B2B Metal Procurement Startup NowPurchase Aims IPO Readiness In 3-5 Yrs With Bullish Growth Outlook

An alumnus of Kolkata’s St Xavier’s Collegiate, National University of Singapore and University Pennsylvania, he started his entrepreneurial journey with a financial technology start-up in Philadelphia, US. NowPurchase, the Indian B2B startup, co-founded by him, is part of the East India startup ecosystem, which is relatively on the back foot compared to what's happening in other cities. And a story like this (the story of NowPurchase) puts the city on the map, where people do believe that joining a startup can change fortunes rather than going the more traditional path or leaving the city. He has more reasons than one to be super excited about this.

Speaking to Bizz Buzz, Naman Shah, CEO and Co-founder, NowPurchase, narrates his entrepreneurial journey and the way forward

Tell us something about the company-how did you start, how have you progressed?

Originally we started NowPurchase, a B2B startup, now offering procurement solution where Metal Manufacturers can procure high quality raw materials like metal scrap, alloys and additives in a trusted & transparent manner, as an online marketplace for people to buy their daily factory requirements. But soon after running a different business model, we realized that the metal manufacturing industry is the one, where there's maximum opportunity available. And we pivoted our business since September 2020 and became a full stack procurement company in the metal manufacturing space. So that is the background. Since then, we have been seeing very strong rapid growth in our business.

We have grown almost 2 times year-on-year for the last 4 financial years. And there is something which we are seeing, because of the solution we are providing, as well as the approach we have taken, and also the favourable market conditions where it's a fast and growing market in the developing country like India. During this time to grow the business, initially, the business was funded by myself and Akash, who are the directors of the company, as well as NIPHA Group. And post that, we raised 2 rounds of funding from external investors, first in late 2021, and the next round, few months back. The company recently secured $6 million in funding, raising its total funding to over $10 million. This round saw equity and debt investments from InfoEdge Ventures, Orios Venture Partners, 100 Unicorns, VC Grid, and a number of family offices and angel investors.

All these happened by building the right team and the team who are not working for paycheck to paycheck, but who believe that they are owners of this company and rightly so.

How big would be this overall market size? I mean, metal companies sourcing different raw materials, metal scraps, and all that, basically the size of this B2B market?

Because India is such a large country, most B2B markets are extremely large. Even this market, just the raw material procurement in this market is worth over $70 billion. So the total market size is $140 billion and the raw material procurement is $70 billion. So it's an extremely, extremely large, market. We are predominantly into ferrous, and to some extent, non-ferrous also.

And there must be other players also, who be doing the same kind of thing or helping companies to source raw materials?

So there are people who are doing it in different industries. The industry we have chosen in our approach because we're just not supplying raw materials. We are providing everything. We have our own infrastructure to do scrap recycling, which is one of the raw materials we provide. We have some of our own brands of raw materials as well, which we sell, as well as we have our own software called Metal Cloud.

So the entire approach we have taken, is quite different in the industry we are focusing on. We are, that way, the only ones doing all these. In general, if you think about B2B solutions, in general, there are many companies out there, who are doing it for different industries.

Right now, you are focusing only on Bengal and 2-3 other states, right? Or are you already a pan India player?

We started off in West Bengal with focus on West Bengal and Jharkhand. And, last year, we expanded to Maharashtra. So West Bengal, Jharkhand, and Maharashtra are our primary markets. And we recently have opened up warehouses in, Punjab, Tamil Nadu, and Gujarat. So if you think about it, with Punjab, Tamil Nadu, Gujarat, Maharashtra, Bengal, Jharkhand, we are covering almost 60 to 70 per cent of the key metal manufacturing states of India. Maybe, in a year or two, we would become a pan India company. But right now, we are catering to all the 4 regions of the country.

So, in next one to two years, you would have your own supply chain management system, or how do you propose do it?

