"EDITION 200"

Published: 11/19/2020

Good morning and welcome to the 200th edition of the newsletter! If someone told me I'd write over 100,000 words on the Indian startup ecosystem in a year I probably wouldn't believe them but here we are. If you were here for the 100th edition, I wrote a bit about 2 companies that I've been a huge fan of this year and so I thought I'd do the same for the 200th edition. And apologies if I sound like a broken clock on these companies since I've covered them a bit before, I'm just a very big fan of theirs. The two other companies of 2020 that I'm a huge fan of are Classplus & Pagarbook.

  • Classplus
  • ➡️ So I've already covered Classplus a couple times in the past (funding rounds and acquisition) but I first heard of the company about a year ago when Sajith Pai (Director @ Blume Ventures) was telling me it and their investment in the company. At its core, its a SaaS product for coaching centers and helps them digitize their offerings.

    ➡️ Even before COVID, I thought this seemed like a really cool business since a lot of the test prep market and larger coaching institutes were going online anyways, but the millions of smaller institutes don't really have the infrastructure to build out their own platforms. This is where Classplus comes in and tutors or coaching centers can manage all online operations through the platform.

    ➡️ The platform lets them manage attendance, content and even billing from the platform. I view the company as a Business-in-a-box platform (teachers can focus on teaching and don't have to worry about the tech at all, similar to how Shopify is empowering small businesses).

    ➡️ And while the first wave of EdTech cos in India were all about the content, wave 2 seems to be about platforms empowering educators and facilitating the learning instead of teaching itself. This also has the potential of scaling much more like an Enterprise SaaS company will similar high gross margins (which is why VCs love businesses like Classplus) and why the company has raised several rounds of capital in 2020 alone.

    ➡️ COVID has ravished certain parts of the economy but has only kicked Classplus into overdrive and has accelerated the growth of these coaching centers and tutors going online. In Jan, students were consuming 14M minutes on the platform and in January that had grown exponentially to 343M minutes (24.5x in just 9 months!)

    ➡️ I did some napkin math on the company then and while they reported they had over 1M students in August, they probably had over 2M students on the platform by the end of September (and that has probably only grown since)

    ➡️ The company's plan to generate money is also pretty clear- they can charge larger centers a monthly subscription fees for using their platform (I assume they might have a couple tiers of this) and then they can also charge a certain percentage for facilitating transactions on the platform itself. With this in place & a solid growth trajectory, I think Classplus is going to have a phenomenal 2021 and probably a pretty large growth round.

    2. Pagarbook:

    ➡️ From the mess in KiranaTech and DukaanTech in the last 4 months, the one good thing that has come out of it was the fact that I came across Pagarbook. Once Bikayi announced their fundraise and people were tweeting about them trending 3rd on the Play Store, I saw another name right above theirs that I had never heard of.

    ➡️ And while Bikayi, Dukaan and MyStore were loudly entering the market and talking about their growth on Twitter, Pagarbook had quietly captured a huge userbase. Pagarbook is an employee management app for micro, small & medium businesses all across the country- these businesses use Pagarbook to manage attendance & payroll for their employees. The company already has 5M+ businesses using the product and is quite likely the largest payroll management system in the world!

    ➡️ When I first came across the company, I thought "Shit! This makes so much sense" and then I was astounded the progress the company had made. To me it also seemed like there were several categories for these MSME Tech companies: i) Managing Khata and their customers, ii) Purchasing products & managing inventory from distributors and wholesellers; iii) Creating and managing invoices; and iv) Payroll management.

    ➡️ Now there were already well-funded companies in the first three categories that we all know about but before Pagarbook, there really wasn't anyone tackling the payroll space. And that is where Pagarbook has quickly grown to capture a large part of the market (Khatabook and OkCredit have recently launched their own Pagar apps but haven't seen much traction yet).

    ➡️ The other interesting aspect of the company was that unlike the other businesses in the MSME Tech space- they actually planned to charge their customers and have always believed that these businesses would be willing to pay for software which actually helps them manage their businesses. And they have rolled out a web version of Pagarbook with more premium features (lot more analytics) which they will charge businesses for.

    ➡️ I also think the company will expand into financial services both on the business side and on the employee side- some businesses are already using Pagarbook to transfer salaries to their employees and this will continue to be rolled out to a lot more businesses. And on the employee side, Pagarbook could follow Gusto's playbook of having some sort of wallet or neobank for the employees where they could potentially get access to their paycheck a couple of days in advance.

    ➡️ And once Pagarbook becomes integral to MSMEs all across the country, I think there's a lot of scope for expanding into other services for both the business (lending is always a possibility) but they could also go deeper into benefits for employees (investing services- gold, etc; insurance and a whole lot more). I think the Pagarbook rocketship is just taking off and I'm excited to see what 2021 holds for the company.

    Feedback & ❤️ always appreciated BONUS (Tweet of the day): https://twitter.com/Nivivacious/status/1328998122454806528

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