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Delhi resident Deepa Singh, a mother of two, has lost count of the number of times she has referred to Mycity4kids.com (also the company's name) for her little ones, ages seven and three.
Mycity4kids.com functions as an aggregator in the children's service space, the only company in the segment. It operates on both the B2B (business-to-business) and B2C (business-to-consumer) levels.
On B2B, it provides five kinds of solutions to SMEs (small and medium enterprises) in the kids space - pre-schools, makers of products for children and so on. The solutions are kick-start (for businesses to go online through a template website or social media), accelerator (also giving interactive voice response solutions), maximiser (also gives preferential listings, and video testimonials), response management, and payment solutions (reminder to SME customers) and local promotion (area-specific) for SMEs. It also has tie-ups for event-based ticketing.
Kidzee, a play school at Delhi's Vasant Kunj area, has seen an uptick in walk-ins and enquiries after tying up with Mycity4kids. Enrolments have risen 10-20 per cent in the past year, says Nipun Monga, director.
At the B2C level, the company lists all children-related services such as information on all schools in a city, summer camps, hobby classes, sports classes, special coaching and so on. Parents of children between one and 14 years of age can search for any service(s), get video reviews from other parents and buy tickets for events online or by cash pick-up. The company caters to parents through real-time updates of events/other activities, taking the locality the child stays in and his age into consideration. An example would be summer dance camps in the Peddar Road area of Mumbai.
The other service is video reviews of services/activities listed from other parents and providing a list of top activities for children in a week. The services or listings on the website are also rated, so that parents can compare services on parameters like the teacher-student ratio in a school, individual or group coaching, school timing, extra-curricular activities.
The beginning
Mycity4kids, co-founded by Vishal Gupta (chief executive officer) with former colleagues Prashant Sinha (chief of operations) and Asif Mohamed (director), started operations in Delhi in October 2010. As a curious father of two boys, Gupta knew the plight of parents wanting to make their children do something extra in their free time. His experience as Aviva Life Insurance's director, marketing, helped in understanding this market.
It was a bumpy ride. "To convince businesses we are here for long was difficult. There was a perception that start-ups come and go. The pedigree of the founding team helped," says Gupta. He is an IIM-Bangalore product, Asif is an IIT-Delhi alumnus and Sinha is from Delhi University.
Still, as Mycity4kids was the first such company, hiring was a problem. Funding was a bigger one. Initially, the promoters pooled a total of Rs 50 lakh from personal savings. The first investor funding was in January 2012 but the investor backed out, questioning the business model, as the market was nascent. In May 2012, YourNest Angel Fund invested; sources put it around Rs 5 crore. Mycity4kids is looking at a second round of funding over the next three to six months; Gupta declined to give details. He says the equity is equally divided between the founders and YourNest.
"Parents are always keen on providing something extra to children. With disposable income increasing, money is going to flow into this space just like in any other consumption segment," says Sunil Goyal, fund manager and chief executive of YourNest.
Agrees Pearl Uppal, co-founder of 5ideas, a seed fund-cum-accelerator, "Indians spend a significant part of their household income on their kids' education, enrichment and well being. This is a big part of the consumer wallet that tech-enabled businesses can target efficiently across the country's one to two million affluent households."
Number game
Mycity4kids earns from its B2B service. The five solutions it extends are priced between Rs 2,500 and Rs 1 lakh a year. Gupta claims the revenue mix from the five solutions is spread out largely between five services, only ticketing solutions are event-based. To make sure they recover costs, Mycity4kids offers prepaid annually renewable services to SMEs. The B2C service is free of cost for parents, which the company plans to monetise only when this reaches a critical mass.
This kids' services aggregator made revenue worth Rs 3 crore in 2012-13. It expects revenue of Rs 7.50 crore in 2013-14 and Rs 25 crore in FY14-15.As it is still expanding in different cities, its break-even is getting postponed, says Gupta. "But, on a city level we've broken even in Delhi and might soon turn profitable in Bangalore, followed by Mumbai," he adds.
