Food distributor WayCool plans to push more products via same channel

Manikanttan is a marginal farmer at a village in Hosur district of Tamil Nadu. Earlier, he would sow a single vegetable — tomato or ladies finger — based on what rest of the village is sowing. These days he divides his two-acre farm into four quarters — one each for tomato, ladies finger and gourd, while leaving a portion empty. He now has somewhat even income throughout the year.  

This is made possible by a master planning and scheduling system and a procurement app used by Chennai-based start-up WayCool, which recently raised Rs 120 crore in a bridge round led by LGT Impact with participation from existing investor Aspada. The start-up sources fruits, vegetables, staples and milk from 35,000 farmers through 25 farmer producer organisations (FPOs).

The company uploads its requirement on an app from which FPOs check with farmers, who then bid for quantity and price. This way, it manages to match supply with demand. Farmers get the produce to FPO centres, where it is sorted for quality and size, before being loaded to company trucks that take them to distribution centres in Chennai and Bengaluru. The produce is sold to kirana shops, retail chains (20 per cent of the demand) and hotels and restaurants (30 per cent).  

WayCool, which likes to be called a food development and distribution company, claims farmers have seen a 25-40 per cent rise in income as they don’t have to pay commissions, besides saving on logistics costs of taking the produce to the mandi and also getting an assured price as against price fluctuations in an open market. After several pivots, the start-up is growing 20 per cent a month and hit a turnover of Rs 25 crore in February.

Kartik Srivatsa, managing partner at Aspada, an earlier investor in WayCool, said: “What impresses us the most about WayCool is their execution capability. It has been able to scale rapidly and consistently by leveraging technology to build a high-quality supply chain despite market disturbances. The company has scaled 20x since the last round of funding with judicious use of capital.” WayCool had raised $2.7 million from Aspada in April 2017, after being backed by angels.

The start-up has been able to scale faster with lesser capital. Its peers such as ninjacart and AgroStar have raised $60 million and $25-30 million, respectively, but trail it in revenues, say industry sources. WayCool wants to acquire several companies to build new capabilities or which helps it push more products through the same channel. 

Beginning & concept

Karthik Jayaraman and Sanjay Dasri, co-founders of WayCool

When Sanjay Dasari came back from the US after his graduation in the summer of 2015, he wanted to start a Korean restaurant in Chennai. He found a chef and began talking to vendors. Sitting in the office of a large vegetable vendor, he found that a dog was relieving next to a pile of cabbage lying on a muddy floor. This vendor also supplies to big hotels, and when Dasari asked, he said this is how it is.

That’s when Dasari thought if he could supply things hygienically, there could be a market. Hotels and restaurants slowly joined in but were not willing to pay more. It adopted the B2B model in June 2016, began sourcing from farmers in six months, added staples in June 2017 and milk in November 2018. ‘‘We are trying to leverage those synergies and push more products through the supply channel,’’ says Sanjay, son of Ashok Leyland MD Vinod Dasari, who invested as an angel.  

‘‘We want to be present in main product categories that form the majority buying basket and want to develop deep sourcing capabilities,’’ says the 25-year old. So, it used its automotive background to develop a supply chain with the same view of traceability as in the automotive industry, and invested in a fleet of 150 trucks. As a farm produces tomatoes of different sizes, it also diversified on the customer side. While households prefer medium-sized tomatoes, which go to kirana stores, hotels prefer the bigger ones; it sells smaller tomatoes to sauce-making units.  

The landscape 

There are many start-ups active in the agri-space, which can be broadly categorised into production, distribution and consumption. There’s Cropin doing exciting work in production, AgroStar and ninjacart in distribution, and CrowFarm in consumption. ‘‘Everyone is working in silos, solving unique, small problems. We are the only one doing all three steps,’’ says Sanjay, who studied entrepreneurship.  

WayCool sees itself as a food development and distribution company. So, it helps farmers with NPK (soil fertility) analysis, cultivation practices and advisory services. It runs partner farming programmes, working closely with FPOs. It sources 78 per cent of its produce from small and marginal farmers owning land up to 2 acres. 

Road ahead

The company wants to double volumes to 300 tonnes a day, and eventually target 1,000/1,500 tonnes a day. ninjacart, industry sources say, does volumes of 200-250 tonnes a day. As it sells fruits as well, WayCool product mix fetches a price of Rs 40-45/kg as against other players whose product mix fetches only Rs 20-25/kg as they largely do onion, tomato and potatoes. WayCool claims to be operationally profitable, and hopes to be EBITDA-positive by June/July.  As it tries to scale, a key challenge is to get talent and at a fair cost.