Backed by Fidelity Growth Partners and a stream of notable angel investors including K. Ganesh, Kunal Bahl, Rohit Bansal and Amit Agarwal, CredR aims to bring the credibility and trust factor into selling second-hand bikes by having every bike put on sale checked by mechanics and rated on a scale of one to five.Sumit Chhazed, Co-Founder, CredR
An IIT Mumbai graduate, Sumit Chhazed’s first goal on graduating in 2013 was to quench the thirst to ride a bike. Since he was not sure of how long he would be in Mumbai, he decided to opt for a second-hand bike. But within three to four weeks of the quest, the fire had died in the dampening disappointment that followed. After following many misleading advertisements, he bought what looked like a usable bike, only to spend another Rs 15,000 or so because he had been taken for a ride and given a bike that had a damaged fuel tank and engine!
Embittered by this experience, Chhazed realised that he was not alone in this traumatic experience. Other friends from other cities too had similar experiences that made them wary of buying second hand bikes.
And yet, there was a huge market for second hand bikes; the student community, people in the early stages of their career, those unsure of how long they will be in a city – they all seemed to want to buy second hand bikes till greater certainty and better earning power put a new bike within their financial reach. This prompted him and his friends to research the need, the market and the challenges faced by potential buyers. They discovered that the market severely lacked trust, credibility, quality assurance and transparency.
Chhazed along with Nikhil Jain and Nittin Mittal, batchmates, had co-founded two ventures – Enelek Power, a start-up aimed at providing energy saving solutions in India, and Coursewave Eduventures- a technology focused education company. In November 2014, they set up a team of mechanics in Ghatkopar, Mumbai, and a list of parameters to check used bikes coming up for sale on CredR and rated it on a scale of five. “Only those that are three stars and above get listed on the technology platform we started for buying and selling of used bikes,” explains Chhazed.
It established a technology team for developing the solution and a team of coordinators as the single touchpoint between buyers and sellers to improve the quality of interactions. In 15 days, the team managed to sell 15 bikes, which gave them the confidence to go live.
Once they tested the feasibility of the process and the solution, they expanded to rest of Mumbai, and by December end 2015, they had sold 25 bikes on the site.
Funding and Growth
The company found angel funding from leading investors such as K Ganesh, Kunal Bahl and Rohit Bansal of Snapdeal, and Amit Agarwal of Amazon, who have also helped it shape its business model and make it a compelling value proposition. “Though others have come into the market, our greatest strength is that we take responsibility for the product because we only have on display validated and tested products,” Chhazed says with confidence.
From the initial team of six in 2014, the company grew to 30 members by early 2015, and is present in Mumbai, Bangalore and Pune. Since it believes quality assurance is the critical disruptive factor in the sale of second hand bikes, it prefers to have its own team in all the locations. “The team size can be small since this is not a time-bound business. Typically, from the time a bike comes up for sale to the time the sale happens, it can take easily from five to seven days,” he points out. The mechanics can inspect up to 15 bikes a day.
“We are disrupting an existing business by ensuring credibility – which itself was a big challenge.”
CredR had set for itself a target of 1000 bikes before it went for further funding, as it would also be able to scale up with more stability. By March 2015, it achieved this goal and was funded by Mumbai-based Fidelity Growth Partners to the tune of $15 million, which was used for expanding to markets such as Delhi, Hyderabad, and recently, the NCR regions as well. “These are big markets. So we would like to strengthen our base here before expanding further to the rest of India,” says Chhazed. The company now has a team of 300.
Currently CredR does 120 transactions a day. It intends to see 2000 a day and is promoting through targeted social media marketing. It also does promotions around campuses and in IT parks, where its main market is.
Selling happens either by individuals as also aggregators, who are CredR’s main target suppliers for the second hand bike. “We are disrupting an existing business by ensuring credibility – which itself was a big challenge. Most suppliers were hesitant when we introduced the processing of checking the bikes, but we had to convince them that this would improve their chances of sale,” says Chhazed. Second was the transparent pricing, which did away with bargaining – typical when selling second hand goods. But the pricing is backed by market trends and data analytics and has worked well for all parties concerned, including CredR, which also makes money in the process.
CredR aims to establish itself as a credible brand for customers to connect for buying and selling bikes. It wants to take the ecosystem to another level, and though it has charted a growth plan, it is also aware of the need to stabilise before expanding. It intends going pan India, but for the coming quarter, it will tap the potential in its existing markets.
Founded by: Sumit Chhazed, Nikhil Jain and Nittin Mittal
Founded in: Dec 2014
Funded by: Angels, Fidelity Growth
Focus: Online marketplace for second hand bikes
Wheeling out a New Deal
Though there is a huge market for second hand bikes, there is no guarantee for the buyers that they truly get value for money. The process of identifying and buying a bike in good condition for the right price can be an uphill and disillusioning process. Having burnt their fingers, Sumit Chhazed, Nikhil Jain and Nittin Mittal, IIT graduates from Mumbai, decided to start a venture which adds the trust factor by testing the bikes that come for sale and rating them, thus adding credibility. After a pilot in Ghatkopar in Nov 2014, the company went live in Jan 2015 and has grown from a team of six to 300 today. It is present in Mumbai, Bangalore, Pune, Delhi, Hyderabad and NCR region. It handles 120 transactions a day and provides six-month warranty for the bikes it sells, thus building trust and quality assurance. It also has a transparent pricing policy that is win-win for all concerned. The company has received investments from angels as well as Fidelity Growth Partners, and plans to strengthen its presence in the existing markets before going pan-India.