Heady Corporate Ride: Verayu, Yantra and Routematic

(L to R) Sriram Kannan, Founder & CEO and Kavitha Ramachandra Gowda, Co-founder and Executive Director of Routematic. Image: Selvaprakash Lakshmanan for Forbes India

It was 2017. For Sriram Kannan, a computer scientist from the Indian Institute of Science in Bengaluru, it had been more than one-and-a-half decades of well-conceived, well-planned and a well-executed life. The physics grad from the University of Madras started his professional innings as a software designer with Texas Instruments in 2000, and went on to add many firsts to his name—launched the world's first telemedicine application on touch phones that helped doctors and specialists review and diagnose medical images on-the-fly; developed Verayu, a location intelligence platform for enterprises that worked without data and GPS; and rolled out Yantra, a 65 gram, high-end GPS tracking device. Nivaata, a company Kannan started as part of a golden handshake from Texas Instruments in 2007, had a successful run for nearly a decade. Everything was going according to plan.

Then in 2017, the best-laid plans went astray. “Everyone has a plan till they get punched in the face,” recalls Kannan, who lifts Mike Tyson’s punchy one-liner to explain the first big setback of his life. “You don't understand failure till it hits you,” underlines the software engineer who was seared by the hardware fire. “Doing hardware in India is tough,” he rues, alluding to the flip side of the business of Yantra, a high-end GPS tracking device. Despite a thriving demand, consumers wanted a ‘ridiculously’ cheaper version.

But there was another dimension to the problem. Kannan had amassed a massive inventory, the founder had already committed himself deeply to manufacturing, and the first-generation entrepreneur was stuck in long and short-term debt. The result was a botched cash flow. “We badly miscalculated on cash flow,” he recounts. The company had to pull the plug on producing devices. Apart from the financial fallout, Kannan faced another unpleasant inevitability: The slashing of headcount. “We had to cut the team to one-fourth,” he says, adding that it was not an easy decision. “We had a superb team, but we just didn’t have the cash,” he rues.

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Three years later, in March 2020, Kannan had enough cash, but his business was set to run out of cash. Reason? The pandemic had dealt a body blow to the business of daily office commute, which Routematic ventured into in 2018 when it started its pilot with Infosys. After two years of operations, the revenue jumped to Rs45.3 crore in FY20, and losses were under control at Rs7.75 crore. Suddenly, Covid forced offices to shut down, ‘work from home’ became the norm, and ‘work from office’ disappeared.

There was something else that also vanished at the same time. Kannan was in the advanced stages of negotiations to close a Series A round $10-12 million in funding. The pandemic, unfortunately, pushed the venture capitalists into deep hibernation. From carrying laptops to oxygen cylinders, Routematic did everything to survive the first wave of the pandemic. A meagre funding round of $2 million from Bosch in March 2020 came as a respite, but the second wave of Covid triggered an existential crisis.

By March 2021, the revenues alarmingly dipped to Rs16.17 crore from Rs45.3 crore in FY20. Covid’s prolonged spell extended ‘work from home’, and Kannan was strapped for choice. A team of 150 shrunk to 45, funding remained a moonshot, and pivoting Routematic to either a delivery company, a fintech or an agritech seemed a practical solution. Every option was explored, debated and finally shunned.

Routematic was hopelessly trapped in the crosshairs of the pandemic, and there were no signs of a flicker of light at the end of the tunnel. What made matters worse was a counterintuitive move by the founder. “Let’s double down on the corporate commute business,” he shared his intent with his team. “I was branded insane,” recalls Kannan. And rightly so if one looked at the context. The world of corporate commute was fast disintegrating and here was a founder who exhibited his streak of irrationality by talking about ramping up operations.

Kannan, meanwhile, was justified in his approach on two counts. First, his education wired him to think like a scientist, but his vocation—entrepreneurship—made him hunt for opportunities even in a crisis. With smaller players exiting the corporate commute market, and the unorganised industry collapsing under the weight of the pandemic, Kannan was looking at a huge upside. “What if the pandemic ends in a year or so and people return to office,” he wondered. “And if such a scenario does play out, then I would hit a jackpot,” he argued.

