Friday, September 22, 2023

How Vahak Plans for a Better Future for Truck Owners in India

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India’s logistics system is broken, but vahak believes it can fix it — and the tech startup has today unveiled a $14 million Series A financing round that it hopes will help deliver on that promise.

India’s transportation sector is worth $200 billion, say Vahak founders Karan Shaha and Vikas Chandrawat, but struggles under the weight of outdated systems and technologies. For example, when a factory owner wants to transport his goods from A to B, he usually uses one of the millions of small and medium-sized companies in the transport industry to manage the work; this SME then has to call dozens of truck owners and drivers – 70% of trucks in India are owned by small owners who often also drive – to find someone who can do the job at a competitive price. The process takes days instead of hours.

Shaha saw this problem firsthand through the experience of family members in the industrial sector who struggled to move their goods. So, in 2016, he teamed up with Chandrawat, an old friend from college, to start a new transportation company. “We did that for two years, during which time we met more than 1,000 SMEs and truck owners,” recalls Shah. “We got a very clear picture of the challenges they were facing, not least because we were facing the same issues.”

That experience led to the launch of Vahak in 2019. Instead of trying to improve things with yet another transport company, the founders reasoned, why not focus on a technology-based solution. To this end, Vahak is a free to use online marketplace that connects transport SMEs with truck drivers and owners.

The idea is that every time the SMB receives an order from a customer that needs shipping, it posts the details on the platform. Truck drivers immediately see what is needed and can list their availability, along with a price for the job. “We greatly speed up the process of finding a driver,” explains Shaha. “The load is immediately broadcast to every driver on the platform – you reach more drivers, faster and face competition to offer the best price.”

The proposal works well for both parties. SMEs can offer their customers – the shippers – a much more efficient and price-competitive service. They can also use Vahak to build their credibility with customers and increase brand trust by displaying their track record on the platform.

Truck owners and drivers gain access to more job opportunities and no longer have to pay commissions to brokers who stand between them and SMEs. Shaha estimates that where some drivers previously only found work 12-15 days in a given month, that has increased to 25-26 once they move to Vahak. “Our approach is all about empowering drivers to live better lives,” Shaha added.

The idea seems to capture the imagination of both SMEs in the transport sector and truck owners. So far, Vahak has signed up 1.5 million users on both sides of the platform – and it has now set itself the goal of getting 10 million users in the next 12 months. That would represent a 10% share of the logistics market in India.

Meanwhile, Shaha and Chandrawat also have to figure out how to make a profit from the business. The free-to-use business model is geared towards mass adoption – which produces a network effect, Shaha emphasizes, with users increasingly benefiting from the platform. Over time, however, the founders see Vahak more and more as a one-stop-shop for the logistics sector, offering services such as fuel, insurance, GPS technologies and the purchase of spare parts. These value-added services allow the company to monetize and build on technologies such as the app-based payment service that Vahak has already used.

Investors buy into that vision. The $14 million Series A round announced today brings the total investment the company has raised since launch to $20.3 million. This latest fundraiser is led by Nexus Venture Partners, with participation from Foundamental, iSeed Ventures, Leo Capital, RTP Global and Titan Capital.

“Despite good growth, the Indian logistics market still faces certain challenges due to the lack of technological integration,” said Sameer Brij Verma, General Manager of Nexus. “Platforms like Vahak are now driving the digital transformation of this sector by providing technology-driven features and services to help millions of truck drivers and shippers in the country.”

Vahak says the funding will be used to double the customer acquisition strategy, accelerating user adoption of the platform. The company also plans further investments in its technology infrastructure as it builds out additional value-added services.

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