything we need to launch in Bangkok.”
Thailand — which Malaysia-based rival Dahamakan picked for its first expansion — is the only new launch on the table, but Sung said that could change.
“If things move faster, we’ll expand to more cities, maybe one per year,” he said. “But we need to get our brand, our food and our service right first.”
One part of that may be securing better deals for raw ingredients and food from suppliers. Grain is expanding its “hub” kitchens — outposts placed strategically around town to serve customers faster — and growing its fleet of trucks, which are retrofitted with warmers and chillers for deliveries to customers.
Grain’s journey is proof that startups in the region will go through trials and tribulations, but being able to bolt down the fundamentals and reduce burn rate is crucial in the event that things go awry. Just look to grocery startup Honestbee, also based in Singapore, for evidence of what happens when costs are allowed to pile up.
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Singapore’s SalesWhale raises $5.3M to bring AI to sales and marketing teams
SalesWhale, a Singapore-based startup that uses AI to help marketers and salespeople generate leads, has announced a Series A round worth $5.3 million.
The investment is led by Monk’s Hill Ventures — the Southeast Asia-focused firm that led SalesWhale’s seed round in 2017 — with participation from existing backers GREE Ventures, Wavemaker Partners and Y Combinator. That’s right, SalesWhale is one a select few Southeast Asian startups to have been through YC, it graduated back in summer 2016.
SalesWhale — which calls itself “a conversational email marketing platform” — uses AI-powered “bots” to handle email. In this case, its digital workforce is trained for sales leads. That means both covering the menial parts of arranging meetings and coordination, and the more proactive side of engaging old and new leads.
Back when we last wrote about the startup in 2017, it had just half a dozen staff. Fast-forward two years and that number has grown to 28, CEO Gabriel Lim explained in an interview. The company is going after more growth with this Series A money, and Lim expects headcount to jump past 70; SalesWhale is deliberating opening an office in California. That location would be primarily to encourage new business and increase communication and support for existing clients, most of whom are located in the U.S., according to Lim. Other hires will be tasked with increasing integration with third-party platforms, and particularly sales and enterprise services.
The past two years have also seen SalesWhale switch gears and go from targeting startups as customers, to working with mid-market and enterprise firms. SalesWhale’s “hundreds” of customers include recruiter Randstad, educational company General Assembly and enterprise service business Unit4. As it has added greater complexity to its service, so the income has jumped from an initial $39-$99 per seat all those years ago to more than $1,000 per month for enterprise customers.
SalesWhale’s founding team (left to right): Venus Wong, Ethan Lee and Gabriel Lim
While AI is a (genuine) threat to many human jobs, SalesWhale sits on the opposite side of that problem in that it actually helps human employees get more work done. That’s to say that SalesWhale’s service can get stuck into a pile (or spreadsheet) of leads that human staff don’t have time for, begin reaching out, qualifying leads and sending them on to living and breathing colleagues to take forward.
“A lot of potential leads aren’t touched” by existing human teams, Lim reflected.
But when SalesWhale reps do get involved, they are often not recognized as the bots they are.
“Customers are often so convinced they are chatting with a human — who is sending collateral, PDFs and arranging meetings — that they’ll say things like ‘I’d love to come by and visit someday,’ ” Lim joked in an interview.
“Indeed, a lot of times, sales team refer to [SalesWale-powered] sales assistant like they are a real human colleague,” he added.
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CleverTap lands $26M for its mobile-focused customer marketing service
CleverTap, an India-based startup that lets companies track and improve engagement with users across the web, has pulled in $26 million in new funding thanks to a round led by Sequoia India.
Existing investor Accel and new backer Tiger Global also took part in the deal, which values CleverTap at $150-$160 million, the startup disclosed. The deal takes CleverTap to around $40 million from investors to date.
Founded in 2015 and based in Mumbai, CleverTap competes with a range of customer experience services, including Oracle Cloud. Its service covers a range of touchpoints with consumers, including email, in-app activity, push notifications, Facebook, WhatsApp (for business) and Viber. Its service helps companies map out how their users are engaging across those vectors, and develop “re-engagement” programs to help reactive dormant users or increase engagement among others.
