Yesterday's start-ups become tomorrow's established online platforms. Founded in 2010, VConnect has had the backing of a large group and built up an extensive database of companies: particularly the kind of service businesses it was harder to find before the arrival of the Internet. Russell Southwood spoke to Deepankar Rustagi, co-founder and General Manager of VConnect.
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The idea for VConnect came to co-founder Rustagi when he was traveling a lot outside of Nigeria:"I saw the need and the solutions available". So he created a local directory and search engine platform that allowed its SME customers "to be able to connect with their target market. The majority of businesses on the platform are service-centric."
Founded in 2010, the platform now has 1.4 million local businesses on it, of which the biggest category is services providers - things like gardening, painting, plumbing - and the second biggest category is education with things like courses and schools. There are 15,000 connections a day which is about 450,000 connections a month.
Three-quarters of those accessing the service do so on mobile with the balance on PC and laptop. On mobile, it's available on Android and IoS but it's also optimized for all other operating systems. There's also a WAP portal that is optimized to give an app-like experience.
The business model is based on the visibility and responses the businesses get:"They pay a subscription based on the connections they get. Somebody wants to connect to them and we get the details. So let's say they get 5 calls, we know the duration of the calls and who the user was. We also add that number to the address book so that businesses can build longer term relationships with their customers. Local SMEs don't put enough effort into retaining customers."
So how do users get to know the platform exists?:"It's been pretty organic. When they search for local businesses, they find us at the top of the list. The right quality of data gets the first engagement and produces high rankings on the search engine."
Its competitors are anyone who is offering services to SMEs. So for example Jumia has an eBay like site but it does not have so many businesses on it. There's also the Naspers-owned online classifieds site OLX and GiGi where people sell secondhand goods. Finally there are other local search engines like Lyf.ng, which is part of online deals site DealDey.
Through friends and family connections, VConnect got a US$5.4 million investment from the Tolaram Group which lists as its main activities: consumer goods, digital services, energy and infrastructure: it runs Port Lekki. Nigeria is an important territory for it with its own Managing Director but it also has a presence in six other African countries: Benin, DRC, Ghana, Cote d'Ivoire, Tanzania and Togo. VConnect was Tolaram's first and thus far only venture into digital services.
"We're the largest in this space in Nigeria and Ghana but we're working to expand in other parts of Anglophone Africa."