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Wassup looks at acquiring stressed start-ups in on-demand laundry segment

It has acquired Mumbai-based Chamak, Hyderabad-based Ezeewash and Delhi-based Wash Club

Laundry

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Gireesh Babu Chennai
On-demand laundry and dry cleaning start-up Wassup is in the process of beefing up its operations by acquiring stressed on-demand laundry start-ups in various major cities in the country. At a time when many of the online laundry start-ups are shutting shop, the company has already acquired three companies and is planning to acquire four more in the next four months.

It has acquired Mumbai-based Chamak, Hyderabad-based Ezeewash and Delhi-based Wash Club starting from 2015. It is working with almost eight more laundry start-ups for similar acquisitions in near future, said R Balachandar, co-founder and CEO of Wassup. The acquisitions are made on full equity contribution and not on cash.
 
"We talk with the companies which are under stress and work with them for almost an year to sustain their revenues and if it is 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 the company to a Rs 500 crore business in next three years, by when we may go for an IPO," he added. The company currently has a revenue of $2 million (around Rs 12 crore) and has a presence in eight cities – Chennai, Kochi, Bengaluru, Hyderabad, Pune, Mumbai, Delhi and Gurgaon.

It has turned operationally profitable in September this year and is expected to break even in the beginning of next year.

When the company started operation in 2011, it was the only online on-demand laundry and dry-cleaning service provider. However, a large number of companies entered into the online laundry services later. Quoting some reports, Balachandar said that around 65 start-ups emerged in this segment in the last 36 months and almost 40 are either closed or in the process of shutting shops now.

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

Wassup, on the contrary, has operational expertise in the segment, and back-end capabilities with its own laundry and dry-clean facilities and it did not discount its services at any point of time. It has been charging Rs 50 a piece on average, while its rivals were offering services for Rs 20 a piece. Interestingly, some of the companies washed their orders in Wassup's facility for Rs 50 and offered it to the customers at a discount of Rs 20 a piece, he said.

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

"It is a five to 10 year game and you can sustain only if you have a long-term view," Balachandar said. The company is looking at acquisition of players which have customer access, a good team or back-end asset.

It is also looking at launching laundromat services through franchisee in various smaller cities, where the machinery, software, process and supply chain will be from the company. One of the major challenges the sector has is lack of skilled manpower and the company is looking at bringing experienced washermen onto its platform, he added.

Durga Das, managing partner of Das Star Ventures, who has invested in the company is currently the co-founder, MD and COO of Wassup. The company is also raising $3.5 million pre-series A funding from various high networth individuals, of which $3 million has already been raised from Arun Chandra Mohan and Praveen Sinha, the co-founders of Jabong and angel investor Micky Watwani, among others. It would go for a Series A funding later, to raise around $10 million. The company also has plans to expand operations in some other countries in Asia, including Indonesia, Das added.

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First Published: Oct 30 2016 | 11:18 AM IST

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