The company says its SDK is installed in more than 8,000 apps and its customers include Southeast Asia-based startups Go-Jek and Zilingo, Hotstar in India and U.S.-based Fandango . With a considerable customer base in Asia, CleverTap puts a particular focus on mobile because many of these markets are all about personal devices.
“Asia is mobile-first and massively growing,” CleverTap CEO and co-founder Sunil Thomas told TechCrunch in an interview. “A lot of engagement in this [part of the] world is timely… we were sort of born physically on the east side of the world, so we got to scale with all these diverse set of devices.”
That stands to benefit CleverTap as it seeks to grow market share outside of Asia, and in markets like the U.S. and Europe where mobile is — right now — just one part of the marketing and customer engagement process. The company believes that engagement by mobile has a long way to develop there.
“Engagement [in the West] is still email-heavy and not really timely,” Thomas said. “Whereas the East thinks of it as ‘Hey, let’s be proactive… instead of a user coming in to hunt for information, can I provide it when I think he or she will need it?’ ”
Of course, mobile push and in-app notifications can be easily abused.
Most people will know of an app on their phone that falls into that category. So, how does a company know what is too much or what isn’t enough?
“As long as you use push or in-app as an extension of your brand, then I think it’s extremely useful,” explained Thomas. “After all, this is a really competitive world; it isn’t just your app out there — if you can make your brand count when this person isn’t in your app, that’ll help you.”
More broadly, Thomas argued that CleverTap brings data to the table which, ultimately, “changes the whole context in real time.” So a customer can really look holistically at their online presence and figure out what is working, and with which users. In real terms, when used to acquire new users online, he said he believes that CleverTap typically doubles registration conversions and triples the buying rate.
“The cost of acquisition to first purchase is what we really effect,” said Thomas. “It’s that moment you get a new person into your house.”
CleverTap has an office in Sunnyvale and it has just landed in Singapore. Now it plans to add a location in Indonesia before the end of the year. Those expansions are centered around business development, with some customer support, since tech and other teams are in India. Already, according to Thomas, the company is looking to grow in Europe while it is weighing the potential to enter Latin America in a move that could include a local partnership.
The CleverTap CEO is also considering raising more money toward the end of the year, when he believes that the company can push its valuation as high as $400 million.
“That’s very doable based on revenue growth,” he said. “We think that the revenue will demand that valuation.”
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Snap is channeling Asia’s messaging giants with its move into gaming
Snap is taking a leaf out of the Asian messaging app playbook as its social messaging service enters a new era.
The company unveiled a series of new strategies that are aimed at breathing fresh life into the service that has been ruthlessly cloned by Facebook across Instagram, WhatsApp and even its primary social network. The result? Snap has consistently lost users since going public in 2017. It managed to stop the rot with a flat Q4, but resting on its laurels isn’t going to bring back the good times.
Snap has taken a three-pronged approach: extending its stories feature (and ads) into third-party apps and building out its camera play with an AR platform, but it is the launch of social games that is the most intriguing. The other moves are logical, and they fall in line with existing Snap strategies, but games is an entirely new category for the company.
It isn’t hard to see where Snap found inspiration for social games — Asian messaging companies have long twinned games and chat — but the U.S. company is applying its own twist to the genre.
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Jio Health combines online and offline healthcare in Southeast Asia, starting in Vietnam
The internet is often lauded for the potential to increase the impact of a range of primary services in emerging markets, including education, commerce, banking and healthcare. While many of those platforms are now being built, a few are finding that a hybrid approach combining online and offline is advantageous.
That’s exactly what Jio Health, a “full stack” (forgive the phrase) healthcare startup is bringing to consumers in Southeast Asia, starting in Vietnam.
The company started as a U.S.-based venture that worked with healthcare providers around the “Obamacare” initiative, before sensing the opportunity overseas and relocating to Vietnam, the Southeast Asian market of 95 million people and a fast-growing young population.
Today, it operates an online healthcare app and a physical facility in Saigon; it also has licenses for prescriptions and over the counter drug sales. The serviced launched nearly a year ago; already the company has some 130 staff, including 70 caregivers — including doctors — and a tech team of 30.
The idea is to offer services digitally, but also provide a physical location for when it is needed. Therein, the company ensures that “every element of that journey” is controlled and of the required standard; that’s in contrast to services that partner with hospitals or other care centers.
