GimBooks is an Upekkha cohort startup that built its early-stage business the Value Saas way. In this Clubhouse chat with Upekkha Partners Prasanna Krishnamoorthy and Rajan, he talks about how GimBooks is winning in an extremely crowded market.
Non-tech solo founder in Raipur: Genesis and early days
Prasanna: Before we get into the fundraise, let's step back and understand why did you start GimBooks?
Yash: Let's step back even further. Before starting GimBooks, I was trading a few industrial products and I realized that there is need for a mobile-first bookkeeping software - an easy-to-use bookkeeping software that can be operated by Indian business owners without any external assistance.
In the Indian SME ecosystem, accounting is managed by a full-time or part-time accountant or CS, because it is difficult for small business owners to understand and operate the software by themselves.
There were two main triggers in the beginning. The first was having a mobile-first platform where a trader or small business owner can do everything on the go. And secondly, I thought of starting a simple bookkeeping platform, which later became GimBooks.
Prasanna: So once you understood bookkeeping was a need, how did you go about building the product?
Initially, we just started it as a small invoice-maker app because that was the highest use case in the industry.
I had the domain knowledge as I was personally walking in our customers' shoes, trading products. But I am not a techie. So first, I found some core team members who could build the tech for the product.
Initially in Raipur, it was difficult to find techies because there was no such ecosystem in the city. The tech ecosystem headstart had happened only a few months before starting GimBooks. Some tech meetups started happening in the city. During one such session, I met Meghal, and we together started building GimBooks. Meghal is currently the Head of Products at GimBooks.
Prasanna: Awesome, how many years has it been and who was your first customer?
Yash: It has been three-and-a-half years now. Our first customer was a company called Sunrise Industries; they are in the same industry as us.
Interestingly, I used to post some creatives on my WhatsApp and Facebook statuses. That's how we got our first customer.
Prasanna: Once you started building the product, when did you realize this is really taking off and can be very big?
Yash: Two months after the launch of our first version, in January 2018, we started seeing a lot of active users on the platform. They started calling us asking for more features. Most importantly, they started paying us. So that was when we thought we can make this bigger and make it accessible to a lot more business owners.
Prasanna: In the early days, what were some things that you didn't really expect will happen?
Yash: A SaaS startup has to spend a lot of money on marketing and sales functions. But in our case, we almost started getting our paying customers after the launch of the product. In the first two months, we had a considerable number of paying customers, which was a big surprise to us. We never thought it would happen.
7X pricing hike: We got there after 100+ customer calls
Prasanna: Tell us about your pricing plans. SaaS pricing is normally monthly but you have long-term plans. This is an important lesson for SaaS founders. Because, they don't realize that depending on the market and industry - and what the customer is ready to pay for - they have to adjust pricing. Tell us what you have learned in this area?
Yash: During the initial days, we used to talk to every customer we have. I have spoken to more than 100 customers when I started GimBooks, to understand the challenges they face and the value our product offers by solving their problem. By talking to them, we built our product roadmap and also our pricing strategy.
In our industry, business owners are not acclimatized to the idea of monthly payments and they are happy paying for long-term, i.e., for six months or one year. Also, as it is a very non-sticky industry, we didn't want our customers to pay for a month and then negotiate with us. That's why we have got long-term pricing plans.
Prasanna: We have seen is founders do not talk to their customers one-on-one regularly. But you have got deep domain expertise as you spoke to a lot of your customers in the early days. How did this help in pricing? And where does it stands now?
Yash: Yes, we understood from our customer conversations the value provided by our product. So we have increased our pricing 7x. We started with 600 INR/year. Now we charge 3000 INR + taxes for basic features. And then, we have some value added services, for which users pay on the basis of consumption. On an average, a user pays us around 4000 INR plus tax.
Prasanna: Was it hard to increase the price 7x?
Yash: No, Not really. There were a few customers who asked us about the raise, but we were able to justify it. We kept adding more features, which added more value for our customers. Once they understood they were getting more value, they were not troubled by the price hike and kept paying for the product.
At Upekkha: Building for international markets
Prasanna: You joined Upekkha two years ago. What brought you to Bengaluru and why did you join Upekkha?
When we joined Upekkha, we were looking for more exposure from the SaaS ecosystem point of view. Hailing from a city like Raipur, we did not have much awareness of the SaaS industry. So that was the first trigger to apply for Upekkha Value SaaS Accelerator Program.
At Upekkha, we got more than what we wanted to learn. The value props, the strategies and in-depth thinking frameworks from Upekkha helped us dive deeper into the business.
Prasanna: What are the two top learnings from Upekkha?
