On 19th January 2016, we announced our USD1.5 million Series A funding round. This is what happened behind the scenes.
When I wrote this post about TheLorry’s story on idea validation on Nov 2014, we were still basically a two-man team (two-man and a half if you count a freelance developer). I was doing mostly customer service & operations work whereas my partner and co-founder Chee Hau was in charge of marketing & sales.
(Btw, if you were our customer and noticed a certain “Adam” replying – that was me. “Adam” was my customer service alter-ego.)
As we started to get traction, we were convinced that our idea is sufficiently validated and it was time to put in more resource to take it to the next level.
Since tech is our core competency, we felt we should get a developer on board full-time. Freelance won’t work. Our credit cards were already maxed out so we needed to look for outside money in order to start hiring.
We began to actively meet potential early-stage investors to pitch our fledgling startup.
One of them that we pitched to was a KL-based angel investor. Meeting went well but I suppose we didn’t impress him enough.
We pitched to numerous other early-stage investors. Probably 5–6 in total. Some were warm to the idea but some said we were still too early to be ‘investable’ (we were only about 3 months old up to this point).
Having participated in WatchTower And Friends (WTF)’s pre-accelerator program, I kept in touch with its founder, Sam, for business advice and mentorship. He told me one day that application for the full-blown accelerator programme was now open and that we should apply.
We sure did. We applied, went through a pitching session, got grilled a little ..
..and got in!
The programme gave us a much-needed financial boost of RM50,000 for us to ramp up our marketing and hiring efforts.
Beyond money, one of the reasons we were attracted to the 4-month programme was its emphasis on mentorship. After learning this the hard way previously with my first startup, it was crucial to get as much support as possible and avoid running a business in a silo.
We were assigned to ex-GrabTaxi Regional Head of Ops & ex-AirAsia Regional Head of Cargo, Sathis Manoharen, who played an immense role in crafting our strategy and growth going forward.
There was a Demo Day at the end of the 4-month programme to present our progress. We were voted crowd favourite!
A series of fortunate events
One of my buddies from high school days (we were in a band together), Isa Ghani, called me up one day and invited me to a gathering of startup founders. Being a fairly new entrant in the ecosystem, I knew it was important to network with like-minded individuals.
At this event, we met a founder (identity is secret for now!) and asked for a coffee session to pick his/her brains about our business. We were doing fairly well in growing our numbers m-o-m but needed some practical “been-there-done-that” advice on our overall strategy and direction.
I remember telling Chee we have to be at the meeting place 1 hour early. The Japanese are known to be punctual (Us Malaysians 9.00am means between 9.00am-9.30am lah) and we have to make a good first impression!
10 days after pitching to KK Fund we put pen to paper and signed a funding deal.
This fund together with WTF’s RM50,000 gave us the capital we needed to scale up our operations and get a team going. “Adam” has to retire from customer service work — he’s got more important things to do!
Early on, our initial vision was to be an “Expedia for logistics” where users could select the best option based on ratings & prices provided by our pool of vendors.
To do this, we had to interview each and every vendor during the on-boarding process and ask for their respective quotations. This exercise involves a spreadsheet with over 900+ price points for KL & Selangor alone.
We soon found out that this model doesn’t scale, for the following reasons:
- On-boarding of vendors is tedious and most of the time vendors would just say “follow the cheapest guy” to compete
- More price points would be needed from each vendor should we decide to expand to other states beyond KL & Selangor
- Users can google the provider’s name and deal directly (no commissions lah, sadface)
- Issues with supply as the cheapest vendor might not have the required supply to serve the demand
After much consideration, we decided to pivot our model to an “Uber” model where we’d set the price based on certain formula and then decide on the back-end which vendor would go for the job. This was done manually until we released a vendor app which automated the whole process. Way more scalable.
Building a team to grow demand and supply
With KK Fund backing, we started to assemble our founding team across all key functions — tech, sales, operations, vendor relations, customer service and finance. We were obsessed with only two key metrics — growth in demand (bookings) and supply (fleet size).
On the demand side, we figured that the B2C market (house moving, disposal) is mostly one-off, and although promise higher margins there is no repeat usage (how many times in a year will a family move house?).
With that in mind, around early April 2015 we shifted our mindshare and focus to B2B (commercial cargo) “spot” market — manufacturers, distributors and freight forwarders who require on-demand solutions for their urgent trucking needs. Our clients liked the service and we were eventually awarded to serve their contracted/regular business as well.
In an effort to ensure demand is adequately served I went on an aggressive vendor acquisition spree to bolster the supply side. Our acquisition strategy is a little different compared to other marketplaces as we require face-to-face meet as part of the on-boarding process. No phone calls/emails.
Up to this point, most our vendors are primarily based in KL & Selangor. So if you needed goods moved from Batu Pahat to Kuala Terengganu, we’d have a tough time fulfilling the request. To fix this I travelled and recruited vendors all over the Peninsular — from Bukit Kayu Hitam to Pasir Gudang and grew our fleet size 5x — enabling us to serve any customer within Peninsular Malaysia. You can just imagine my fuel bill at the end of the month.
We also organised regular meetups with our vendors to talk about our vision and to answer any burning questions.
To ensure that the service provided by our vendors are of good quality, we organised training sessions which covers the basics of packing, loading and general handling of goods.
Next stage of growth
We knew we had to strengthen our operations in home market and expand regionally to grow to the next level.
Our B2C and B2B segment were growing, but there are still a lot of areas where we can improve in order to ensure that TheLorry becomes the #1 solution for customers who want to move heavy goods with lorries.
We got into e-commerce deliveries late August 2015 focusing on large, bulky item deliveries. The transaction volume was unbelievable and it grew too fast that our operations couldn’t cope. Our team worked long, long hours. We need to grow the operations faster or risk more quality deterioration.
Having done a handful of cross-border (Malaysia-Thailand, Malaysia-Singapore) deals, we noticed that there is a great opportunity to interlink the three countries together and setup operations in those two countries. We travelled to Singapore and Thailand to study the market and meet potential partners. It was time to expand.
To achieve our vision and execute successfully, we needed fresh capital and connections.
Chee and I discussed at length about it and we felt that it was the right time to raise our next round of funds.
We began drafting our presentation deck.
Raising Series A
Let me say this: fund-raising a full-time job. It is tiring and a tedious process. It may distract you from your day-to-day operations. Founders beware, please be ready for sleepless nights!
We started sending out intro emails to VCs sometime in September 2015. Some of them replied, some didn’t. All-in-all we managed to meet or had Skype sessions with close to 20 VCs. Only 2 were Malaysia-based. Others were Singapore-based or had offices in Singapore.
Pitching to VCs is tough. They will grill, turn you upside down and attack all your weak points to test whether you know your stuff.
One pitch session went something like this:
Me: *Started off with the usual introduction pitch. Who we are, problems, etc etc*
VC: Stop, stop. Don’t have to give me all that. Just go straight to the point. Show me your product and numbers.
At the end, we received a couple of offers on the table and decided to go with SPH Media Fund as lead investor with participation from Elixir Capital. This USD1.5 million will be utilised to carry out our vision in becoming a regional player for cargo transportation.
We still have a long way to go and its only just begun. It’s all about execution now. One thing for sure, I’m so proud to have a team that believe in the vision and the reasons we exist. To create real impact. Excited for the times ahead!
I can be contacted at firstname.lastname@example.org or on Facebook at Nadhir Ashafiq.