The scope of Jio Health’s services range from pediatrics to primary care, chronic disease management and ancillary services, which will soon cover areas like eye care, dermatology and cancer.
“Our initial research [before moving] found that healthcare in Vietnam was unlike the U.S.,” Raghu Rai, founder and CEO of Jio Health, told TechCrunch in an interview. “Spending is primarily driven by the consumer (out of pocket) and there’s no real digital infrastructure to speak of.”
Rai — a U.S. citizen — said doctors typically “have minutes per patient” and get through “hundreds” of consultations in every morning shift. That gave him an idea to make things more efficient.
“We can probably address north of 80 percent of consumers’ health needs,” he said of Jio Health,” but we also have referral partnerships with certain hospitals.”
Raghu Rai is CEO and founder of Jio Health
The process begins when a consumer downloads the Jio Health app and inputs primary information. A representative is then dispatched to visit the consumer in person, potentially within “hours” of the submission of information, according to Rai.
He believes that Jio Health can save its users money and time by using remote consultancy for many diagnoses. The company also works with health insurance companies for areas like annual checkups, and Rai said that McDonald’s and 7-Eleven are among the corporations that offer Jio Health among the providers for their staff; they’re not exclusive.
This week, Jio Health announced that it has closed a $5 million Series A funding from Southeast Asia’s Monk’s Hill Ventures . Rai said the company plans to use the capital for expansion. In particular, he said, the company is adding new care categories this month — including eye care and dermatology — and it is working toward expanding its brand through marketing.
Further down the line, Rai said the company hopes to expand to Hanoi before the end of this year. While there is interest in moving into other markets within Southeast Asia, that isn’t about to happen soon.
“We have begun to investigate other markets, but at this point feel the market in Vietnam is substantial in itself,” he told TechCrunch. “It’s very plausible that we’d be looking at international expansion plans in 2020… we’re going to be focused on Southeast Asia.”
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Razer hooks up with Tencent to focus on mobile gaming
Razer is summoning a big gun as it bids to develop its mobile gaming strategy. The Hong Kong-listed company — which sells laptops, smartphones and gaming peripherals — said today it is working with Tencent on a raft of initiatives related to smartphone-based games.
The collaboration will cover hardware, software and services. Some of the objectives include optimizing Tencent games — which include megahit PUBG and Fortnite — for Razer’s smartphones, mobile controllers and its Cortex Android launcher app. The duo also said they may “explore additional monetization opportunities for mobile gaming,” which could see Tencent integrate Razer’s services, which include a rewards/loyalty program, in some areas.
The news comes on the same day as Razer’s latest earnings, which saw annual revenue grow 38 percent to reach $712.4 million. Razer recorded a net loss of $97 million for the year, down from $164 million in 2017.
The big-name partnership announcement comes at an opportune time for Razer, which has struggled to convince investors of its business. The company was among a wave of much-championed tech companies to go public in Hong Kong — Razer’s listing raised more than $500 million in late 2017 — but its share price has struggled. Razer currently trades at HK$1.44, which is some way down from a HK$3.88 list price and HK$4.58 at the end of its trading day debut. Razer CEO Min Liang Tan has previously lamented a lack of tech savviness within Hong Kong’s public markets despite a flurry of IPOs, which have included names like local services giant Meituan.
Nabbing Tencent, which is one of (if not the) biggest games companies in the world, is a PR coup, but it remains to be seen just what impact the relationship will have at this stage. Subsequent tie-ins, and potentially an investor, would be notable developments and perhaps positive signals that the market is seeking.
Still, Razer CEO Min Liang Tan is bullish about the company’s prospects on mobile.
The company’s Razer smartphones were never designed to be “iPhone-killers” that sold on volume, but there’s still uncertainty around the unit with recent reports suggesting the third-generation phone may have been canceled following some layoffs. (Tan declined to comment on that.)
Mobile is tough — just ask past giants like LG and HTC about that… and Razer’s phone and gaming-focus was quickly copied by others, including a fairly brazen clone effort from Xiaomi, to make sales particularly challenging. But Liang maintains that, in doing so, Razer created a mobile gaming phone market that didn’t exist before, and ultimately that is more important than shifting its own smartphones.
