Incurable entrepreneur Deepankar Rustagi is the founder and CEO of Omnibiz, a B2B marketplace that eliminates the bottlenecks of traditional trade by digitising the retail chain.
Rustagi is an Indian by blood but a Nigerian by birth and form, having spent about twenty-five years in the country. Equipped with invaluable lessons from his first failed tech startup, VConnect, he gave entrepreneurship another shot with the launch of Omnibiz in 2019, and the platform is fast gaining traction within its market.
In 2021, Omnibiz raised a seed round of $3 million to expand into new markets after proving its viability with its user base in Lagos and Kaduna.
Rustagi, a Stanford Seed alumni, reveals to Business Elites Africa in this interview why VConnect failed and how he’s mapping the success routes for Omnibiz, among other issues.
BEA: What inspired you to start Omnibiz, and what problem are you solving?
Deepankar Rustagi: So this Omnibiz is my second startup. My first startup was a company called VConnect. It was a local search engine helping small businesses create online visibility. My team and I have been very passionate about making a difference in the small business segment. We feel the oil has been there for long, but the real power of Nigeria or Africa will be unleashed if every business can scale 20% per anum; nothing can stop us at that point.
So our focus or the businesses that we build are in that direction. Omnibiz is a business that enables traditional retailers with tools to help them be as profitable and scalable as a supermarket. So they can manage their business and supplies more efficiently. They have access to more working capital. Nothing more is required to scale your business.
BEA: I understand your focus is on the informal sector. Considering most of these retailers are not so familiar with tech, how are you onboarding them?
Deepankar Rustagi: As you know, Nigeria is a country where internet penetration is really high. We have WhatsApp, Facebook, online banking, and then COVID came, which forced people in various ways to get closer to technology. And when we started, we realised that almost every retailer has two phones. One is a small and none smartphone, and the second is a smartphone, which they activate for data and use for their online banking, and manages their Whatsapp. So we have given them the reason to bring that phone forward and use it for business.
We have not had the situation where we have to buy them phones or train them on how to use the phone. What we have experienced around is that Nigerian retailers are very adaptable. They have adopted technology lately, and once you give them a good enough reason to use technology, they take that opportunity.
BEA: I’m trying to understand the process. How do you onboard the retailers?
Deepankar Rustagi: We have a team of scouts who are on the field. They go to these retailers and educate them on how to use the application and highlight the benefits of using the app. So the first experience is hand-holding them in using the app – registering them, getting their username and password on the application. And once they have done that, the application has push notifications and communication with the retailer to help them use the application.
BEA: How has the experience been so far?
Deepankar Rustagi: It’s not easy. I would say because whenever you are talking about any mass-market product, where you have to go out in the open market, recruit people, recruit retailers, educate them, and sometimes re-educate them because it takes time to wean them off the age-long habit of going to the market to purchase goods and telling them can do everything online.
So there is a learning curve. It is tough, but I think it’s very rewarding because when you see the benefit a retailer gets from using your technology, you and your team feel empowered that, yes, we’re solving the real problem. So that’s what drives us and makes us more passionate about our goals.
BEA: Besides convincing these retailers to buy from your app, isn’t it difficult to get them to pay upfront, considering the trust deficit in this environment?
Deepankar Rustagi: You’re absolutely right. In the adoption process, we try to minimise the barriers as much as possible. We envisaged whatever barriers could come in them making the desired decision, like the trust issue, like making payment up front, and like doubts about quality and choice of goods. We removed all those barriers. We made it in such a way that you can place an order, and once the goods are available, you can see them, and that’s when you have to pay. This removed many doubts the retailers may have.
BEA: It would seem funding is the biggest problem for startups. Have you raised any funds?
Deepankar Rustagi: I don’t think there is a problem with funding. I believe there are enough funds available. The problem is when you cannot prove that the investor will get their returns, or you cannot prove what you will do with these funds, so it will multiply.
In our case, as a startup, we did our prototype and our seed stage only in Lagos. And that’s when we raised $US3 million because Omnibiz had done well in Lagos and Kaduna.
Once we showed our investors that we have the potential to scale, we were able to raise the fund. And similarly, we do the same for our retailers; we give them additional working capital once we see they have the potential to scale. We don’t provide it to someone whom we are just onboarding. We see their data for the last five to six purchases, and once we see that the retailer has the potential, we have a clear reason to provide that working capital.
So, in any business, when you can showcase that these funds will get multiplied, funds will be available for you.
BEA: You said you started in Lagos and then moved to Kaduna. Have you expanded beyond these areas?
Deepankar Rustagi: Yes, we started with Lagos, and we went to Kaduna. We wanted to check that it is not a Lagos-centric business and to be sure it can be multiplied in other cities. And now we are in 12 cities. We are in Kano, Kaduna, Abuja, Minna, Suleja, Port Harcourt, Enugu, Asaba, Ibadan, Ilorin and Osogbo.
BEA: You mentioned that your first startup was VConnect. What happened to the business?
