Don’t be media frenzy. Keep expectations and valuations realistic: Delhivery

In India a lot of startups have not taken so much as what’s called inspiration but rather outright copied from USA. MakeMyTrip = Asiarooms.com, Bookmyshow.com was a byproduct of an idea generated in South Africa when Ashish Hemrajani was listening to the radio about a website to book concert tickets. However, the idea of ‘Delhivery’ was quite unique in itself. Delhivery was born when Sahil Barua & team found a gap. Basically, there was no dedicated courier company for e-commerce. Other courier companies did pick-ups in evening and delivered in morning. E-ecommerce required round the clock delivery. Also they did not offer COD (Cash on Delivery) option of payment, whereas in E-commerce more than 70% orders are COD. Delhivery started its operations in 60 lakh corpus in March, 2011. First funding came from Times Internet – 6.7 cr in May 2012.

An incident occurred during the Indian Ecommerce Shopping Festival, when Snapdeal and Flipkart claimed that they were to receive a million orders per day respectively. To cater to this heavy requirement, Delhivery increased its employees from 6K to 20K. All within a span of 5 months. But things did not quite turn out as expected, which ironically should have been expected! This made so Delhivery’s cash burn jumped from 3cr to 20cr per month. And when not able to sustain, they layed off employees which hampered company’s reputation.

Investors recommended Delhivery to go to media and spend on PR. Sahil Barua & team regret they did it with no advantage. Reporters used to increase & tarnish the company’s reputation overnight. Later, the founders realized there guilelessness. The press was never going to pay for the loss & they had created a blunder by seeking lime light at this hour.

Mr. Sahil Barua expressed resentment on the funding scenario, wherein the startups are forced to use the funding in the given limited time frame or return to the investors. The focus of startup shifts from growth model to capital expenditure model by opening new ways of doing expenses. Startups usually don’t return unused funds and spend it rather irrationally. The VCs are the buyers and Founders are the sellers of an idea or a concept – You cannot over-committ & under deliver. Doing so only makes it difficult for the company to get funding for the next round.

This irreparable demoralizes the stakeholders. In the funding round, Delhivery had two options: one from Tiger Global and another from Ontario at premoney valuation of $450 mn and $283mn respectively, wherein Tiger offered to give $85mn and Ontario offered $150 mn funds. But the term sheet of Ontario was aggressive wherein they would revisit value of investment two years after & would hold the company accountable if valuation had increased 2 times by then. Delhivery declined Ontario’s offer and went for Tiger Global, which had a more realistic valuation. This shocked Ontario. But Sahil firmly believes that one should keep expectations and valuations realistic.