Young-turk trio harness IT trends to boost customer bond

In this episode of CNBC-TV18's Young Turks, meet IITians Anish Reddy, Krishna Mehra and Ajay Modani who left their comfortable corporate careers behind and found Capillary Technologies in 2008 betting on cloud computing. Capillary helps retailers intelligently engage with customers through mobile, social networking and in-store channels.

This Bangalore-based venture has recently raised Rs 85 crore from Sequoia Capital, Norwest Venture Partners and existing investors Qualcomm Ventures. Join us as we find out what Capillary's next milestone is likely to be.

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Below is an edited transcript of the show on CNBC-TV18.

Armed with a Rs 15-lakh loan from their alma mater's entrepreneurial cell, the three IITians went about building a customer engagement platform that it did not require customers to fill up forms or carry a membership card. And that's what gave birth to Capillary and its flagship product, InTouch- a cloud-based retail customer relationship management solutions that retailers can use to access and use customer and purchase data to entice buyers with loyalty programmes, discounts or rewards. InTouch also provides add-on products like call-centre support, gift cards and a complaint-management system. The team claims their marquee clients like Pizza Hut, Puma, Raymond and United Colors of Benetton (UCB) have realised as much as a 10-percent increase in same-store sales by leveraging Capillary's solution. Krishna Mehra tells us how it all began.

Krishna Mehra, co-founder, Capillary: For a retailer, the strongest bond is the one that exists with the customer. So we realised that this area offered potential for disruptive innovation with the help of new technologies. Most retailers issued out plastic cards as part of their customer-loyalty programmes. However, most customers never carried those cards and that put paid to customer-loyalty programmes.

So we figured that there was a big scope of using the mobile-phone as a de facto identifier, validator and communicator to help retailers engage with their customers in a much better manner through the use of real time technologies. And that was the genesis of the business that we have built. I think our key insight was to change the way customers interacted with brands.

And this insight has helped Capillary grab investor-attention from the get-go. In 2009, the venture received Rs 50 lakh from Qualcomm Ventures. Angel investors like Google India head Rajan Anandan continue to pour in capital. And then in September 2012, the boys hit the jackpot.

Capillary raised Rs 85 crore from in series-A funds from Sequoia Capital and Norwest Venture Partners. Like other SaaS model, the startup charges a monthly fee between Rs 5,000 and Rs 25,000 pre store per month and the venture has reached 50 million customers across 10,000 stores and has touched Rs 10 crore in revenue. Krishna says this is just the tip of the iceberg.

Mehra: Capillary harnesses the four most powerful trends in business today- cloud computing, social networking, big data and mobile access- to help a retailer take business to the next level. And we are winning deals against the biggies in this space- against SAP, Epicor, Oracle and dunnhumby. The potential is immense with the large number of retailers in India and overseas who need solutions like this over the next three-to-four to help understand their businesses. We have set our eyes on 50,000 stores and USD 1-billion in revenues in the next four years..

With the pitch set, the Capillary team is gearing up for a long innings. With an eye on backing to non-retail markets like hospitality and healthcare to grow, the trio is targeting partners in 100 Indian cities by 2015. They are also hoping to offer services in global markets like Southeast Asia, the Middle East and the UK and may look at acquisitions as the preferred route. In fact the company is in a process of acquiring SocialStock, a US-based TechCrunch Disrupt company that will provide a leg-up into the world of social networking.