Deepankar Rustagi: I think VConnect was a nice concept. We were on that journey for seven years. We raised capital in the process and got great traction from the users. If you searched online, VConnect was one of the top companies that would come up in providing you service providers like a plumber, a painter, electrician, fumigation service, or any other service provider you needed.
But in terms of monetisation, we were a little ahead of curve payments. Neither Paystack nor Flutterwave was that big then; we started in 2011. So we were doing cash collection, which was not viable. So we were a little ahead of time, but we still believe the business has potential. We couldn’t succeed in monetisation at that point.
BEA: So what lessons did you learn from that failure, and what are you doing differently with Omnibiz?
Deepankar Rustagi: Awesome. I’m happy you asked that question because in every entrepreneur’s journey, there are various failures which teach you to move forward to something bigger.
One of the biggest lessons we got from VConnect was passion, focus and persistence. Focus is the key. So you should focus on one stakeholder, and in our case, it is our retailers. We don’t look at every stakeholder in the trade. We focus on a few products and optimise the supply chain for them. We focus on one problem at a time.
So we were solving only the supply chain problem for the retailers. We didn’t get into the working capital problem. Once we saw that, now we have achieved this. That’s when we went into the working capital issue. So I think focusing and achieving, scaling things before adding another layer was the key lesson.
BEA: What’s really unique about Omnibiz?
Deepankar Rustagi: Many companies are doing something similar, and we are happy because the market is very large. All the companies combined are doing less than 2% of the overall market. So that’s how big the opportunity is.
In terms of our differentiation, our unique selling proposition compared to our competition is how we are built. Our platform is structured in such a way that we can partner with the ecosystem more conveniently. We can provide more services to the retailers, and instead of replacing the existing chain, we are complementing it.
So we don’t replace the distributor. We complement a logistics provider to do it more efficiently. We work with the manufacturer, providing them with more or better quality data. We work with the retailer to generate more and retain their existing customers.
BEA: Let’s talk about Africa’s tech ecosystem. The influx of VC investment is unprecedented. Are we really growing, or is this a flash in the pan?
Deepankar Rustagi: The African tech ecosystem has grown significantly in the last five years. In the last two years, we have seen much investment complementing and recognising that growth. So we are really growing. I wouldn’t doubt that. And I will say we are also solving genuine problems at scale.
But I still think we need to gradually take the valuation cycle because I believe everything should be on an incremental trend. It’s not good to say, ‘hey, we had an X million dollar evaluation and then it comes down to X minus Y.’ So try to grow fast but grow stable.
BEA: I think you hit the point I was coming to. The ecosystem is growing fast but is the growth sustainable, or how can we ensure sustainability?
Deepankar Rustagi: I think solving real problems ensures that our growth is sustainable. All the big startups, all the startups that have emerged or have raised capital, are solving the genuine problem, and they are solving it sustainably.
So every startup should have visibility of its path to profitability because startups don’t make money in the first year and shouldn’t be pushed to make as well, but the visibility of how that startup is going to become profitable eventually should be very clear and that economics should be visible in the traction today. I would say that makes us self-sustainable. Yes, there is capital available globally and open to being invested in Africa, but we don’t want the international sentiment to decide the growth of the African tech ecosystem.
So we should grow in a manner where we can sustain this growth on our own.
BEA: Where do you see Omnibiz in five years?
Deepankar Rustagi: The problem we are solving is the problem of traditional trade being digitised. In the next five years, we would be present in 15 to 16 countries across Africa where this problem is big, and there is huge requirement for our solution. We would be solving it for over 500,000 retailers across the continent, helping them grow their business, simplifying retail, and making the experience much better than what it is today.
BEA: As someone who has done business in Nigeria for a while, what would you say are the key elements any entrepreneur needs to succeed in the country?
Deepankar Rustagi: That’s amazing. I would say any entrepreneur needs three key things to succeed in Nigeria or any tough market: number one, passion, and number two, persistence. There are ups and downs that you will see when running a startup. You have to be persistent. Thirdly, I think it is to be very humble.
As an entrepreneur, your real work is to work with people who can help solve the problem because you can’t do it alone. No entrepreneur can solve the problem by themself. So if you are not humble, if you are not a people-first person, you will not be able to solve the problem for long.
BEA: How were you able to put together the team that is driving Omnibiz?
Deepankar Rustagi: I think this is key. I worked in FMCG before, so I knew a little about the existing problems, and I worked with one of the largest companies in the FMCGs space on this continent.
We went on the field and interviewed the retailers to understand their problems. And once we were clear on the key problems and how we could prioritise and solve them, we looked for people who are the best fit in the industry to solve the problem and who understand and would be passionate about solving it for a longer duration of time. Not for three months, not for nine months but at least three to five years.
Then we built those people to build the founding team to take this forward. We got people from logistics, supply chain, people from FMCGs background, people from a sales background, people from a finance background, people from operational success background who could design the processes and systems, people from products background who have worked with Konga, Mckenzie and various other companies who have built product. So I think bringing those people together was instrumental in building the base for the success of the platform.
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