[Funding alert] Travel protection startup Railofy secures Rs 70M from Chiratae Ventures; eyes geographical expansion
Railofy, a startup that offers travel protection to railway passengers against waitlist (WL) and reservation against cancellation (RAC), on Thursday announced it has raised Rs 70 million in its seed round from Chiratae Ventures.
In an exclusive conversation with YourStory, the founders said they plan to use the freshly raised funds to scale its presence across the country.
Founded by Rohan Dedhia, Vaibhav Saraf, and Hrishabh Sanghvi in September 2019, Railofy started its operations in early-2020 with select trains in Mumbai.
TC Meenakshisundaram, Founder and Managing Director of Chiratae Ventures India Advisors, says, “More than 300 million passengers get waitlisted on the railways each year. By solving this pain point, Railofy is addressing one of the largest transportation challenges in India.”
Addressing a national pain point
India has a vast rail network, connecting every nook and corner of the country. According to India Brand Equity Foundation (IBEF), Indian Railways ferry 23 million travellers every day. However, a long-standing problem of the Indian Railways has been its waitlist feature, which often leads to cancelling trips, not getting a seat while travelling, dealing with unreliable agents, and even paying for last minute expensive flights.
Railofy is trying to solve problems of congestion, cancellations, and hassles associated with a waitlisted railway ticket.
Ever since the beginning of the pandemic, Railofy has been providing protection against railway travel for the special trains that are running across the country.
“While the government has been at the forefront of addressing the WL and RAC problem through initiatives like dedicated freight corridor and privatisation of trains, Railofy with its asset-light model will leverage technology by connecting excess demand of the railways to other transportation modes like flights and busses at affordable price,” Rohan says.
The problem of being waitlisted by Indian railways has been long existing, and co-founder Rohan faced this challenge first-hand.
He had to travel to Bhuj, Gujarat from Mumbai to drop his grandmother. Despite booking a train ticket well in advance, Rohan’s ticket never got confirmed. He was forced to take a flight instead.
“When I got on the flight, I was astonished to find that almost 15 to 20 percent of the seats were empty and yet we were charged exorbitantly by the airlines,” he recalls.
“A quick search on the DGCA website shows that India has almost 50,000 empty seats on flights each day. If all the waitlisted passengers that day could get on to the Bhuj flight at train prices, it would have been a win-win situation for all parties,” Rohan adds.
This, he says, was the eureka moment. Railofy says it wants to redefine rail travel to ensure no passenger has to ever miss a trip again.
How does it work?
Approximately one out of two passengers get waitlisted at the time of booking a railway ticket. Railofy allows passengers to purchase the protection against their ticket from its portal. The average price of a Railofy protection is Rs 200, the starting price being Rs 50.
If the train ticket is not confirmed after the chart is prepared, Railofy provides a flight close to the price of a train ticket or a bus for nominal prices to the destination.
“The price for the flight or bus ticket is fixed at the time of purchasing WL and RAC protection itself, thus ensuring the passengers are shielded from last-minute rising fares,” Vaibhav explains.
Railofy thus connects excess demand in railways to other modes of transportation such as flights and buses that have lower load factors.
Meet the team
Rohan manages marketing, finance, and strategy at Railofy. Prior to this he was the Assistant Vice President at early-stage venture capital fund Orios Venture Partners. The Indian School of Business alumnus has also worked with JP Morgan and KPMG.
Vaibhab handles Product and Operations at Railofy. He comes with over 12 years of experience, serving roles such as Product Manager and Management Consultant. Vaibhab graduated from IIT Bombay and has done his post-graduation from Indian School of Business.
Hrishabh is responsible for Data Science and Technology at the startup. The IIM Lucknow alumnus is also a guest lecturer at IIM Lucknow and National Institute of Securities Market.
The team has up to 15 employees.
Rohan says that all its customers have been acquired by word of mouth. “We have leveraged our friends and connections to acquire the first set of customers,” he adds.
The startup is yet to spend any money on marketing.
Railofy started its trials in January this year as a minimum viable product on trains originating from Mumbai.
“In just one and a half months of operations, we witnessed more than 60,000 visits, selling hundreds of WL and RAC protections,” Rohan says.
Hrishabh tells YourStory that the biggest challenge for the startup has been convincing the larger players, that is flight partners, to work with them. While getting the first meeting was not as difficult, proposing the new concept was not as easy. The team sorted this by diving deep and analysing every meeting and reiterating the model based on learnings. Secondly, “If faced with rejection, we would reach out to the same executives to mentor us,” Hrishabh adds.
Market overview and future plans
According to Allied Market Research, the global travel insurance market size was valued at $19.2 billion in 2019, and is expected to reach $39.9 billion by 2027, growing at a CAGR of 17.4 percent from 2020 to 2027. Vaibhav says Railofy is not competing with any player and that “While the problem we are solving for is common, our solution to solve it is unique.”
“Indian Railways is the backbone of our country. As India becomes more aspirational, passengers will demand a more reliable experience while travelling by the railways. Railofy is working towards this by solving one of the biggest problems affecting railways - waitlist due to congestion,” says Meenakshisundaram.
Rohan says that the funding from Chiratae Ventures further validates the startup’s belief that the problem of waitlist can be solved indigenously using a technology-led model.
Edited by Megha Reddy