ENTREPRENEUR/STARTUP SPECIAL.... Starship Enterprise ..Customer Engagement

STARTUP SPECIAL Starship Enterprise 

Powering Customer Engagement 

Firm has unique platform that does not require customers to fill up forms or carry membership cards

When Aneesh Reddy, Krishna Mehra and Ajay Modani—all alumni on IITKharagpur—quit their jobs to set up Capillary Technologies in 2008, they did so without any concrete business plan. “We were young and had no major responsibilities. So, it was the right time to take the risk,” says Reddy, now the CEO of Capillary, who was earlier with ITC. Mehra was at Microsoft Research and Modani at Danieli India when they took their entrepreneurial plunge. Their gamble has more than paid off, what with the Bangalore-based customer engagement solutions venture—which Capillary ultimately morphed into—having raised $15.5 million (about 85 crore now) in a first round of venture funding in September.
The friends had initially experimented with a few ideas. “Mobile and retail were booming and so we thought of focusing on these sectors,” says Reddy. They first created a traffic management solution for the Kolkata Police but dropped the idea when they realised there was not much revenue potential in the solution.
They then came up with a deal aggregation site. But the team quickly realised that in a post-Lehman world, retailers were more worried about getting customers into stores. “We asked retailers what they needed, what problem of theirs we could address. They all wanted some way of getting customers back in stores,” says 28-yearold Reddy. Armed with a 15 lakh soft loan from their alma mater’s entrepreneurial cell, they went about building a customer engagement platform that did not require customers to fill up forms or carry a membership card.
The customer information is captured incrementally at the billing counter each time he or she shops and the customer’s mobile number is his or her unique identification number.
The database is stored on the cloud and stores can choose to manage their own database or outsource the management to Capillary.
Like other Software as a Service (SaaS) models, the startup also charges a monthly fee of $100 to $500 per store per month. The product was launched in March 2009 and the company acquired its first five customers, including Indus-League Clothing, Indian Terrain, Numero Uno and Madura Fashion & Lifestyle’s People brand, soon after.
Capillary now provides clients analytics based on the data they gather, including details like shopping trends, customer preferences and profiling. Retailers can also run campaigns like sending out offers to a select group of customers through the platform.
Reddy says their most revolutionary product is the instant cross-selling engine, where a customer gets a discount on a product within a store as he is billing other products. “We have seen conversion rates of up to 30%,” says Reddy. The company now has 140 clients, including some big brands like Raymond, Pizza Hut, Puma, United Colors of Benetton, Peter England and Nike.
“When they came to us around three years ago their idea of no form-filling and no membership cards were revolutionary,” says Mrinmoy Mukherjee, director of marketing at Raymond. Mukherjee says their premium memberships have grown six times since they got onto Capillary’s platform. “Around 70% of our sales come from these members.”
In 2009, the company was placed second globally at QPrize, Qualcomm Ventures’ seed fund competition. This fetched them $10,000. In December that year, a handful of angel investors, including former chief executive of Cafe Coffee Day Naresh Malhotra, put in around $500,000 and in January 2011 a further set of angel investors, including Google India’s Managing Director Rajan Anandan, pumped in $1 million. It was following this round of angel investment that the company went international. “Our strategy was simple. We approached our India clients that had international presence,” says Reddy. The company now has clients in 16 countries across Europe, Middle East and South East Asia.
With the $15.5 million venture funding from Sequoia Capital, Norwest Venture Partners and Qualcomm Ventures this year, Reddy says they intend to expand their reach. The company, which is targeting around $7 million in revenue in the current financial year, services 10,000 stores. “We offer a strong value proposition to our clients. There is no reason why we cannot reach 500,000 stores soon,” he says.
RADHIKA P NAIR ET121221