Herd Mentality
Welcome to the brave new world of crowdfunding. As the name itself suggests, it is an alternative method of raising money compared to traditional mores. Here, a large number of people collectively contribute relatively smaller sums of money to support a creative project or donate to a cause/ charity.
- May 20, 2016,
- Updated May 23, 2016 1:44 PM IST
Betaout is an interesting Noida-based start-up that, among other issues, is trying to solve a key problem facing e-commerce companies. A customer after adding goods to a checkout cart on an e-commerce platform ends up most of the time not closing the transaction. It's called 'abandonment' in sectoral lexicon. Most e-commerce companies would give an arm and a leg to get data and, importantly, analysis on why this happens - this would help them improve their conversion ratio. There are several players trying to provide this kind of analytics and Betaout is one among them. It sells customer intelligence and marketing automation software to e-commerce companies.
Betaout counts the likes of Paytm, Mauj, Droom and Tokopedia (a leading Indonesian marketplace) amongst its 40-plus clients. The company has some marquee angel investors in the likes of Kunal Bahl of Snapdeal and Phanindra Sama, Co-founder of Redbus, who have invested half a million dollars in the company.
So when Ankit Maheshwari, the co-founder of Betaout, was looking to raise an additional sum of money to expand operations, Kunal Bahl asked him to check a crowdfunding platform called LetsVenture, another company he has invested in. "I was initially sceptical. Crowdfunding investments even internationally are relatively new. But I decided to check them out and it was probably one of the best decisions I took," says Maheshwari.
Maheshwari feared that he would have to approach, hat in hand, several thousand investors, but he was in for a surprise. "I was taken aback by how easy and seamless the entire process was. LetsVenture did a phenomenal job of handholding and making the entire process pain free. We went in looking for Rs 1 crore of additional investment and given the strong response from the investor community, ended up raising Rs 3 crore. The whole process was over in three-four weeks. This allowed us to focus on growing the company rather than having to devote time in raising funds."
For its pains, LetsVenture ended up getting a fee of 2 per cent of the funds raised, considerably lower than what Maheshwari would have had to spend if he were to go around on his own looking for investments.
India has 3.1 million NGOs, according to a government report. With the huge challenges the Indian society faces, a number of NGOs have been working in different areas like education and healthcare. They need funds on an ongoing basis for various projects. Similarly, individuals in distress have had to fall back on charity of their fellow human beings. Indians are also collectively big givers relative to their income size. Till now, majority of these transactions were limited by various factors like awareness and geographical limitations.
Charity crowdfunding has been the answer to several of these challenges and, unsurprisingly, this has been the biggest segment of the crowdfunding market. A number of players such as Ketto and BitGiving operate in this space. Varun Sheth, CEO of Ketto, says his site has helped raise Rs 10 crore last year and has done 7,000 campaigns on its platform till date. Ketto, which has 25 employees and has raised $800,000 in funding, says it is breaking even at present.
Ishita Anand, the CEO of Bitgiving, says her platform came to the rescue of the Indian Ice hockey team when it didn't have funds to travel abroad to play in tournaments. "We helped them raise more than Rs 5 lakh from 325 contributors." Bitgiving itself has raised an undisclosed sum of money from seven angel investors. "We don't see ourselves as a transactional platform, rather we are a technology-enabled platform to help people raise funds through crowdfunding."
Most of these platforms charge 6-10 per cent of the money a campaign raises on its platform. A few others like Milaap and Rangde operate in the debt crowdfunding space, where investors, through the platform, lend amounts to micro-enterprises and entrepreneurs.
Clearly, crowdfunding is becoming a mainstream alternative to conventional modes of funding, though some conundrums around regulations and sectoral bias towards charity and causes are apparent. But it's an idea whose time appears to have come.
Betaout is an interesting Noida-based start-up that, among other issues, is trying to solve a key problem facing e-commerce companies. A customer after adding goods to a checkout cart on an e-commerce platform ends up most of the time not closing the transaction. It's called 'abandonment' in sectoral lexicon. Most e-commerce companies would give an arm and a leg to get data and, importantly, analysis on why this happens - this would help them improve their conversion ratio. There are several players trying to provide this kind of analytics and Betaout is one among them. It sells customer intelligence and marketing automation software to e-commerce companies.
Betaout counts the likes of Paytm, Mauj, Droom and Tokopedia (a leading Indonesian marketplace) amongst its 40-plus clients. The company has some marquee angel investors in the likes of Kunal Bahl of Snapdeal and Phanindra Sama, Co-founder of Redbus, who have invested half a million dollars in the company.
So when Ankit Maheshwari, the co-founder of Betaout, was looking to raise an additional sum of money to expand operations, Kunal Bahl asked him to check a crowdfunding platform called LetsVenture, another company he has invested in. "I was initially sceptical. Crowdfunding investments even internationally are relatively new. But I decided to check them out and it was probably one of the best decisions I took," says Maheshwari.
Maheshwari feared that he would have to approach, hat in hand, several thousand investors, but he was in for a surprise. "I was taken aback by how easy and seamless the entire process was. LetsVenture did a phenomenal job of handholding and making the entire process pain free. We went in looking for Rs 1 crore of additional investment and given the strong response from the investor community, ended up raising Rs 3 crore. The whole process was over in three-four weeks. This allowed us to focus on growing the company rather than having to devote time in raising funds."
For its pains, LetsVenture ended up getting a fee of 2 per cent of the funds raised, considerably lower than what Maheshwari would have had to spend if he were to go around on his own looking for investments.
India has 3.1 million NGOs, according to a government report. With the huge challenges the Indian society faces, a number of NGOs have been working in different areas like education and healthcare. They need funds on an ongoing basis for various projects. Similarly, individuals in distress have had to fall back on charity of their fellow human beings. Indians are also collectively big givers relative to their income size. Till now, majority of these transactions were limited by various factors like awareness and geographical limitations.
Charity crowdfunding has been the answer to several of these challenges and, unsurprisingly, this has been the biggest segment of the crowdfunding market. A number of players such as Ketto and BitGiving operate in this space. Varun Sheth, CEO of Ketto, says his site has helped raise Rs 10 crore last year and has done 7,000 campaigns on its platform till date. Ketto, which has 25 employees and has raised $800,000 in funding, says it is breaking even at present.
Ishita Anand, the CEO of Bitgiving, says her platform came to the rescue of the Indian Ice hockey team when it didn't have funds to travel abroad to play in tournaments. "We helped them raise more than Rs 5 lakh from 325 contributors." Bitgiving itself has raised an undisclosed sum of money from seven angel investors. "We don't see ourselves as a transactional platform, rather we are a technology-enabled platform to help people raise funds through crowdfunding."
Most of these platforms charge 6-10 per cent of the money a campaign raises on its platform. A few others like Milaap and Rangde operate in the debt crowdfunding space, where investors, through the platform, lend amounts to micro-enterprises and entrepreneurs.
Clearly, crowdfunding is becoming a mainstream alternative to conventional modes of funding, though some conundrums around regulations and sectoral bias towards charity and causes are apparent. But it's an idea whose time appears to have come.