Right. We have everything built in house. So we have our own tech team, which has built the software solution Metal Cloud, as well as we have our own tech team, which has helped us build internal systems to make sure that our processes, our order deliveries, our inventory management, everything is, extremely efficient.

And how do you ensure quality and delivery time?

I think for whether it's quality or delivery, it revolves around having a very strong process control. So once we are able to establish a strong process control, then it's easy to build tools and technology to monitor it. In terms of, delivery tracking, we provide our customers with real time delivery tracking. So almost like you can track your food delivery on Swiggy or Zomato, you can exactly track where your delivery vehicle is, when it's coming to your factory.

So we provide that real time vehicle tracking as well to all our customers. And there is a kind of timeline given to the customer within this time frame absolutely. There's a tag given to the customer, and they are notified through automated WhatsApp messages about where is the vehicle in men's literature.

How do you plan to utilize the funds, recently raised?

There are primarily 2 or 3 goals from this fund raise. Like I mentioned to you, one is geographical expansion, which we already discussed. The second is our ability to build on our supply chain with respect to scrap recycling and private labels. That is the second and the 3rd is to further own and grow our technology expertise with respect to Metal Cloud.

And now that you have planned this ESOP for your employees, I mean, what prompted you to do this?

We first did this actually, in July 1, 2019. That was the first time when we released ESOPs to our employees. Now why are we doing it? See, you know, it's for very simple, there are two parts to it.

One is, there is no way I can ever build this alone, and there has to be alignment of incentives. So my alignment of incentive is to create more value of the company because I hold shares in the company. Now if a vast majority of my team also holds shares in the company, they are also aligned to do what's the best for the company, and they put the company first. So it is a clear incentive alignment. That is the second thing.

And the next is that, you know, you are spending 8, 10, 12 hours of your day at work, which is almost 50 to 60 per cent of your awake time you spend at work. You wanna make sure there's a place, not only you, but everyone coming in likes coming into work. They feel that this is the place where they're wanted. Not something where they're monitoring the time when they can leave. So that all of this together, you know, prompted us to build this ESOP programme, quite early in our journey. And now we have completed our first-ever Employee Stock Option Plan (ESOP) buyback, marking a key milestone for the company and the startup ecosystem in Kolkata. The buyback, which was valued at approximately 100 times the initial purchase price, has had a transformative impact on employees' lives.

Any fresh hiring plans at this point in time?

Yeah. You know, we are regularly hiring. So we are keeping on adding team members. I would just think, I think the last 1 year, we have added close to 40 people. So, we are, you know, regularly growing and expanding. I think, again, maybe in the next 12 months, we will again have maybe 40 to 50 people join us as well. That's the kind of average that we are looking at. And more than that, we're also looking at improving, making sure we get upskilling our existing team.

With advent of AI and technology, you can really upskill your team and make sure that they are also able to reach to the next level. So not only add people, but make sure that each of them are able to get higher return for their time and make more salary as well. And a lot of focus on getting that done as well.

How has your family business, Nipah, helped in growing or developing this new baby?

Nipha is a manufacturing company. And what it has helped us, it has given us a very, I would say, direct view on how our customers think because of them being a manufacturing company as well. And it has also become a very, our first training ground for our employees to understand the customers and the technical processes. So their support has been invaluable since the starting of the business. It continues to do so.

Do you have any plans to create your own brands?

There are certain raw materials which we have already started selling in our own branded packaging as well. So people have started associating, our company in certain areas with trust and quality. So we are leveraging that and building our own private label brands portfolio for some raw materials. We have already launched private label brands for 3 SKUs. And similar things will happen for the rest of the production. Whenever we feel we can add value to the customer, we will, you know, create such private labels.

So what next?

We are extremely excited about what the future holds. We are in India, which is a fast growing economy, and by virtue of that, metal remains a key part of the economy. And we are adding value by making procurement and production, transparent and efficient. So we remain extremely bullish on the future of the company. We remain bullish that we can build an IPO-able, profitable public company in the next 3 to 5 years. That remains the goal for me and my team.