Wassup on an acquisition wave for expansion

On-demand laundry and dry cleaning start-up Wassup is in the process of expanding its operations by acquiring other on-demand laundry start-ups. 

Headquartered in this city, it has acquired Mumbai-based Chamak, Hyderabad-based Ezeewash and Delhi-based Wash Club in a year. It is working with almost eight more laundry start-ups for similar acquisition, in the near future, said R Balachandar, co-founder and chief executive. The acquisitions are made on full equity contribution and not on cash.

"We talk with companies under stress and work with them for almost an year to sustain their revenues and if successful in doing it, we bring them into our company by offering our equity," he said. "We are looking at a consolidation of these companies under Wassup, which could lead to Rs 500 crore (annual) business in the next three years, by when we might go for an IPO (initial public offer of equity).

The current annual revenue is Rs 12 crore, from eight cities -- Chennai, Kochi, Bengaluru, Hyderabad, Pune, Mumbai, Delhi and Gurgaon. It turned operationally profitable in September this year and expects to break-even at the beginning of next year.

When the company started operations in 2011, it was the only online on-demand laundry and dry-cleaning service provider. However, said Balachandar, citing some reports, around 65 start- ups had emerged in this segment over the past three years; close to 40 have either closed or are in the process of shutting shop. 

One for the failure of many was that they were on an aggregator model, connecting various existing laundry outlets, which led to issues in timely delivery and other challenges. Many of them did not have operational expertise; they were good at developing of technologies. The services were also heavily discounted, which made it difficult for them to operate, he added.

Wassup, he contended, had operational expertise in the segment, and back-end capabilities with its own laundry and dry-clean facilities. It did not discount its services at any point of time. It has been charging Rs 50 apiece on average; rivals were offering services for Rs 20 apiece. 

Interestingly, some of the companies used Wassup's facility for their orders, at Rs 50 each, and billed customers at a discount of Rs 20 apiece, he said.

The company also has a business to business service, with hospitality majors, including the Taj group, as customer.

"It is a five to 10 years game and you can sustain only if you have a long-term view," he said. The company is looking at acquisition of players with customer access, a good team or back-end assets. It is also looking at launching laundromat services through franchisees in smaller cities, where the machinery, software, process and supply chain will be from the company. A major challenge the sector has is lack of skilled personnel and the company is looking at bringing experienced washerfolk into its platform, he added.

Durga Das, managing partner of Das Star Ventures, who has invested into the company, is co-founder and operations head. The company is also raising $3.5 million in a pre-Series A funding from various individuals, of which $3 mn has already been raised from Arun Chandra Mohan and Praveen Sinha, co-founders of Jabong, and angel investor Micky Watwani. It would go for Series-A funding later, to raise around $10 mn (Rs 67 crore). The company also has plans to expand to other Asian countries, he said.