From Rs 1 lakh to Rs 24 Cr: how 4 NIT engineers churned out profit by making educational labs smarter
With smart devices making their way into Indian classrooms, textbooks and traditional teaching are passé. Digital learning is in, and with it, are various technological tools such as virtual reality, IoT-enabled gadgets, interactive projectors, and so on.
Now, with Indian classrooms getting smarter and much more efficient, shouldn’t the same upgradation be applied to laboratories and research units of educational institutes? After all, what’s the point of putting theories to test when you cannot provide adequate facilities and physical infrastructure?
Four engineers from NIT Durgapur, Rourkela and Jamshedpur came upon this gap in the market, and pivoted their business model to address the lack of proper laboratory infrastructure in the country.
Aniket Thakur had experienced this first hand in his previous job, and today their startup, Labkafe, which originally sold industrial lab products to industries, focuses on catering to the diverse needs of laboratory supplies at educational and research institutes in India.
“We focus on resolving bottlenecks encountered in the procurement of laboratory supplies (equipment and furniture) in schools, colleges, healthcare, and research institutes through our platform. We provide end-to-end turnkey solutions for laboratories,” says Aniket Thakur, CEO and Co-founder of Labkafe.
From working together to starting up
It was while working at a steel plant’s quality department at Jindal Stainless Steel in Jajpur, Odisha, that Aniket conceived the idea of Labkafe. His work at the time entailed frequent travel between Bhubaneswar and Ahmedabad, carrying material samples; a routine that would eventually drive home the sad state of laboratory infrastructure in the country.
“While working in the quality lab, we also faced problems procuring exact specified lab equipment for testing. This inspired us to create a portal to address bottlenecks of procuring lab products,” Aniket says.
He quit his job in 2015 to start Labkafe with fellow colleague and NIT alumnus Hitesh Kumar in May that very year. The startup, whose founding team includes two other members – Sunil Panda, who is an NIT Rourkela alumnus and looks after sales and marketing; and Amrit Raj, chief strategies officer and a graduate from NIT Jamshedpur - is based out of Kolkata with branches in Ambala and Ranchi.
“We chose Kolkata mainly because we were working at a steel plant in Odisha and it was the nearest metro city. Secondly, as a bootstrapped startup, we wanted every penny to count and Kolkata offered low rents, fixed costs, and low expenses with a high employee retention rate,” Aniket says.
Building a profitable business with just Rs 1 lakh
Bootstrapped with just Rs 1 lakh, Labkafe is a profitable business today, boasting stock that includes more than 12,000 lab equipment items and over 200 lab furniture designs. “Based on design layouts and subject matter, materials are supplied to customers,” explains the founder, adding, “Most products are manufactured under our brand name ‘Labkafe'.”
Built with a vision to disrupt the industrial goods and supply sector, Labkafe tasted success after a few initial hiccups and a pertinent pivot. “We started by selling industrial lab products to industries, only to realise the high competition, low margins, and complex procurement routes,” Aniket recalls.
Since Aniket and his team had already dabbled in the market by then, orders started pouring in through the website and other -commerce channels, providing the engineers-turned-entrepreneurs with hands-on ground experience and insight into the market of laboratory supplies for educational institutes.
Within eight months of inception, the founding team says they received orders worth Rs 10 lakh for industrial lab equipment and safety equipment. But the margin on these equipment was very low and it was extremely challenging to crack the market.
At the time, they realised that margins were better, and the procurement and decision-making processes were a lot simpler for academic and research institutes. This realisation, coupled with the fact that they were still a startup with limited resources, led them to pivot and start targeting schools, colleges, and universities.
For educational and research institutes, the average order basket is between Rs 1-1.5 lakh, Aniket says.
The startup claims to be profitable today, with the founders saying they closed at Rs 8 crore in FY19. They are now eyeing bigger goals. Growing 3x on a year-on-year basis, Labkafe is expanding both horizontally and vertically, and is eyeing to close FY20 with Rs 24 crore.
The biggest hurdle along the way…
“Managing cash flow is one of the biggest challenges any bootstrapped startup faces,” says Aniket, explaining how his team overcame this hurdle. “We finalise payment terms with customers, optimising various factors like customer brand name, vendor payment terms, location, profitability, services required etc.”
While Labkafe generates revenue mostly by selling products to institutes, over time, it has also designed specific lab packages for Class 10 and 12 as per CBSE/ICSE/state board curriculums. This package is quite popular among schools.
In addition, the team also provides technical expertise to zero in on customer requirements. Aniket elaborates, “This helps us minimise competition, avail high margins, maintain a high entry barrier, get a high order basket value and improve the brand value.”
So far Labkafe has served more than 500 institutes, including DRDO, Air Force Gwalior, Indian Army, State Forensic Science labs, Baidyanath Pharma, NITs, IBSD, St Xavier Group, South Point High School, Techno India, GD Goenka Group, DPS Group, and KVs. The goals are getting bigger.
“We are planning to develop a global chain of Labkafe Innovation Centres (LIC), which will provide a unified platform for practical and activities-based learning to students, schools, and institutes,” Aniket says. “This will help billions of people develop necessary skills, scientific acumen, and cognitive intelligence.”
(Edited by Suruchi Kapur Gomes)