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Second, as an individual, Kannan was feeling torn. All his life, he chased closure. Covid, he reckons, tore a chapter from his book. “I wanted to complete my book. I wanted to finish it,” he says, adding that he had always backed his actions and ideas with conviction. Take, for instance, the move to stay on course even when a section of VCs didn’t get the hang of his business. Some mistook Routematic as a traditional fleet vendor or an operator, a few erroneously thought the company pitted itself against the likes of Ola and Uber, and a handful thought that the daily office commute was a manual job that didn’t need any technology intervention or an upgrade. Kannan made futile attempts to drive home his tech prowess. “Our cabs are dispatched autonomously, our routing is done autonomously, and there is a lot of AI (artificial intelligence) involved in operations,” he pleaded passionately. “It's a hardcore tech company solving a big pain point,” he underlined. His pitch got muffled because of another reason. The office commute market was littered with lookalikes and imposters who pretended to use AI and high-tech in operations.

What also hampered the fund-raising efforts was the absence of the right kind of keywords. A bunch of investors hunted for the next Facebook, Google or Twitter. “Unfortunately, we could never match these keywords,” says Kannan, who was also subjected to repeated jibes about ‘people trying in the past but failing gloriously’. A miffed founder would always shoot his rational retort: If people have failed, it means there is an opportunity. Right? The reasoning, however, didn’t cut much ice, and the voice fell on deaf ears.

Cut to May 2024. Routematic has defied the odds and rebounded to post a staggering Rs115 crore operating revenue in FY24. “We are PAT positive and have been generating cash,” claims Kannan, who has just raised around $6 million in funding in its journey. “It’s a B2B business, and we never needed crazy billions,” he says. The urban tech mobility company for daily office commute is now operational across 20 cities, serves over 175 corporate clients, and claims to cater to over 3 lakh commuters every month. “When we started piloting with Infosys, we just did 10 trips daily. Today, we do their 100 percent trips,” he says.

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With a resurgence in ‘work from office’, Kannan sniffs a much bigger opportunity. He rolled out CoCo Rides, a ride-sharing platform for office commuters who can book in advance, in 2022, and has expanded furiously across 15 cities. “There is no surge pricing, no driver cancellations and CoCo has an electric fleet of e-rickshaws and sedans,” he says. Post-Covid, the daily office commute landscape has been highly volatile in recovery. While corporates have been taking different strategies to promote ‘return to office’, they have also been providing flexible work timings and using a hybrid model. “This poses a significant opportunity for tech-enabled vertical SaaS companies,” he says.

The industry watchers, meanwhile, are impressed with the performance of Routematic. “The company has found its niche in a crowded space,” reckons Anil Joshi, founder of Unicorn India Ventures. A high degree of tech-enabled solutions, underlines Joshi, has helped the company stay ahead of the curve and post profitability. The challenge now is to expand operations and maintain a healthy bottom line.

Kannan, for his part, reckons there is no going back on profitability. “Once you have tasted profits, you can’t return to the old world of losses,” he says, adding that as an entrepreneur, his biggest edge is scripting his own story. “If you go by the book, then there are millions who are already doing the same. What advantage would then a founder have,” he argues. A trait, Kannan lets on, that matters most in the entrepreneurial journey is being stubborn. “It's just doggedness, and nothing else,” he says. If given a chance to start his journey again, would he like to write a different script? The founder stays ungarnished in his reply. “I would raise lots of money,” he smiles.

Routematic has raised just $6 million in 17 years. Though Kannan doesn’t have any regrets for being miserly in the funding game, one could sense a brutal learning that the founder picked up during multiple cycles of irrational funding and an exaggerated valuation that the Indian startup has experienced over the last two decades. “As a new entrepreneur, I would create a business idea using ChatGPT business and raise $100 million on day one,” he laughs. “It’s my revenge,” he signs off.