“We aggregate SMEs’ requirements and buy large quantities as an enterprise and provide them great price points. Our ideology is to make SMEs more profitable so that they can…make themselves more competitive globally.”
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The Power2SME Story
Power2SME seeks to give small and medium businesses the power of bulk-buying their raw materials at cheaper rates than they would otherwise have to pay. The company aggregates demand from SMEs for the most commonly required materials such as chemicals, polymers, steel and additives and procures these for them at prices that only large enterprises enjoy. Power2SME is founder R. Narayan’s second venture. It started as a subsidiary of Denave (which provides sales enablement services) and was set up as an independent company in 2011.
In Conversation with Narayan
Recipe for success
Focus on the idea, hire the right team, understand your customer, build and move your network and ensure you have access to capital – those are the key ingredients of success for a startup .
Your business idea should be very clear and must solve a real problem or need. It must be disruptive and surrounded by real numbers. A lot of people get hung up on branding and making everything perfect before you launch. I say sell your product first, start generating interest and income, and then produce.
The team you build must have the right people in it to make sure it is well-rounded. A great idea is the catalyst but needs a crack team to make it come alive.
Walk in your customer’s shoes otherwise you may never know if your idea is really solving their problems. Are they comfortable using your product or service? Is there ecstasy when they engage with you? You will learn many valuable lessons by knowing your customers better.
Ensure access to capital, because no amount of money is enough to grow your business. It is not really difficult if you have a good team, good idea and a good execution plan.
Build your personal network while building your business. This gains momentum as you work with more and more people. The network becomes stronger when the people in it help each other. If you can build that kind of momentum, then there’s very little chance that you will go wrong.
Your unique idea
If a large company wants to buy 20,000 litres of paint, it would cost them 2x-3x less than the maximum retail price (MRP), but if an SME wants to buy 200 litres of the same paint, they have to pay the MRP. There are various price points for different volumes. Power2SME seeks to level the playing field by acting as a buying club for SMEs, mostly manufacturers. These businesses share their raw material requirements with us. We, in turn, aggregate their requirements and buy large quantities as an enterprise and provide SMEs great price points. Our ideology is to make SMEs more profitable so that they can invest more in their business, R&D and marketing to become more competitive globally. In developed countries, 50% of GDP is generated by SMEs, whereas the figure is just 8-12% in India. That’s the problem we’re trying to solve.
Partnership with Kalaari
Kalaari has been an amazing partner running alongside us all the way. One of the best things about them is the mentoring they provide. Whether an entrepreneur is young or old, their ability to provide mentoring and dive into problems to help us with our thinking is a great quality. Kalaari also brings with it a phenomenal network. You throw any problem at them, and they will give you three scenarios where they’ve seen such problems. They will also give you 12 connections who have helped solve that problem. This ensures you can take a crack at the best solution at the first stage and move ahead without failing and starting over.
Your first meeting
The first thing that came to my mind at our first meeting with them was the energy level in the room – it was unprecedented. The bubble or buzz around the place was phenomenal and very infectious. The second was their empathy towards the entrepreneur; when they posed questions they weren’t questioning the entrepreneur, they were always questioning the idea, testing their own understanding of the space and the idea, and testing the entrepreneur’s depth of understanding of that space and idea. Another thing that clearly stood out at was their office. I had visited many such meetings with other venture capital firms and had always seen lots of white, glass, straight lines, etc. in their offices. Kalaari’s office gives you a sense of warmth, a sense of India and its culture, a sense of being lived in that immediately settles you into a conversation much faster than in any other place.