Lightspeed is doubling down on Wheelocity as it ventures into rural India

While India’s urban population is shifting from mom-and-pop shops to fast-paced commerce, its rural side — home to more than 800 million people — still relies heavily on offline businesses for their daily needs. Wheelocity aims to transform that untapped market to allow people living beyond the country’s top 200 cities to easily shop online.

The Chennai-headquartered startup, which was founded in September 2021, has moved from a previous B2B business of providing instant trading platforms to create a platform to solve e-commerce access for people living in urban areas. and rural areas, often referred to as “Bharat.”

For some time now, e-commerce giants Amazon and Flipkart-owned Walmart have tried to tap rural India to tap into the world’s second-largest online market after China. The region has also attracted startups including Meesho and Rozana. However, Wheelocity founder and CEO Selvam VMS told TechCrunch that none of them can crack that space because of the access issue.

“Our approach to solving this problem is very different,” he said in an interview. “We are focused on creating a 100x better alternative for our consumers.”

Wheelocity has started to change by offering freshly produced goods including vegetables and fruits and groceries through its app. However, unlike traditional e-commerce platforms that sell products online, the startup has taken a “phygital” approach. This includes electric tricycles to let the startup take your products to villages every day to help gain consumer trust. These vehicles allow consumers to place orders using the Wheelocity app and receive delivery at their doorstep.

Once they get used to it, consumers will start using the Wheelocity app at home, VMS predicted.

The executive added that, unlike Wheelocity, which offers daily door-to-door delivery, other e-commerce platforms use their week-long delivery of products to the same location. This makes it challenging to deliver affordable fresh produce and groceries.

Wheelocity uses its existing chain, built for the former B2B business, to provide customers with freshly produced goods and groceries quickly. After purchasing it from third parties including farmers, the products reach consumers through the Wheelocity brand.

VMS sees the change, which began quietly in October 2023, as a $1 trillion-plus opportunity. He did not disclose business-related figures but said the startup was “very well maintained.”

The startup currently offers an e-commerce platform in 3,500 villages in central Tamil Nadu and has 1,000 electric vehicles to enable physical ordering and delivery. It has already set up an operations office in Tamil Nadu’s phase-II city of Trichy to understand the buying behavior of consumers better and get their feedback. Next, it plans to scale up the business to 20,000 towns and villages and expand to all five southern states of India within the next 12 months, taking its platform to 10 million consumers.

Lightspeed, Wheelocity’s existing investor, has backed the latest move by leading its $15 million Series A2 round. In July 2022, the VC fund had led a Series A startup round of $12 million.

Alteria Capital, Anicut Capital, and VMS also participated in Wheelocity’s new round. In addition, the round includes an undisclosed amount of debt, primarily to facilitate the financing of its electric fleet.

Lightspeed partner Rahul Taneja told TechCrunch that the VC fund decided to reinvest in Wheelocity because the market size was so large and untapped and the startup created a unique business model, “allowing for profitable coverage of historically unfeasible areas.”

The founder’s quality and passion for building a “profitable business” before spinning off also helped convince Lightspeed to close the deal, Taneja said.

Focusing on smaller cities and towns in India has been an emerging trend in the VC market, as buyers in those areas typically have higher incomes and purchasing intent. Earlier this year, Accel also began scouting the region for future unicorns.