How one entrepreneur's belief changed

Sonali Chowdhury

Naveen Krishna was working with the Ministry of Rural Development when he identified an opportunity where others saw only poverty and despair. Krishna was already a seasoned campaigner in the social welfare sector and, after years of watching rickshaw pullers struggle in his hometown Varanasi, he was finally ready to build a future for them.

With seed capital of Rs 40,000 raised from a mentor, Krishna launched his social enterprise, Slow Moving Vehicles (SMV) Wheels, in Varanasi in April 2010. He has helped build a sustainable livelihood for 1,200 cycle rickshaw pullers in two Indian cities since then. Krishna is not the first in India to reach out to this marginalised section of the workforce. But, unlike NGOs who “do charity and foster dependence”, Krishna’s innovative model comes with dignity and no debt.

Small Step, Big Difference

So exactly how is SMV Wheels different? The start-up’s success rests on two little words – “deferred payments”. “In just 56 weeks, the rickshaw puller can own his own vehicle by making small, weekly payments for just over a year,” explains Krishna, who, after his Master’s in Social Work from Banaras Hindu University, was campus recruited for CAPART, the funding agency of the Ministry of Rural Development.

SMV Wheels doesn’t stop there. The company establishes a relationship with the rickshaw pullers through vocational counselling which includes helping them get a licence, insurance, uniforms and identity cards as well as access to no-frills banking.

Interestingly, the start-up offers two products – a traditional cycle rickshaw and an SMV Wheels-designed rickshaw. “Our design is lighter and reduces the burden on the driver. It also has additional seating space, which increases income potential,” Krishna explains.

He adds, “Our USP is multiplicity of choice for customers, developing ancillary products such as audio rickshaw tourism, advertisements on the back of the rickshaw to increase income, quality control and no dependence on NGOs and grants to achieve sustainability.”

Starting Up Broke

The young entrepreneur says his biggest challenge was securing the initial capital for his business. “I was left with only Rs 7,500 after I quit my job,” reveals Krishna. “Coming from a conservative place like Varanasi, I had a tough time convincing people about my start-up venture including my father. Reaching out to impact investors from a small city like Varanasi was a mammoth challenge.”

Finally, with the money he received from a mentor and the support of team members Pravin and Sumit Singh, SMV Wheels sold its first rickshaw in November 16, 2010.

It took at least 1,000 elevator pitches, more than 500 power-point presentations in Mumbai and Delhi and 18 months to raise some serious money. But Krishna’s unwavering conviction in his vision saw him through. “There are an estimated 10 million cycle rickshaw drivers and 20 million street carts in India. Our rickshaw pullers supported us during the hard times and believed in us throughout this journey.”

Funds Roll In

Krishna’s pilot project received an overwhelming response from funding agencies and VCs. The start-up also won several national and international awards, and, finally, he received $300,000 in funding from a syndicate of international investors which included K L Felicitas Foundation, First Light Ventures, A-Spark Good Ventures, Silicon Valley Community Foundation and the Social Entrepreneurs Trust.

The start-up also recently received a grant from the World Bank Group under their Development Marketplace initiative.

This financial infusion enabled Krishna to open branches of his company in Varanasi and Jaunpur, with plans for a third branch in Jharkhand.

Revenue Model

SMV generates revenue by selling cycle rickshaws at a small mark-up over the cost price. Each vehicle thus costs the rickshaw puller Rs 11,500, which also covers the cost of support services like a licence, uniforms, insurance, KYC compliance checks and weekly home visits by field staff.

The company also sells advertising space on the back of the rickshaws. The revenue is shared with the rickshaw pullers.

Also, instead of sourcing rickshaws from the market, SMV Wheels purchases the parts and gets them assembled in local garages. This reduces the vehicle’s cost while also ensuring quality control.

Road Ahead

SMV Vehicles recently tied up with the Government of Uttar Pradesh to introduce solar rickshaws and has already trained 50 solar rickshaw pullers. With the help of the state government, the company aim to scale this up to 50,000 in the next 5 years. “We plan to reach out to at least 20 per cent of the estimated 10 million cycle rickshaw pullers in the next 10 years,” says an upbeat Krishna. “With an upswing in the demand for our services, we are considering opening a production unit some time soon.”

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