Small and Medium Enterprises (SMEs) are starting to contribute significantly to the Indian economy. However, these businesses face innumerable challenges, especially on the digital front.
While working for iBall, Vikalp Somani and Vikas Mundhra faced similar problems. They always found it difficult to get better insights and real-time information to make meaningful and informed decisions.
“With every requirement, we found ourselves standing at the door of our IT team. They would have numerous queries, and after several hours, we would get the desired report. Frustrated, we spoke to many distributors and companies for a solution, and we realised this is a big problem faced by the SMEs everywhere,” says Vikas.
This led Vikas and Vikalp to start Magenta BI in Ahmedabad in 2019. However, the company formally started its operations in August 2020, and in September 2020, the team raised Rs 60 crore in angel funding from a clutch of undisclosed investors.
The startup is a Business Intelligence platform that empowers small businesses to make data-driven decisions through actionable analytics. Vikas explains it is like Google Analytics for SME’s ERP and other data sources.
The duo started by studying the best practices and understanding the core value proposition for SMEs. They found that post demonetisation and GST, many business owners were looking to digitise their business to have sustainable growth. The pandemic further accelerated this need.
What does it solve?
The startup basically integrates its system with the company’s ERP and helps it spot growth opportunities by identifying gaps in sales, purchase, inventory, and payments.
Vikas says, “After getting confirmation from clients, we connect to their ERP and customers can start using it immediately. We are hosted on AWS. Customers can access our product from the web browser or mobile app. As we have made ready connectors with all major ERPs and our product is ready to use dashboard, it starts giving benefits to customers immediately. There is no human intervention once the setup is done.”
According to the founders, Magenta solves two problems for businesses. Firstly, SMEs are increasingly trying to adopt technology and use business intelligence software. These businesses have unique requirements that are not satisfactorily met with the existing DIY (Do it yourself) products. These SMEs are not tech-savvy and therefore end up using ERP reports or spreadsheets which are not insightful.
Secondly, brands and enterprises have relied on custom software development or enterprise solutions such as Power BI or Tableau. But with increasing digitisation and rapidly changing market dynamics, the existing solutions seem to be too slow. Brands and enterprises are now looking for innovative solutions that marry their needs for customisability with software agility to reduce time-to-insight.
Magenta claims it helps them with actionable intelligence with ready-to-use dashboards with KPIs like inventory movement analysis, interactive maps, payment tracking, salesperson, and customer performance review.
Challenges and market
In the initial days, the team faced two main challenges. One was that once the potential customers assumed being a BI product the cost of usage would be high and was just another one of the many products.
“It was difficult to communicate that the whole reason why we started Magenta was that it is much more economical and faster to set up, which differentiates us from existing BI platforms. We overcame this by building cases, getting videos done, and incentivising the spread of word-of-mouth,” says Vikas.
The second challenge was building a team that understands SMEs and their problems. Vikas explains, “We needed our team members to empathise with our customers. We overcame this by setting up interviews of our team members with our customers. Even our engineers would speak to a host of customers to understand their daily struggles and potential losses/gains that they could get,” says Vikas. Today, Magenta is a team of 12.
Today, the market to digitising of SMEs is fast growing. There are different players managing different needs and requirements of SMEs. Startups like Triny.Ai are looking at chatbot AI management for SMEs and GlobalLinker is connecting SMEs digitally.
The opportunity for digitisation is also very large in India. A 2019 Zinnov report estimated the total digital opportunity offered by Indian MSMEs will grow from around $30 billion in 2019 to $85 billion in 2024.
“We have 25 paying customers with another 100 in pipeline. While we are not inclined to disclose our revenue numbers, we can surely say that we have identified gaps and opportunities for over Rs 2,100 crore of business carried out by SMEs until now,” says Vikas.
The startup says it also provides a complete analysis coverage of all business aspects in interactive, insightful, and ready-to-use, domain-specific dashboards and micro-management tools for SMEs. It also has ready integration with Tally, Busy, Marg, SAP ERP, etc., which helps the startup in gaining an edge in the market.
While the team didn’t reveal the pricing, it stated its revenue model is low-ticket vertical B2B SaaS, where customers are charged subscriptions on a monthly, quarterly, or annual basis.
“In next three years, we plan to help 10k SMEs digitise their business and achieve profitable growth with actionable analytics,” says Vikas.