The nationwide lockdown has been good for Instamojo, the digital payments platform for micro-businesses, as more and more entrepreneurs go online with coronavirus forcing people to stay at home.
Upbeat about the spurt, the Bengaluru-based startup hopes to be profitable this year.
As the lockdown, in its seventh week, has made physical meetings and offline services impossible, freelancers like stand-up comedians, gym and yoga instructors and teachers have taken their services online and Instamojo is playing the role of an enabler.
“We are onboarding about 1,500 merchants daily and this is happening completely organically,” chief executive officer Sampad Swain said. In the last week of March, when the lockdown started, the number had dropped to 800.
Swain said many trainers who used to take classes in housing societies, schools and parks moved online and turned to Instamojo for payments and interacting with customers. The platform has 1.2 million merchants, who offer services and products to consumers through the startup.
“I think what demonetisation has done for payment companies, COVID-19 has done for micro-businesses, forcing them to look for options online and that has benefited our business as well,” he said, referring to the respiratory illness caused by the coronavirus.
Like all other businesses, the coronavirus did hit Instamojo hard. In April, it cut 10 to 40 percent salaries of two-thirds of the staff. But, there will be no more cuts as the business had picked up, Swain said.
Among multiple businesses that the platform caters to, online spiritual classes have seen the biggest jump of 311 percent. B2B services are up 117 percent and education 66 percent.
These are the businesses that have aggressively gone online while travel, beauty, clothing and accessories have taken a hit.
Instamojo, backed by Blume Ventures, AnyPay, Kalaari Capital and others, started in 2012 as a payments platform for small businesses selling products and services online.
Over the years the company has expanded into ecommerce, lending, logistics and is on course to be a full-stack software service and ecommerce company.
In February 2020, it acquired GetMeAShop to offer website building, customer relationship management and analytics services to merchant partners.
Except Mojo Express, which is the logistics arm and was not making deliveries due to the lockdown, Swain said all other businesses were recording a 30 to 40 percent growth.
“Our gross margin has gone to 57 percent compared to 37 percent in December last year, backed by an increase in our net revenue and reduction in our marketing spends and higher transaction volumes,” he said.
The company had reduced its “net burn”, the price paid to acquire new customers, by more than 50 percent, its lowest ever.
Given the dramatic improvement, Swain is confident of becoming profitable this year. If it happens, Instamojo will be one of the few companies in the fintech space to make money.
With 98 percent of its merchants below the Rs 20 lakh revenue threshold, Swain wants Instamojo to be the go-to platform for micro-businesses across the country.
When asked about the firing of 13 people, Swain said the integration with GetMeAShop caused redundancy in certain roles, so they were asked to go, it was not because of the pandemic.
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