Here's How This Enterprise-focused Telematics Startup Walked the Path to Profitability In a B2B startup, in addition to the product, "Momentum and Market size" are two critical factors that investors look for.
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Profitability has been the key mantra for VCs this season! Investors have become more aware of components like margins, cost of customer acquisitions and customer retention this year.
With over 300 clients in its pocket, angel-funded AssetTrackr is a telematics startup; wherein the company's solutions enable the safety of people, vehicles and equipment, optimization of business value for clients via location & usage tracking and analysis.
Ashok Yerneni, chairman and co-founder, who is a former IIT-Chennai and Virginia Tech alum, whose previous stints include TutorVista, Silicon Graphics, Network Appliance etc, spoke to Entrepreneur Media about what helped him hit profitability.
Path to profitability
"When we started development, we were working early-on with companies like MorningStar Travels, BigBasket, DTDC etc. and developed the solution platform. We realized pretty early that telematics adoption in the India market was in early stages and sales cycles will be longer. We took the "old-school" approach of being prudent with our cash-burn and focused on unit economics and driving growth through revenues. This worked well for us and helped perfect the product and helped us without burning through our cash and in reaching profitability. We also focused on showing customers business value and customer service. We did not discount heavily to fight off competition. Initially we lost some customers due to pricing pressure from companies offering solutions without sustainable business models. Eventually, many of the customers came back to us when those companies could not deliver on the promise or went out of business!
The company's solutions include enterprise-class, cloud hosted software that's been designed in-house, the company's own and OEM hardware devices for tracking coupled with industry-leading analytics capability that is embedded in its platform.
"We are currently profitable. We would be looking for strategic partners and investments that can help in accelerating our revenue growth. There's been a fundamental shift over the last two years; Indian business owners are more willing to invest (and are allocating) larger budgets into technology. There's an explosion of e-commerce and the need for personnel, asset and vehicle tracking solutions has only become more pronounced and there is huge market opportunity. With AssetTrackr's multi-product portfolio and solutions across sectors, we expect to accelerate revenues," he added.
What pulls investors to B2B startups
B2B startups have been the flavour of the season! Investors have shown key interest in the enterprise-focused space versus the B2C space this year.
"In addition to the product, Momentum and Market size are two critical factors that investors look for. The market traction that a product has achieved and the potential market opportunity needs to be significant enough for the investor. Investor sentiment in India is poised at a particularly interesting point as of now. Many startups have raised huge sums of money and spent hundreds of millions of VC money to try and grab market share at the expense of profitability. Rationalization has set in and I believe companies that do not focus on unit-profitability and cost controls will struggle to survive and grow," Ashok said.
How did it all start?
While heading the India Development Center for Laird Technologies (2008-12) and managing telematics product development efforts the company was looking for hardware sales opportunities in India.
"At the time, we found that there were really no enterprise-grade, fleet products servicing the India after-market and solutions available from other markets were too expensive or didn't fit the requirements. I set about working with a couple of entrepreneurs (now co-founders) to help develop the product. Eventually, I ended up engaging with the company full-time," Ashok said.
The work on AssetTrackr started in 2012. The decision to build a telematics platform targeting India was based on a number of factors that had coalesced - for e.g., Cellular connectivity costs were rapidly declining and India had one of the lowest costs in the world; GPS & GSM/GPRS chipset prices had significantly dropped; Google Maps for India has matured significantly over the last couple of years and Smartphone adoption has grown exponentially (and continues to do so); Location-based information services are exploding and cloud infrastructure has matured with enterprise applications moving to the cloud.
Tackling competition
Today there are number of startups that have flooded the human-tracking and vehicle tracking space. Talking about tackling competitors in this field, Ashok said, "While we started building a fleet management product, our solution platform is much broader than that. We focus of understanding the customer requirements and providing a value proposition that justifies investment. We believe tracking is a commodity service with minimal return.
Our other solutions are software based tracking solution (on smartphones) for field force tracking, delivery dispatch solution for last mile delivery, personal vehicle tracking(safekar.com) and custom IOT solutions in automotive domain. Our modular architecture API based approach enables custom solutions and easy integration into customer ERP & CRM systems."
