Kalaari Capital and Blume Ventures-funded Instamojo provides online sellers an easy-to-adopt method to collect payments online. Moreover, it requires no technology skills to set it up
In 2010-11, Sampad Swain, a serial entrepreneur, was looking to monetise a blog he was running successfully when he realised that the existing payment solutions were not easy for individuals and small businesses. At that time, he along with his friends Harshad Sharma, who has a technology background; Akash Gehani, with marketing and management experience; and Aditya Sengupta, an engineer from IIT, had been toying with several ideas for starting a venture. Realising the high potential – there are a million MSMEs in the country – and the crying need for a simple payment solution that was easy to use, the four decided to create a platform that was more than just a payment gateway. They tested out a beta version in 2012 and launched Instamojo in early 2013.
Today, Instamojo enables individuals and small businesses to sign up and get a simple URL where they can promote their products and services. The payment processing has been simplified so that they can start receiving payments within a few hours of registering. In addition, an app store provides related solutions for bulk emailing, social media promotions, and even signing of affiliates to expand reach and pay a commission using the platform. “Today, we charge a commission of 1.9 percent per transaction. Though some of the apps are charged, our main revenue is from the transaction fees,” explains Gehani.
Setting the initial pace
At the early stage, the founders’ vast social network helped them spread the word about Instamojo and their networking with other startups provided them with the early customers. “Our initial customers were from our direct and indirect social networks. We didn’t have to work very hard to get the word out as our big social circles helped us in that,” explains Gehani. That gave the founders more time to focus more on understanding the audience and building the product. “Our customers range from individuals to small and medium sized businesses, typically, those involved in businesses like providing educational courses, consultancies and merchandise,” he adds.
Currently, the site has 20,000 customers, many of whom are active. And, what used to be a monthly business a year ago has now become their daily business. “This trend has been followed for the last couple of years,” says Gehani. But, given the potential, this is just the tip of the iceberg. Now, the company will start focusing on advertising its services. A key strategy includes content and knowledge sharing to build loyalty and trust. “We are looking at multiple ways of increasing the customer base. Foremost is virality, which has worked very well for us, and the product helps us leverage this. Then, we will also look at growing our business and marketing team which will develop highly targeted strategies to reach out to potential customers,” elaborates Gehani. With such ideas in place, Instamojo is targeting a month-on-month growth rate of 50 percent this year.
Solving a clear pain point
While there are a lot of providers of payment solutions (gateways), there wasn’t a solution, which worked without involving a lot of cost and technology barriers. This, Gehani feels, is the greatest advantage Instamojo has, as it looks at payments as a commerce problem. “It is not the end goal, but the underlying function on which any business runs. We have brought them down, and are empowering a whole new set of businesses,” he remarks.
Instamojo was part of the Silicon Valley-based 500 Startups program, which trained and mentored them in the early stages. They also received seed funding from Mumbai-based Blume Ventures, 500 Startups, and angel investors Rajan Anandan and Sunil Kalra in 2012. In 2014, it raised a Series-A round from Kalaari Capital, primarily for hiring, marketing and scaling up the business.
Building the internal framework
One of the key mandates Instamojo took on itself was to provide a simple platform for its customers. Design, product and risk analysis formed the three pillars of the platform. “Since it has to be simple and easy to use, design plays a very important role,” says Gehani. Since payments is involved, security is another critical area for Instamojo. “Even internally, we ensure that all information is encrypted and certain processes are adhered to,” explains Gehani. The third area is data analytics to understand user patterns as well as risks involved.
Moreover, R&D forms the base for the company. Be it engineering, design, risk or growth, R&D is incorporated across all functions. “And, each function is also involved in managing customer support, which helps secure direct customer feedback from all fronts,” he says.
When it comes to hiring, technology skills and attitude are the two criteria for selecting employees, explains he. “The team is a mix of people from the top engineering and management institutes, and some who have chosen to drop out. The team also has prior experience in startups, many of which they had founded,” he says. Currently, the company has a team size of 25 and plans to double it in the next five to six months.
The challenge of simplicity
Strangely, it is this simplicity that is a challenge at times for Instamojo. “The major challenge was the lack of knowledge of the sector in which we were venturing, and more so because of the fact that it is highly regulated,” Gehani explains. People find the simplicity suspicious, especially when monetary transactions are involved. This was overcome by spending a lot of early time in understanding the environment, and ensuring that the company was building a product that would solve a specific problem.
As they look ahead, the founders’ vision is to make Instamojo ubiquitous and enable millions of businesses to grow with its solutions. “There is a long way to go for it, but we have to get there by focussing on building the right product, getting the right people who will build it with us, and ensuring that customer is always the focus,” Gehani concludes.
Founders: Sampad Swain, Harshad Sharma, Akash Gehani, Aditya Sengupta
Funded by: Blume Ventures, 500 Startups, Angel Investors, Kalaari Capital
Focus: A highly simplified payment solution to anyone to sell onlineBlume Ventures Instamojo Kalaari Capital online payments