Taveesh Pandey, director of Black Diamond PE Advisors, says: "The business model is fairly sensible - monetise the B2B part while using the listings to drive B2C volumes. In fact, it might be easier to monetise the B2C part. The moment it is in a position to do so, they will get a significant uptick in revenue growth and valuation. If the break-even is getting postponed because of expansion, maybe it should look closer at its sales strategy. It should not be too hard to replicate a model that has succeeded in one city at a lower cost in another city."
At present, Mycity4kids sees 8,000-9,000 visits daily, of which 35 per cent are repeats. On B2B, it has tied up with 40,000 service providers under 13 categories like school (day care, pre-school, school), after school (hobby classes, enhanced learnings, tuitions), events and entertainment (amusement parks, kids' events), health and wellness (sports/ activity classes) and so on.
Ahead
From six cities (Delhi-NCR, Mumbai, Bangalore, Pune, Chennai and Hyderabad), the firm plans to spread to the top 16 cities this year and one abroad. It also plans to offer more solutions to its B2B customers.
Obviously, scaling up could get challenging. "The key one is to scale up across multiple cities and get a comprehensive coverage of service providers in each. Each city requires feet-on-street B2B selling, as very few Indian SMEs are online. Most of these SMEs are local retail businesses and if the sales channels are not constructed in a way that you can recover your customer (SME) acquisition cost comfortably, with surplus left to spend on B+2C marketing and distribution, profitability can be a challenge. The customer will not pay Mycity4kids; the customer will pay the end-service provider. Hence, Mycity4kids needs to figure out most of its monetisation through the businesses it serves as a combination of listing and lead-based revenues. It should also enable these SMEs to transact online with the customers," says Uppal.
Gupta says it is important to think like a parent and hence the need to verify listings carefully. Agrees Goyal, "What mostly leads to the downfall of a first mover is the compromise on quality."
The good news is there are scores of urban parents who say they are interested in exploring Mycity4kids.com. But some, like Bangalore's Ananda Das, says schools are well equipped to provide her five-year old son with all kinds of recreational and skill development activities. If not, it has tie-ups for this. "I would rather go for the school's tie-up, as I would be assured about my child. These portals will not take responsibility if anything goes wrong," she adds.
THE OPPORTUNITY
Kids services market: After-school activities (hobbies, sports, tuitions), day-care and play schools, recreation and entertainment (birthday providers, camps, fun places to go), health and wellness and shopping
Size of the market: Estimated at Rs 15,000 crore
The scope in this market...
- Households in the top 16 cities = Estimated at 1.2 million
- Average spend per household (other than school fees) = Rs 950 per month
- Increase in spend on education and recreation = Projected at Rs 8,400 in 10 years from Rs 4,100 in 2012-13 (Source: McKinsey)
- Greater disposable income, Double-income families
- More choices available to parents to spend on their kids
- Parents realising academic excellence is not everything
FACT BOX
Area of business: Kids' service aggregation
Revenue: Rs 3 crore (FY12-13)
Target: Rs 25 crore (FY14-15)
Status: Break-even at city-level in Delhi; will soon turn profitable in Bangalore, Mumbai
Funding: YourNest Angel Fund invested around Rs 10 lakh
Plans: Targeting operations in 16 cities against 6 cities at present
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EXPERT TAKE Mycity4kids.com is an interesting online marketplace for kids' products and services. It not only allows kids' service providers and product manufactures to list on a common platform but also allows customers (parents) to search for these, with an option to pay online or cash payment collection. As such, there is no problem or dearth of kids' services and products but sometimes it becomes a challenge to find or locate these. Even if someone knows about it, they might not be in a position to avail of these due to time constraints or not knowing how to reach service providers. Mycity4kids serves a unique need of market-enabling customers to explore and book services or place the order for products. Also, users can share their comments, making it easier for other potential customers to zero in on what they are looking for. Currently, it is available only in a few cities but has the potential to go to more cities. While Mycity4kids is a great market place to list and sell kids' services/products, it has its own challenges as well. It can be accessed only if you are online or you know about it. Whereas the addressable market is quite big and spread across regions. However, the founding team is capable of overcoming this problem and will certainly figure out the solution, which could be in the form of introducing mobile apps customers. Anil Joshi, president of Mumbai Angels, a network of angel investors |
