Though many people consider B2B business model a new trend which has emerged only in the past few years, very few know that IndiaMart had captured the segment long before it caught the attention of the 20s entrepreneurs of today. We caught up with the founder and CEO of the company, Dinesh Agarwal to know more about his company and its future plans.
IndiaMart entered the B2B market in 1996, long before Internet became a common term in India. Things were much different back then. Mr. Agarwal explains, “When we started IndiaMART it was a very different scenario. Change was yet to become a constant with technology infusion. The virtual world was still to disrupt our lives as inclusively as it does today. It was still up for aspirations and experiments, far drawn away from the essentials we know now — speed, accuracy and relevance. Search was yet to become an engine of our lives. Back in 1996, a customer just wanted his needs to be fulfilled but today a customer expects much more.”
While today’s companies have a lot of aid to start their business, including government support and venture capitalists, back in the 1990s, the scenario was not the same. The LPG reforms of 1991 gave a major push to IndiaMart. He reveals the hard times the company had in the beginning,
“IndiaMART was started out of nothing in the mid-Nineties. Nothing but the belief that the Economic Liberalisation in 1991 had a long way to go for nobodies like us, then, to get on board, realise the opportunities, innovate and deliver. When we began, we just didn’t have the money to match up to the ‘big’ requirements of the Indian market. At the same time, at the core of our idea was the belief that we needed to start something for the ‘small’. That was our opportunity!”
Believe it or not, Dinesh Agarwal had different ideas than launching a B2B business. “When I began,I wanted to set up an Internet Service Provider but Indian norms did not allow private participation,” tells Agarwal. But soon, he changed his plans. He shares with us, “But, with the money we could gather and the need within the SME sector to explore bigger buyer bases in India as well as abroad, we began making websites for them. Despite low internet penetration, we broke even in the first year of operation. This bore testimony to steps in the right direction.”
The initial years saw Dinesh and his cousin Brijesh working double shift as techies and salesmen to launch their business. Dinesh opened up about his initial days of setting up IndiaMart, “We, my cousin Brijesh and I, were salesmen during the day and techies at night, shaping the value-added services we sold, creating sites, designing and maintaining them. Soon we realised that our website business could be developed into a marketplace model. Initially, our operations were directed towards global markets, but later on around 2008-09 we realized the opportunities in the burgeoning Indian market and since then we have been focusing on domestic business.”
Almost all businesses today are based upon the kind of angel investment they manage to get from the investors. This glamorised business cycle has attracted thousands of youngsters and led to them trying their hands entrepreneurship. However, raising funds wasn’t as easy as today in 1996 when the idea of IndiaMart was first mooted. Even when the offers came, the founders were too sceptical to accept them. Hence, most of the investment came only from the earning of the founders.
Mr. Agarwal lets us in on the initial financial model of IndiaMart, “IndiaMART is built on pillars of self-sustenance and convictions. Initially, we began with what we had and then pumped in a major portion of what we earned. At the core of our idea was the opportunity to work for the small-scale industry and help them identify bigger buyer bases in India as well as abroad. Initially, we used to make websites for them.
Not only did a website enhance an SME’s presence beyond geographical barriers, but was slick, smart and a ‘now’ proposition. This was a revenue generation model and served us well to return the earnings to the business. Perhaps we are the only company in the Indian business horizon that bootstrapped for more than a decade, from 1996 till 2008. And survived, be it the Y2K, dotcom bust or global meltdown. I remember being approached by numerous investors and venture capitalists during my early days and we would politely decline considering this to be a loan.
Funding wasn’t so common as it is now. I believe investments are made only after the cheques come in. Once we were on solid ground with a sound business proposition, entities such as Bennett, Coleman & Co Ltd and Intel Capital reposed faith in us, then came others including Amadeus Capital, WestBridge Capital and Quona Capital to lend their support to us in terms of funding.”
After making it big all alone, Dinesh Agarwal wants to help other companies realize their true potential and has been looking for investment opportunities and has even invested in a few firms. We asked about what he sees in a firm before investing. He replied, “We have had history of enabling the eco-system. IndiaMART has been working with small and medium enterprises and some large businesses. We like to work focused companies, howsoever niche its products, segments or services be. It makes sense to partner with companies who are niche driven and still evolving.
What we look with much interest are the inherent values of any funding experience, how it will help evolve the ecosystem. A financial investor may not be very keen on funding a niche product or niche services, but larger companies will find a business proposition as Google invested in Uber cabs. Even IndiaMART is looking at companies in the B2B or SME space.
The pure financial investor may not look upon it as an opportunity. One benefit of partnering with established companies is access to their network. For a startup, a partnership with an established player like us gives it access to an enhanced network, experience and technology platform. We are backed by experience of the industry and know the nuts and bolts. We have the ability to provide a sense of a real-life situation and ground reality.”
One of the things that IndiaMart is best known for is the concept of trust seal and its application in the SME. We wanted to know a bit more about this concept and he obliged. “We have a pioneering role in establishing a single-window, transparent mode for businesses to happen. IndiaMART has a unique score card, based on the availability of a company’s documents, such as the registration certificate, partnership deed, PAN (Permanent Account Number), Import Export Code (IEC), Registration with Shops and Establishment Act, PF/ESI Registration and many such similar documents. If a business scored the minimum qualifying score on this formula, it is eligible for IndiaMART TrustSEAL,” we were told.
Though it is over 3 decades old, IndiaMart has ensured that it remains up to date with the latest technology. The company has adopted SMAC technology rather well for its use. Mr. Agarwal tells us,
“We have always been excited about mobile as the technology because we get location, access to the user’s address book and photo gallery. That’s how the IndiaMART experience is seamless and platform agnostic. Our strategy has been to cater to users as per their preferences – be it the desktop, WAP or App. All these users have different requirements too and completely co-exist with IndiaMART.
SMAC has been at the core of business innovation – a crucible for social, mobile, analytics and cloud technologies, together. For IndiaMART, growth is driven by an ecosystem that continuously improves and innovates upon operations in order to bring the customer closer to our offerings, without additional scale-up cost. Data – structured or unstructured – is the key. IndiaMART thrives on the synergy therein, created by social, mobile, analytics and cloud working. Together, the synergy gives IndiaMART the pioneering spirit and a definite edge. Our growth is the result of the convergence, a disruptive force.”
His new venture, Tolexo.com has gained as much limelight as IndiaMart, if not more. We requested him to tell us a bit more about that. He obliged by saying, “IndiaMART has been ostensibly focused on helping in the growth, development, networking and integration of small and medium-sized enterprises. The IndiaMART platform is essentially a platform for connecting buyers and suppliers. The buyers then shortlist the entities of their choice, do business with the sellers they want to.
We felt we can further the SME buyers and sellers’ interests and growth if we had the wherewithal to not only provide the connectivity but also help in order placement and product purchase. Thus, Tolexo was born, They are often not able to invest in people or brands. Tolexo Helps build their brands as it functions as a review platform too. Sellers list their products on Tolexo for users to compare prices and reviews, and buy online. The business model does not have a listing fee, just a percentage of the actual sales made. Tolexo also takes care of the user experience after the sales until the product is delivered.”
Before we concluded our insightful conversation, we requested him to share his views about Brainbuxa. Here is what he had to say – “We have had online businesses and services till now. With its ability to integrate the social and the educational, BrainBuxa provide at-a-glance real-time advantage on blogs, forums and updates. BrainBuxa has the ability to develop into a go-to information portal that not only brings together Wikipedia, Quora, Reddit, Newsvine, Digg Etc, but also go beyond. The portal must set a course to be disruptive to dominate the space.”