[Tech50] How this Hyderabad-based startup aims to touch over 1.5 lakh Indian villages with its ‘phygital’ network

For Vamsi Udayagiri, rural value chains hold a special place in his heart. With a professional career spanning over 12 years, Vamsi worked on supply chains and also successfully exited the Hyderabad-based agritech startup Pakka. Then he started Hyderabad-based Hesa in July 2019. 

The startup which is among YourStory’s Tech50 list of promising early stage startups is connecting Bharat and India “phygitally” (a combination of physical and digital) provides “access, enablement, and employment” options and aims to bridge the urban-rural gap for the world’s largest customer base that resides in rural India.

“With the opening up of digital pathways, I became more and more convinced that everyone, including my fellow citizens in the hinterlands, should ride it. In early 2019, while returning from a fortnight long trip where I visited almost 100 villages of AP (Andhra Pradesh) and Telangana, the urban-rural divide became even more evident to me. 

“The main challenge in remote rural locations is to have a feasible and sustainable unit economics model as there is a steep difference in the cost of doing business versus the revenues generated. Same situation is faced by rural entrepreneurs including farmers wishing to sell their products,” says Vamsi. 

What does it do

Hesa had initially planned to launch in May 2020, but seeing the urgent need gap in the initial days of the coronavirus pandemic induced lockdown in March, it decided to launch a month earlier in April 2020.

The startup enables connectivity and door-step access in rural india. The technology enabled B2B2C (business-to-business-to-consumer) unified social, digital and physical commerce platform helps rural customers in buying and selling “quality products” at the door-step along with providing other digital facilities such as utility bill payments, recharge etc. 

It helps the rural consumer buy from a wide product portfolio specially curated keeping their needs and desires in mind. These include aspirational products such as mobile phones, laptops as well as innovative farming equipment.

“Rural India largely thrives on an assisted commerce model as trust and relationships form its core. With a vision to be India's largest integrated marketplace by enabling ease of rural commerce and leveraging technology, Hesa is on a mission to bridge the gap phygitally for the world’s largest customer base of 850 million people residing in rural India,” says Vamsi.

The workings  

Rural tech is the need of the hour as an immediate solution to access, connectivity, supply and other issues for both the ends, says Vamsi. He explains that Hesa is the  “go-to” company for all rural commerce needs such as empowering farmers to buy and sell online through their agritech vertical, enabling financial services for rural consumers ranging from insurance cover to withdrawals and deposits to utility bill payments through its fintech vertical.

Once the idea was in place, Vamsi, roped in Hema Nandiraju as the co-founder and CPO and Sridhar Sivalenka, a serial entrepreneur, as the COO. The team today consists of over 170 people. 

Hesa unifies value chains in rural India by enabling local brands and businesses to come together as a community. Complemented by the on-ground network on Village Level Entrepreneurs (VLE), Hesa's robust tech-led platform empowers businesses to reach, showcase, demonstrate, convince, and transact with its customer base of more than 850 million across all remote and rural regions of the country. 

During the pandemic Hesa says it saw “significant growth”, without sharing exact numbers. It also built several verticals to aid rural India during these unprecedented times. “From providing medical and ration kits to enabling livelihoods, Team Hesa has been working hand in glove with the rural communities and other key stakeholders to lend its support in these trying times. The efforts have already positively impacted 12000 people directly and plans are in place to reach out to more people over the next two months,” says Vamsi. 

Under the hood

Its biometric device-integrated technology, enables integration of multiple business functions and APIs (Application Programme Interfaces) . The platform is sector and brand agnostic and connects rural entrepreneurs looking to sell their products to brands and urban consumers. 

Its core offering is a physical network of village-level micro entrepreneurs called Hesaathis, spread across villages and connected through Hesa’s plug and play technology-driven platform. The main role of a Hesaathi is to build a network and establish smooth communication among all stakeholders.  Some of the key technologies used by the startup are Azure Platform, Dotnet, My Sql Server, and Power BI. 

“The phygital approach enables businesses to reach, showcase, demonstrate, convince and transact with the rural target audience,” says Vamsi. 

All that the rural customer has to do is to just visit the Hesaathi in their village who uses the Hesa platform to service all these multiple needs in a single visit. This is especially a blessing at a time when social distancing has become the new norm. Hesa is helping people in villages to avoid long commutes in shared vehicles or having to stand in long queues. 

Hesaathis on the other hand are able to generate income through commission on every transaction they enable on the platform. Presently Hesa is empowering 20,000+ Hesaathis with income and livelihood.

Funding and market 

Hesa is backed by Inflection Point Ventures (IPV) and Venture Catalysts, and has raised a total seed funding of $2 million. Hesa has also received a $450,000 grant from NABARD to empower rural women in Odisha with income enhancement and capacity building.

As far as the market is concerned several ecommerce startups are helping small sellers ride India’s ecommerce wave by providing them with the back-end solutions they need without starting from scratch. These include ShopX, LaYuva, Meesho, Shopmatic, Shyplite, Shop101, GlowRoad, Ezmall Zepo, Kartrocket, and Shopify. On the other hand, startups such as Delhi-based Mimo, Chennai-based Boonbox, and 72Networks are focusing on last-mile rural connectivity. It's a robust and buzzing industry without doubt. Various studies peg the Indian rural marketplace at $650 billion and believe that is ripe for disruption. 

Hesa hopes to lead this space by being the “go-to” company for corporates, SMEs (small and medium enterprises), banks, government and the NGOs (non-governmental organizations) that wish to enter the villages of India, for their buy-sell proposition and social responsibilities.

“Leveraging our robust and scalable technology platform and the deep insights of the rural eco-system, by 2025, we aim to have a pan-India presence and phygitally connect 1.5 Lakh Indian villages and 20 crore rural households. We are all geared up to play a pivotal role in revolutionizing rural commerce for businesses and bringing financial and social empowerment in the lives of the lacs of people touched by Hesa in the Indian heartlands,” says Vamsi. 

Hesa is currently operating in the three states of Andhra Pradesh, Telangana, and Karnataka,  catering to 6,00,000 customers via 65+ businesses such as Vaya Finsrve, HDFC Life, Way Cool, Airtel Payments Bank, Instant Pay, etc. Hesa’s annual revenue slab is upwards of Rs 10 crore, according to the founders. Some of its key competitors are Vakrangee, Frontier Markets, and BoonBox.

The startup earns a margin on every financial transaction with its vast VLEs and CSA (Customer Service Associate) network.

Hesa has a total turnover of Rs 50 crore, which primarily comes from the transactions that take place on the digital platform. It has 8,000 active Hesaathis. The startup’s current valuation stands at Rs 85 crore.