Lessons to learn: How Qwikcilver built a successful technology business in a nascent market
Spotting a disruptive business opportunity at the right time is often a challenge for both entrepreneurs and investors. Being a category creator has its own set of challenges. But when the right set of people come together and work towards a common goal, a market leader evolves.
If you’re holding a gift card in your hand, then there’s a 9 out of 10 chance that a company you may have never heard of - Qwikcilver - is the one that made it possible.
In March this year, the 12-year-old startup was acquired by point-of-sale (PoS) player Pine Labs for $110 million to own a full-stack gifting solution.
As Pine Labs CEO Vicky Bindra told YourStory at the time, “It just isn’t about the team and how they have been able to scale the business, but also how they have been able to keep their operations frugal and build high quality technology. They are the de-facto business for any company.”
So how did three entrepreneurs build a successful business in a segment that was nascent to the point of being virtually non-existent?
Accel Partners, an investor in Qwikcilver, provides a glimpse of how BITS Pilani buddies Kumar Sudarsan, TP Pratap and Bhaskar Vasudevan did exactly that.
In a recent blog post, they write about how the trio decided to become entrepreneurs even though they hadn’t even thought of a product. After studying malls, they found that buying gift vouchers was a tedious affair because they were treated and stored like regular currency and susceptible to fraud, counterfeit and theft.
The Qwikcilver team with family members. Image courtesy: Accel Insights blog
The solution was to have a gift card backed by tech data. Studying the US market, they found it was a huge one - to the tune of $100 billion. That clinched it, and the trio decided to bring the technology to India in a big way. There was the problem of cost — a gift paper voucher could be made for just 60 paise as against a gift card backed by tech data for Rs 10-15. Then there was convincing a nascent market that data was safe on the cloud.
Accel Partners got involved in 2006 when Mahendran Balachandran and Prashanth Prakash met the Qwikcilver founders and soon participated in a $20 million funding round.
“It was still early days for organised retail in India and there was little to no adoption of the gift card concept at the time. But the founders’ conviction in the massive potential of gift cards, their drive to evangelise the concept and get early adopters on board led Accel to fund Qwikcilver’s seed round,” they write.
Things began to move for Qwikcilver after a tie-up with Landmark in 2008-09. Deals with multiplex operator PVR and brands like Titan, Helios, Fastrack, Flipkart, Shoppers’ Stop, etc. followed. Tier II cities proved to be a challenge, but they too were cracked.
In 2012 Qwikcilver was declared India’s best Prepaid Card provider by Global Prepaid Exchange. When Amazon came to India, they quickly tied up with Qwikcilver where things like an RBI authorisation had already been integrated into the process. In fact, the RBI prepaid license helped to create gift cards across merchants. In 2015, Qwikcilver launched gift card ecommerce site Woohoo.com along with its mobile app and forged partnerships to venture into the UAE, Singapore, Malaysia, the Philippines, and Indonesia.
Today, gift as a category is growing at a high double-digit rate of 30-50 percent annually and Qwikcilver, as part of Pine Labs, is sitting pretty.
Its journey holds several lessons for entrepreneurs chasing growth. As the blog says,
“For any startup founder wondering ‘what should we be doing to win in a new space?’, Qwikcilver’s journey offers valuable insights into starting with what is familiar, while seeking to revolutionise new markets.”
Also read: Why Pine Labs chose to acquire gift-card solutions provider Qwikcilver for $110M