“Nobody was talking about gaming smartphones [before the Razer phone], without us doing that, the genre would still be perceived as casual gaming,” Tan told TechCrunch in an interview. “Even from day one, it was about creating this new category… we don’t see others as competition.”
With that in mind, he said that this year is about focusing on the software side of Razer’s mobile gaming business.
Tan said Razer “will never” publish games as Tencent and others do, instead, he said that the focus is on helping discovery, creating a more immersive experience and tying in other services, which include its Razer Gold loyalty points.
Outside of gaming, Razer is also making a push into payments through a service that operates in Southeast Asia. Fueled by the acquisition of MOL one year ago, Razer has moved from allowing people to buy credit over-the-counter to launch an e-wallet in two countries, Malaysia and Singapore, as it goes after a slice of Southeast Asia’s fintech boom, which has attracted non-traditional players that include AirAsia, Grab and Go-Jek, among others.
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NetEase is the latest Chinese tech giant to lay off a big chunk of its staff
NetEase, China’s second-biggest online games publisher with a growing ecommerce segment, is laying off a significant number of its employees, adding to a list of Chinese tech giants that have shed staff following the Lunar New Year.
A NetEase employee who was recently let go confirmed with TechCrunch that the company had fired a large number of people spanning multiple departments, including ecommerce, education, agriculture (yes, founder and executive officer Ding Lei has a thing for organic farming) and public relations, although downsizing at Yanxuan, its ecommerce brand that sells private-label goods online and offline, had started before the Lunar New Year holiday.
Multiple Chinese media outlets covered the layoff on Wednesday. According to a report from Caijing Magazine, Yanxuan fired 30-40 percent of its staff; the agricultural brand Weiyang got a 50 percent cut; the education unit downsized from 300 to 200 employees; and 40 percent of NetEase’s public relations staff was gone.
A spokesperson from NetEase evaded TechCrunch’s questions about the layoff but said the company is “indeed undergoing a structural optimization to narrow its focus.” The goal, according to the person, is to “boost innovation and organizational efficiency so NetEase can fully play to its own strengths and adapt to market competition in the longer term.”
NetEase CEO Ding Lei pictured picking Longjing tea leaves in Hangzhou. Photo: NetEase Yanxuan via Weibo
Oddly, ecommerce and education appear to be some of NetEase’s brighter spots. The company singled them out alongside music streaming during its latest earnings call as the three sectors that saw “strong profit growth potential” and “will be the focus of [the company’s] next phase of strategic growth.” The staff cuts, then, may represent an urgency to tighten the purse strings for even NetEase’s rosiest businesses.
The shakeup fits into market speculation about company staff cuts to save costs as China copes with a weakening domestic economy. JD.com, a rival to Alibaba, is firing 10 percent of its senior management to cut costs, Caixin reported last week. Ride-hailing giant Didi Chuxing plans to let go 15 percent of its staff this year as part of a reorganization to boost internal efficiency, though it’s adding new members to focus on more promising segments.
Alibaba took an unexpected turn, announcing last week that it will continue to hire new talent in 2019. “We are poised to provide more resources to our platforms to help businesses navigate current environment and create more job opportunities overall,” the firm said in a statement.
2018 was a tough year for China’s games companies of all sorts. The industry took a hit after regulators froze all licensing approvals to go through a reshuffle, dragging down stock prices of big players like Tencent and NetEase. These companies continue to feel the chill even after approvals resumed, as the newly minted regulatory body imposes stricter checks on games, slowing down the application process altogether and delaying companies’ plans to monetize lucrative new titles.
That bleak domestic outlook compelled NetEase to take what Ding dubs a “two-legged” approach to game publishing, with one foot set in China and the other extending abroad. Tencent, too, has been finding new channels for its games through regional partners like Sea’s Garena in Southeast Asia.
NetEase started in 1997 and earned its name by making PC games and providing email services in the early years of the Chinese internet. More recently the company has intended to diversify its business by incubating projects across the board. It has so far enjoyed growth in segments like music streaming and ecommerce (which is reportedly swallowing up Amazon China’s import-led service) while stepping back from others such as comics publishing, an asset it is selling to youth-focused video streaming site Bilibili.
