Entrepreneurs

How Vahak Plans To Drive A Brighter Future For India’s Lorry Owners

India’s logistics system is broken, but Vahak thinks it can fix it – and the start-up technology company has today unveiled a $14 million series A funding round it hopes will help it make good on that promise.

India’s transport sector is worth $200 billion, point out Vahak founders Karan Shaha and Vikas Chandrawat, but is struggling under the weight of antiquated systems and outdated technologies. When a factory owner, say, wants to ship its goods from A to B, it typically engages one of millions of small and medium enterprises in the transport sector to manage the work; this SME must then phone round dozens of lorry owners and drivers – 70% of India’s trucks are owned by small owners who often drive too – to find someone who can do the job at a competitive price. The process takes days rather than hours.

Shaha saw this problem first hand through the experience of family members in the industrial sector who were struggling to move their goods. So in 2016, he teamed up with Chandrawat, an old university friend, to launch a new transport business. “We did that for two years, during which time we met more than 1,000 SMEs and lorry owners,” Shaha recalls. “We got a very clear view of the challenges they were facing, not least because we were suffering with the same problems.”

That experience prompted the launch of Vahak in 2019. Rather than try to improve things with yet another transport business, the founders reasoned, why not focus on a technology-enabled solution. To that end, Vahak is a free-to-use online marketplace that connects transport SMEs with lorry drivers and owners.

The idea is that each time the SME gets an order from a customer needing shipping, it posts the details on the platform. Lorry drivers instantly see what is required and can post their availability, along with a price for the job. “We speed up the process of finding a driver dramatically,” explains Shaha. “The load is broadcast immediately to every driver on the platform – you’re reaching more drivers, more quickly, and getting competition to offer the best price.”

The proposition works well for both sides. SMEs get to provide their customers – the shippers – with a far more efficient and price-competitive service. They can also use Vahak to build their credibility with customers, increasing brand trust by showcasing their track records on the platform.

As for lorry owners and drivers, they get access to more work opportunities and no longer have to pay commissions to brokers standing between them and the SMEs. Shaha estimates that where some drivers were previously only finding work for 12-15 days in a given month, that has risen to more like 25-26 once they’ve moved on to Vahak. “Our approach is all about empowering drivers to live better lives,” Shaha adds.

The idea appears to have captured the imagination of both transport SMEs and lorry owners. So far, Vahak has signed up 1.5 million users spanning both sides of the platform – and it has now set itself a target of getting to 10 million users over the next 12 months. That would represent a 10% share of India’s logistics market.

In the meantime, Shaha and Chandrawat also have to work out how to turn a profit from the business. The free-to-use business model is aimed at getting mass adoption – that delivers a network effect, Shaha points out, in which users get ever more benefit from the platform. In time, however, the founders see Vahak as becoming more of a one-stop-shop for the logistics sector, offering services such as fuel, insurance, GPS technologies and spare parts purchases. These value-added services will enable the business to monetise – and build on technologies such as the app-based payments service Vahak has already used.

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

“Despite posting good growth, the Indian logistics market continues to face certain challenges due to the lack of technology integration,” argues Sameer Brij Verma, managing director of Nexus. “Platforms such as Vahak are now bringing about the digital transformation of this sector by providing tech-driven features and services to aid millions of truck drivers and shippers in the country.”

Vahak says the funding will be used to double down on its customer acquisition strategy, accelerating users’ adoption of its platform. The business also plans further investment in its technology infrastructure as it builds out additional value-added services.

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