When you go to a travel site and compare the prices of a hotel room, you would expect the platform to list the best pricing. However, once you book the room and you go back to the site the next day, you may find the room cheaper than what you paid for. Now that's what Pune-based startup Vervotech aims to solve for large aggregators and agents.
Travel agencies often prioritise sourcing the best rates and hotel content for their customers. To achieve that, they must connect to multiple content sources and then map hotels and rooms across the suppliers to offer unified content to the end-users. This process can be very complex and time-consuming, which leads to a lack of accuracy, duplication in content, and costly mistakes.
The founding team of Vervotech
"We solve these problems with our AI-based products NEXUS and UNICA. We put together technologies that leverage artificial intelligence that is smart and hyper-focused on business growth. Our products allow travel agencies to focus on their core business without having to worry about content sourcing technology," Sanjay Ghare, Co-founder of Vervotech, tells YourStory.
The early days
This company has six co-founders – Sanjay Ghare, Dharmendra Ladi, AjitMulani, Ganesh Pawade, Sameer Lodha, and Amol Raut. They used to work together in a SaaS company called Tavisca.
"Everyone had been working in the travel technology segment for more than a decade. While working with customers across the globe, we found out that there are certain problems faced by travel companies that needed a dedicated focus. That is when the idea of Vervotech came into existence," says Sanjay. The startup was founded in 2017.
With their collective experience, they began solving these problems faced by travel businesses, which indirectly impacts travellers. The founders’ vision was clear – help travel agencies to scale up their business.
The technology
The startup’s product algorithms leverage the power of machine learning to uniquely map hotel content with a 99.99 percent accuracy, as it claims. The mapping algorithm is completely agnostic to the source of the content and provides the best-opinionated content to further enhance the user experience. In simple words, the startup reads millions of data points that are coming from hundreds of sources. Once they have that, they use their inbuilt AI-based capabilities to learn and predict. Once the data is read and processed by the algorithms, it is used by businesses to target the customer with precisely what they want.
In 2017, the founders identified the top 10 travel businesses in India and signed up one of them as their first customer.
"We needed a lot of data for product validation and testing our algorithm which was feasible by only working with big customers. Since we are a bootstrapped startup, we had to gain the client’s confidence to showcase company stability along with product value. Fortunately for us, product comparison is straightforward in terms of coverage and accuracy percentage. Since we chose to target big companies, we ended up spending a lot of time just to get a seat on the table with the right people at the right time," says Sanjay.
Since these companies had been using other technologies for hotel and room mapping, a comparison with statistics and results for content mapping validated their products’ value. It did take time to convince clients and gain their trust in the organisation’s stability. Akbar Travels, one of India's largest travel companies, was their first customer that signed in October 2018. Post that, they got their first paycheck in November of 2018 after their product launch.
Their product has a seamless easy-to-use interface and API helps users configure supplier credentials, upload content files, pinpoint duplicates, and map hotel content.
The business model
The founders personally invested Rs 10 lakh (approx. $13,300) in the company, initially. This investment was mainly used for office space, laptops, some tools, and cloud hosting bills of the first three-to-four months.
Being bootstrapped, they onboarded big customers from North America, South America, and India. Now their focus is to onboard big travel companies from the Middle East, Africa, and Europe in the coming months before they aggressively scale up their business by signing up thousands of customers. At that point, they would need investments to scale rapidly across the globe and would need to have local offices in each of the targeted regions for support and account management.
Their business model mainly focuses on B2B and B2B2B clients, which include online travel agencies and technology companies, giving services to travel businesses.
Their products are contractually offered when the customers start using them. The pricing models consist of:
● Per supplier pricing
● Per property/hotel pricing
● Per set of suppliers pricing
"We rolled out our first product within the first three months and signed up our first customer within a month,while the product was still getting built. With 15 customers signed up globally so far, we have already generated revenue of more than $500,000. For product validation, we are targeting big travel companies from each market," says Sanjay.
For the current financial year, their revenue is $328,000, and for the next financial year, their target is to reach $1.2 million — out of which $500,000 is expected to be recurring revenue which would come from long-term contracts.
The challenges
The startup had to face many challenges, particularly in managing their finances.
"From the beginning itself, we had planned to not seek any investment until we have a product validated with customers across the globe and have at least 30 paying customers. Today, we have 15 customers. Even though this decision helped us to completely focus on building the product, we had some rough times during the journey in managing finances," says Sanjay, whose clients are still paying them for using their SaaS product.
Building a SaaS business also came with its own set of challenges. Sanjay says that one of the biggest B2B companies in the US with annual revenue of $22 billion—Travel Leaders Group—was the most difficult cross-border transaction for the startup.
"Since it is a huge company, we had to do so much more beyond product validation like compliances, legal terms, drafting time-consuming contracts and so on. Onboarding them was the most difficult task for us. With our customer-first approach, we are focusing on opening to the bigger global market of travel technology. We aim to sign up 100 paying customers before October 2021 when we complete three years in the business," says Sanjay.
The Indian tourism industry
The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. The industry attracts a lot of foreign investment and creates significant jobs.
For customers, the utmost important parameter now in the travel industry is experience and value for money. And for business, the challenge is to continue to offer that experience and give that value for money while remaining profitable.
"In B2C, some companies are bringing everything on one platform for the customers so that they can have a one-stop-shop solution and a seamless experience. In B2B, some companies are also building technologies to offer such platforms for businesses," says Sanjay.
However, with the COVID-19 pandemic grinding the economic activity to a halt, and grounding most of the planes, the tourism industry has taken a massive hit. The outbreak has not impacted the business as customers have continued to pay Vervotech. However, the company expects global travel to slowly return after the crisis.
Some of the startup’s big customers are Travel Leaders Group, Hotel Planner.com, 5M Travel Group, and Akbar Travels. The company competes with Travel Perk and TravBizz.
(Edited by Kanishk Singh)
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Link : https://yourstory.com/2020/07/artificial-intelligence-saas-pune-startup-vervotech-travel-agencies
Author :- Vishal Krishna ( )
July 28, 2020 at 05:45AM
YourStory