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Go-Jek extends ride-hailing service to the rest of Singapore
After a limited rollout, Go-Jek said today that it will extend its ride-hailing service to all of Singapore tomorrow while continuing its beta phase. The Indonesian-based company began offering rides in Singapore at the end of November, but only for passengers riding to and from certain areas. It introduced dynamic pricing there, which increases prices during peak times, a few days ago.
“We continue to welcome feedback from driver-partners and riders during this enhanced beta phase, as we work to fine-tune the app and create the best experience for our users,” the company said in a statement.
After Uber exited from Southeast Asia earlier this year by selling its local business to Grab, Go-Jek became Grab’s main rival. Uber still maintains a presence in the region, however, thanks to its 27.5 percent stake in Grab.
There is currently a waiting list for Go-Jek in Singapore, with customers of DBS/POSB being given priority.
When asked about how long new users need to wait, a Go-Jek spokesperson said in a statement that the time depends on supply and demand. “The response from the driver community since we opened pre-registration has been overwhelming with tens of thousands of drivers signing up via the pre-registration portal. While we can’t disclose figure at this moment, we are confident we can meet consumer expectations during the beta service period.”
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Musical.ly investor bets on internet radio with $17M deal for Korea’s Spoon Radio
One of the early backers of Musical.ly, the short video app that was acquired for $1 billion, is making a major bet that internet radio is one of the next big trends in media.
Goodwater Capital, one of a number of backers that won big when ByteDance acquired Musical.ly last year, has joined forces with Korean duo Softbank Ventures and KB Investment to invest $17 million into Korea’s Spoon Radio. The deal is a Series B for parent company Mykoon, which operates Spoon Radio and previously developed an unsuccessful smartphone battery sharing service.
That’s much like Musical.ly, which famously pivoted to a karaoke app after failing to build an education service.
“We decided to create a service, now known as Spoon Radio, that was inspired by what gave us hope when [previous venture] ‘Plugger’ failed to take off. We wanted to create a service that allowed people to truly connect and share their thoughts with others on everyday, real-life issues like the ups and downs of personal relationships, money, and work.
“Unlike Facebook and Instagram where people pretend to have perfect lives, we wanted to create an accessible space for people to find and interact with influencers that they could relate with on a real and personal level through an audio and pseudo-anonymous format,” Mykoon CEO Neil Choi told TechCrunch via email.
Choi started the company in 2013 with fellow co-founders Choi Hyuk jun and Hee-jae Lee, and today Spoon Radio operates much like an internet radio station.
Users can tune in to talk show or music DJs, and leave comments and make requests in real-time. The service also allows users to broadcast themselves and, like live-streaming, broadcasters — or DJs, as they are called — can monetize by receiving stickers and other virtual gifts from their audience.
Spoon Radio claims 2.5 million downloads and “tens of millions” of audio broadcasts uploaded each day. Most of that userbase is in Korea, but the company said it is seeing growth in markets like Japan, Indonesia and Vietnam. In response to that growth — which Choi said is over 1,000 percent year-on-year — this funding will be used to invest in expanding the service in Southeast Asia, the rest of Asia and beyond.
Audio social media isn’t a new concept.
Singapore’s Bubble Motion raised close to $40 million from investors but it was sold in an underwhelming and undisclosed deal in 2014. Reportedly that was after the firm had failed to find a buyer and been ready to liquidate its assets. Altruist, the India-based mobile services company that bought Bubble Motion has done little to the service. Most changes have been bug fixes and the iOS app, for example, has not been updated for nearly a year.
Things have changed in the last four years, with smartphone growth surging across Asia and worldwide. That could mean different fortunes but there are also differences between the two in terms of strategy.
Bubbly was run like a social network — a ‘Twitter for voice’ — whereas Spoon Radio is focused on a consumption-based model that, as the name suggests, mirrors traditional radio.
“This is mobile consumer internet at its best,” Eric Kim, one of Goodwater Capital’s two founding partners, told TechCrunch in an interview. “Spoon Radio is taking an offline experience that exists in classic radio and making it even better.”
Kim admitted that when he first used the service he didn’t see the appeal — he claimed the same was true for Musical.ly — but he said he changed his tune after talking to listeners and using Spoon Radio. He said it reminded him of being a kid growing up in the U.S. and listening to radio shows avidly.
