South Africa's Naspers to invest $55 mn in Indian logistics startup ELasticRun

September 03, 2019: Naspers, a South African internet group and one of the largest technology investors in the world is in talks to invest $50 - 55 million in Indian logistics startup ElasticRun, with an intention to double down on the investment in the next eight to twelve months, a source informed to a local Indian media.

Naspers based its further investment intention on the startup's business model which the venture capital (VC) fund deemed as the "most capital-efficient way to build a scalable technology logistics network in India," according to the source.

Founded in 2016, ElasticRun adopts a business model that takes a cue from the concept of the shared economy. Instead of operating its own warehouses, fulfilment centres, and delivery fleet, it aggregates spare logistics capacity from various businesses such as corner stores, local couriers, as well as SMEs to fulfil customer orders. The Pune-based company claims that this asset-light model could help reduce the heavy capital usually needed to build up a national-level delivery network and make better use of extra warehousing and delivery capacity from a variety of businesses that otherwise might be wasted during their non-peak time.

Its services apply to a wide range of industries, from consumer goods, online retail, manufacturing, automotive to hospitality.

The cost of using ElasticRun's services is flexible and on a "per delivery" basis, given its aggregator hence flexible nature. Its platform could leverage a wide range of logistic capacity to cater to different clients' needs.

ElasticRun's latest funding happened last October, when Kalaari Capital and Norwest Venture Partners invested $8 million.

Some of ElasticRun's local rivals include Loadshare and Locus, backed by Matrix Partners and Tiger Global, respectively.

Logistics spend in India is 13-14 percent of the GDP, according to a recent research report by accountancy Ernst & Young. The country's logistics sector is highly fragmented and unorganised, translating a huge market potential for capacity aggregators like ElasticRun.

NTex Transportation Services, which owns and operates ElasticRun, said in regulatory filings that revenue for fiscal year 2018 stood at Rs 63 crore on a loss of Rs 17 crore. The company closed fiscal year 2019 at about Rs 200 crore.