We have already discussed one of the learnings, which is pricing. We would have never got the courage to increase the price by 7x. We were following an umbrella model pricing. The second great learning is getting the direction to build a product for the world. We are planning expand globally. In a few weeks, we are launching an application that will be used in different countries. The motivation to build a global SaaS product came from Upekkha.
Pandemic lows amid phenomenal growth high
Rajan: We had this pandemic last year, and in just about three years, GimBooks has seen phenomenal growth. In between, there were ups and downs, when the lockdown happened. What was your highest high and your lowest low in the last three years?
Yash: Ok. I will start with the lowest low because that happened first. Immediately after the COVID hit last year, our revenues dropped down to 15% to 20% of what we were doing before. And we were bootstrapped. We had like a lot of expenses, and we were breaking even. It was slightly profitable. But between April and June , our revenue was negligible, but our expenses remained the same. So that period was the lowest low for us. Also, that was the period when we started looking for funds.
Rajan: How did you overcome this lowest of the low situation?
Yash: We had some cash reserve that kept us going for a few months but we had a short runway. We raised debt from an Upekkha founder for a nominal interest rate. That helped us survive. Apart from that, we received grants from GoI and NSRCEL, Bangalore. We also took the Revenue Based Financing route for six to eight months. All these put together gave us the oxygen for survival.
Rajan: Okay. What was your highest high?
Yash: We won the Atmanirbhar Challenge conducted by the Govt of India. That gave us a lot of recognition in the Indian startup ecosystem. That was the highest high in the last three years.
Winning in a competitive space with verticalization
Rajan: You are in a crowded market. There are a lot of funded competitors. Why you think that you have a shot at winning in the marketplace?
Yash: We are competing with heavily-funded players like Vyapar and My Bill Book. We indirectly compete with Khatabook and even with Zoho and Intuit. The reason why we have got an edge over our competitors is that we focus on a niche segment which are not targeted by them. Some of them focus on retailers, some of them focus on mid-sized businesses. Our target audience is business owners at the bottom of the pyramid in terms of tech-savviness. They do not know how to operate Zoho Books or Intuit or any other software I mentioned. Custom-made features for this target audience is helping us in this competition.
Rajan: So what does it tell you when your competitors are giving things for free, but your customers are paying for the same software?
Yash: It really indicates that you cannot give away software for free when it's adding value in someone's life. If customers are not paying for it, then it means the software is not creating any value for them.
Prasanna: I know that one of the things that you're doing is a lot of verticalization. Can you talk to about why are you doing that and why is it important?
Yash: Verticalization is a USP that differentiates us from other players in the industry.
What we offer is domain-based bookkeeping. A signing up user can be from any industry. Say, for example, pharma or electronics or a trading industry. Depending on the users' industry, we offer customized features, interface, and invoicing templates. We keep digging deeper on these verticals with the help of customer feedback to understand their most pressing problems and offer a solution that adds value to them.
Most of the software that existed before the traditional software had a generic bookkeeping for all the verticals. For example, invoicing in manufacturing and trading requires different form fields and documentation. Similarly, in the pharma industry, form fields are different and includes manufacturing date, expiry, batch number, which may not be relevant to other industries. For the electronics industry, there is a different need of having a barcode scanner, barcode generator.
When we started, our retention rate was not that great. It was around the industry standard, like 50%. But when we started talking to our customers to know why they are leaving us, we understood that they are looking for some kind of customizations according to their industry. That is when we decided to build on a deeper vertical level to gain an edge over our competition. And that is how we started verticalizing, which has helped us achieve an annual retention rate of around 80% .
Getting into Y Combinator
Prasanna: You are now a part of YC. Why did you join YC and how is the experience?
Yash: As I mentioned earlier, we started looking for funds after getting impacted by the pandemic. A lot of things were not going really well for us. I am a solo founder and we are based out of a small town Raipur. So initially, it was tough to raise money in India through VCs. We applied for a couple of accelerators, and we got through YC.
YC is a very structured fundraising training academy I would say. It brings a lot of value in terms of the network, mentorship, but above all, the advantage we gained is in fundraising. They create a competitive process among the investors, not the startups. There are a few 100 investors who are looking to invest in a couple of 100 of startups. They are able to create that FOMO and competition among investors. It really helped us in the fundraising process.
Prasanna: Can you share details about the recent seed fund you raised?
Yash: We raised our seed funds from YC and First Check Ventures, $125K and $200K respectively, in the month of March. We are using these funds to enhance our product and to acquire more customers. And, right now we are looking to raise our pre-series A as well.
You may also like:
SaaS pricing tips by Upekkha Partner Prasanna Krishnamoorthy