“It’s a really interesting phenomenon taking off in Asia because of smartphone growth and people being keen for content, but not always able to get video content. It was a net new behavior that we’d never seen before… Musical.ly was in the same bracket as net new content for the new generation, we’ve been paying attention to this category broadly,” Kim — whose firm’s other Korean investments include chat app giant Kakao and fintech startup Toss — explained.
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India’s Cashify raises $12M for its second-hand smartphone business
Cashify, a company that buys and sells used smartphones, is the latest India startup to raise capital from Chinese investors after it announced a $12 million Series C round.
Chinese funds CDH Investments and Morningside led the round, which included participation from Aihuishou, a China-based startup that sells used electronics in a similar way to Cashify and has raised more than $120 million. Existing investors, including Bessemer Ventures and Shunwei, also took part in the round.
This new capital takes Cashify to $19 million raised to date.
The business was started in 2013 by co-founders Mandeep Manocha (CEO), Nakul Kumar (COO) and Amit Sethi (CTO) initially as ReGlobe. The business gives consumers a fast way to sell their existing electronics; it deals mainly in smartphones but also takes laptops, consoles, TVs and tablets.
“When we began we saw a lot of transaction for phone sales moving from offline to online,” Manocha told TechCrunch in an interview. “But consumer-to-consumer [for used devices] is highly opaque on price discovery and you never know if you’re making the right decision on price and whether the transaction will take place in the timeframe.”
These days, the company estimates that the average upgrade cycle has shifted from 20 months to 12 months, and now it is doubling down.
With Cashify, sellers simply fill out some details online about their device, then Cashify dispatches a representative who comes to their house to perform diagnostic checks and gives them cash for the device that day. The startup also offers an app which automatically carries out the checks — for example ensuring the camera, Bluetooth module, etc. all work — and offers a higher cash payment for the user since Cashify uses fewer resources.
A sample of the Cashify Q&A for selling a device
Beyond its website and app, Cashify gets devices from trade-in programs for Samsung, Xiaomi and Apple in India, as well as e-commerce companies like Flipkart, Amazon and Paytm Mall.
Used device acquired, what happens next is interesting.
The startup has built out a network of offline merchants who specialize in selling used phones. Each phone it acquires is then sold (perhaps after minor refurbishments) to that network, so it might pop up for sale anywhere in India.
With this new money, Cashify CEO Manocha said the company will develop an online resale site that will allow anyone to buy a used phone from the company’s network. Devices sold by Cashify online will be refurbished with new parts where needed, and they’ll include a box and six-month warranty to give a better consumer experience, Manocha added.
Today, Cashify claims to handle 100,000 smartphones a month, but it is planning to grow that to 200,000 by the end of this year. Cashify said its devices are typically low-end, those that retail for sub-$300 when new. A large part of that push comes from the online site, but the startup is also enlarging its offline merchant network and working to reach more consumers who are actually selling their device. That’s where Manocha said he sees particular value in working with Aihuishou.
Cashify is also developing other services. It recently started offering at-home repairs for customers and Manocha said that adding Chinese investors — and Aihuishou in particular — will help it with its sourcing of components for the repairs service and general refurbishments.
Cashify estimates that the used smartphone market in India will see 90 million phones sold this year, with as many as 120 million trading by 2020. That’s close to the 124 million shipments that analysts estimate India saw in 2017, but with surprisingly higher margins.
A reseller can make 10 percent profit on a device, Manocha explained, and Cashify’s own price elasticity — the difference between what it buys from consumers at and what it sells to resellers for — is typically 30-35 percent, he added. That’s more than most OEMs, but that doesn’t take into account costs on the Cashify side, which bring that number down.
“When I sell to a reseller, the margins aren’t that exciting, which is why we want to sell direct to consumers,” the Cashify CEO said.
The startup has plenty going on at home in India, but already it is considering overseas possibilities.
“We will focus on India for at least the next 12 months, but we have had discussions on markets that would make sense to enter,” Manocha said, explaining that the Middle East and Southeast Asia are early frontrunners.
“We are working very closely with one of the Chinese players and figuring out if we can do some business in Hong Kong because that’s the hub for second-hand phones in this part of the world,” he added.
Note: The original version of this article was updated to correct that Amit Sethi is CTO not CFO.
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