Empowering India’s 60M offline merchants

For instance, Oyo Rooms is targeting various segments of users under “affordable hotel accommodation” with its multi-form strategy (townhouse, homestays, managed hotels). Sharechat works day-in, day-out on personalization to ensure that users’ feeds are unique to their preferences. PocketFM, a player in the audio content space, deeply understands how user behavior differs not just by age group, but by state and city.

As investors, we are always on the hunt for founders who appreciate the depth of this country, and who have a relentless drive to attain product market fit in their market segments. This is what led us to OkCredit in 2017. The founders — Harsh Pokhrana, Gaurav Kumar and Aditya Prasad — had known each other for years and were actively hunting for a startup idea. They found their calling when they simply decided to solve a problem they had at their doorsteps — accurately tracking and managing credit payments with their neighborhood grocery store.

Lightspeed is proud to partner with Harsh Pokhrana, Gaurav Kumar and Aditya Prasad on their journey and excited to announce we are leading OkCredit’s $67M Series B from both our India and US funds.

In India, most purchases at the neighborhood grocery store are made on credit, in which the store owner sends one of his employees to collect payments at the customers’ doorsteps or at one of their regular visits to the store. In the last decade, technology has slowly penetrated the consumer offline retail market. The grocery store has moved from collecting payments in cash, to using POS machines. More recently, QR codes have become prolific. Paper bills turned to printed bills. But the one thing that has not changed is the fact that most customers still purchase goods on credit recorded in a notebook.

Every time Harsh, Gaurav, or Aditya made settlements, an argument with the store owner would ensue. No one remembered exactly what was purchased and neither parties trusted each other. Given most store owners manage credit transactions on pen and paper, the collections, procurement and cash flow reconciliation tends to be very tedious, and far from accurate. In order to solve this problem, they decided to build an app for store owners to keep a record of all credit extended to their customers and send payment reminders in an easy and intuitive way. With all records now digitally stored in the cloud in real-time, trust and timely collections would be as easy as tapping a button.

On average, 30–40% of all merchant sales happen on credit. The percentage varies by sector — higher (45–50%) in grocery and lower in services. In addition, 65% of all purchases made by a retailer happen on credit. For 60M merchants and retailers representing a $1 trillion market, this is a lot of credit! When 60% of your business runs on credit, managing credit cycles becomes a core need.

Since Lightspeed India’s initial seed investment, OkCredit has been on a tear. They’ve grown 76x since beginning of this year, reaching a base of 6.5M merchants all within 24 months of launch. Today, OkCredit is used for both B2C and B2B transactions by merchants across industries and across Tier 1–4 cities in India. Some of the most powerful products appear deceptively simple, which is core to the success of OkCredit. The product’s receivables management utility is inherently viral. 3 out of every 10 customers that a merchant sends collection reminders to, is another merchant. When this merchant receives a payment reminder from OKCredit, he sees the value in the product for himself and downloads the app. For every paid acquisition, 2 organic merchants join, leading to viral growth and strong network effects.

Lightspeed has been investing in the SME segment in India for years now and we deeply appreciate how complex user acquisition is for this segment. OkCredit represents a rare breed of companies that are discovering digital and viral growth in a market where traditionally, feet-on-street was the only acquisition strategy. We are also fortunate to witness this transition along with a team that is deeply connected to its customers and is solving with a first principles approach to product development.

We look forward to following and supporting the progress of Harsh, Gaurav, and Aditya, from storefront to storefront across India and beyond.

We are especially proud to announce today’s news, as OkCredit is the perfect example of an innovative team and idea fueled by the power of the global Lightspeed platform with teamwork across continents, from New Delhi to Menlo Park.

— By Harsha Kumar, Dev Khare, Nakul Mandan, Amy Wu, and James Ephrati