Building a unicorn: B2B construction ecommerce platform Infra.Market's road to success
After spending 10 years in the field of infrastructure and construction in India, IIM Ahmedabad alumnus Aaditya Sharda realised the construction sector continues to be highly unorganised.
To disrupt this segment, Aaditya started Infra.Marketalong with his friend Souvik Sengupta, a CA and IIM Bangalore graduate, in 2016.
An end-to-end construction solutions startup, Infra.Market takes the entire procurement process online, ensuring quality, organising the vendor base, and bringing transparency in pricing, which Souvik claims is an industry-first tech platform in India.
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For the consumer, Infra.Market is a one-stop solution to buy multiple products sourced from manufacturing units or vendors.
The startup entered the unicorn club this year and is now valued at more than $2.5 billion. It is backed by leading investors like Tiger Global Management, Nexus Venture Partners, Accel Partners, Foundamental, Sistema Asia Fund, Evolvence India Fund, and Trifecta Capital Advisors.
Journey of the founders
As a financial professional, Souvik has previously worked with infrastructure players, and Aaditya knows the construction industry by the rote, and comes with over 10 years of industry entrepreneurial experience.
While working, Souvik realised that though steel and cement were widely available across India, they accounted for just 15 percent of the raw material required for a construction project. As he looked to source the remaining 85 percent materials, he identified the disparity in the Indian construction supply chain that was highly unfragmented and disorganised."The sector required a consolidated platform that could simplify and promote the access and usage of materials required across the construction lifecycle," says Aaditya. After discussion with Souvik to bring a change and redefine the construction sector with the intervention of technology, the duo launched Infra.Market in 2016.
Souvik says the startup leverages technology to provide an enhanced procurement experience for all players in the construction ecosystem.
The B2B ecommerce platform for construction materials started its own private label last year, which has been the focus for further growth, says Aaditya. He adds that more than two-thirds of the sales are contributed by the company's private label that has spread across most of the product categories in the sector like Infra.Market Electricals, Infra.Market tiles, Infra.Market Sanityware, etc.
He claims that over the past few years, the startup has become the go-to partner for all building material needs, especially during the pandemic when the traditional supply chains were disrupted.
Turning a unicorn
The Mumbai-based startup reached the coveted unicorn status early this year with its Series C round funding led by Tiger Global, which also saw the participation of existing investors like Foundamental, Accel Partners, Nexus Venture Partners, Evolvence India Fund, and Sistema Asia Fund, at a valuation of $1 billion.
All this happened within 20 months of its seed round from Accel Partners in June 2019, and its latest funding of $125 million from existing investors brought its valuation of $2.5 billion.
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Souvik says, this is not a sudden growth or there is no special industry change. Infra.Market was the only player in this space and it was bootstrapping for three years, so it could not scale the way it did after its first capital infusion, he adds."The market has been there, and we had the potential to expand and scale always, but we just did not have the capital, and as soon as we got the capital, we embarked on this fast-paced-growth," says Aaditya.
The growth story
According to the founders, the growth is also in terms of profitability, which has been the company's focus since day one, and it has been a profitable entity since its first year of operations.
According to the startup's financials filed with the Ministry of Corporate Affairs (MCA), Hella Infra Market, which runs and owns Infra.Market, recorded a profit of Rs 8.1 lakh in FY17-18, followed by a profit of Rs 1.7 crore in FY19, and Rs 8.5 crore in FY20.
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Aaditya claims that Infra.Market has emerged as the fastest-growing B2B platform in India with its economics and profitability metrics."We have seen a 15x leap in valuation in less than three quarters owing to the exceptional execution. The company wants to maintain profitability and our first milestone is to achieve $1 billion in revenue by March 2022 and $3 billion by March 2023," Aaditya says. He adds that the unicorn is targeting five times growth year-on-year.
The construction-tech unicorn works on a hybrid model. While it has an ecommerce platform for all construction-related material, it also has offline stores across India.
Over the last 12 months, Infra.Market has steadily expanded supply to retail outlets. The startup has followed a dual model of opening franchise stores to cater to small stores, and dealership stores for retail customers. Aaditya says there are 300 stores and 200 more will be opened in the next couple of months.
These stores are present in 10 states across India, and the company primarily has its presence in the West and South. After raising its Series D funding in August of $125 million from Tiger Global, the company said it aims to increase its footprint across Eastern and Northern states such as West Bengal, Odisha, and Uttar Pradesh.Infra.Market has also started exporting to countries like Dubai, Singapore, Jordan, and Italy. "Within a year of starting exports, 10 percent of sales has been happening from outside India. We are now in the process of setting up a Singapore subsidiary, where it will have its first international office for global expansion," says Souvik.
It currently has more than 3,000 clients, including some of the established brands such as Tata Projects, Ashoka Buildcon Ltd, KEC International Ltd, Larsen & Toubro, Embassy Group, Ultratech, and ACC Ltd, among others.
It has also catered to marquee infrastructural projects including Nagpur-Mumbai expressway, Navi Mumbai airport, Adani LNG terminal, Metro rail projects in Mumbai, Delhi, Ahmedabad, and Kochi; and real estate projects such as Embassy tech village, IIT Tirupati campus, Amazon data centre, Apple assembling unit, and DRDO data centre.
Hiring, acquisition, and scale
Aaditya says that Infra.Market is now focussing on enhancing its technological offerings, focus on private label brands, expand retail presence, and export to international markets. He adds that the company is keen to grow the business through acquisitions.
"We are looking to acquire mid-sized brands in the construction market across categories as we plan to add more product verticals like plumbing, paints, and sanitaryware in the coming months," he says.
Aaditya adds that the company is building its leadership team for the next phase of growth and expansion, and is looking to hire more people across business verticals from scratch, including supply chain, sales and marketing, and product categories. The startup has a team size of 700 people, and it wants to expand the team to 1,000 by the end of this year.
Market and competition
The construction segment is a key part of a country's economic development and health, and according to Infra.Market founders, the sector contributes to about 9 percent of the country's GDP.
In its latest quarterly report, the Ministry of Statistics and Programme Implementation (MoSPI) released the GDP data for the first quarter of the current financial year (2021-22) and said that India's gross domestic product (GDP) grew by 20.1 percent during the April-June quarter of FY 2022. The strong growth was largely driven by the base effect as the economy had contracted by 24.4 percent in the year-ago period, and the growth was aided by a 68.3 percent and 49.6 percent rise in construction and manufacturing sectors.
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Speaking about competition, Aaditya and Souvik say the construction space is huge and the market is large enough, and all the traditional and new-age players can co-exist.
"The market is big enough to absorb all of us," says Aaditya. Some of the players operating in the similar space include BuildNext, Infra Bazaar, Materialtree, Brick2Wall, Moglix, and Power2SME to name a few.According to Infra.Market founders, technology is a key differentiator for the company, along with it's capabilities of creating quality standardisation, better supply chain processes, and saving costs for the buyers.
"Our vision is to provide end-to-end construction solutions and build a national-level wholesale, retail, and ecommerce platform with in-house logistics and warehousing," says Souvik.
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Edited by Megha ReddyRashi Varshney