Why did I invest in StackBOX?

What is StackBOX?

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StackBOX is a B2B start-up which is building SAAS technology as well running services on its own technology, redefining consumer products distribution highway to warehouse to distributor to retail - FMCG network in many countries across the world.

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Oldest industries become the most difficult to disrupt?– The older the operational style of an industry, the more embedded it is in human psyche. Complex and interdependent economic systems are built around such businesses which make them difficult to replace. Large economic inefficiencies creep into such ecosystems shared by many players. FMCG Distribution/ Distributors in India (and other emerging markets) have been intertwined with the retail store network for too long. It has been inefficient on many counts and there are just too many players. Distributors in most cases are just capital providers and operational managers. They are not bringing a change. This seems like a very interesting real problem for technology to solve.?Stackbox is attempting to solve a real problem.

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SAAS startup which took responsibility of end results?– Stackbox is a SAAS tech startup which provides its routing and planning tech in 15+ countries outside India and has a list of marquee customers. They build deep-tech which brings efficiencies in FMCG distribution. They didn’t start with the idea that they will run the warehouse or the distribution logistics. But when they started selling in India, they realized that demanding Indian customers would need end to end solutioning rather than just technology. They decided to actually build and operate the entire warehouse and the logistics network up to the retailers. They agreed to take responsibility of the SLAs that the technology was promising. This is a big vote for confidence for me. Making software is easy.?Taking responsibility of the end result is something else.

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Measurable results –?What can’t be measured, can’t be improved. We see a lot of start-ups which are not able to measure the benefits to the end-user. The start-ups ability to make money is entirely dependent in the long term on the commercial benefit it can show to its customer.?Stackbox shows very measurable and significant benefits to its marquee list of customers.

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Very large problem which is becoming even more complex in the current setup?– Distribution in India itself is a very large business. Some estimates peg it at USD 50 billion+. The global market will be many times bigger. This off course include many components to which Stackbox does not have an immediate access. But it still is very large. Distribution business is becoming increasingly complex in India. Till only 20 years back, we had very large/ mid size FMCG companies. You could become Distributor for some of them and distribute in a concentrated geography and it was fine. After that, there has been emergence of regional FMCG companies along with the pressure to go geographically deeper and at a lower cost. Now to add to this, we have several smaller niche consumer brands who want to distribute their products in chosen geographies. All of these cannot be accommodated unless there is technology which allows you to take care of multiple parties with different optimization priorities.?Stackbox is well positioned to attempt to solve this problem.

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Multi decade opportunity to earn above cost of capital?– Distributors in India earn through operating a distribution operation. But most of the time a significant portion of returns can be attributed to being able to provide capital.?FMCG companies have limited choice but to aggregate their distribution and share the economic benefits to help themselves. Stackbox is helping them with this. My hope is that at some point of time in future, long away, it would have become so embedded in distribution system that it will also become a capital provider to the system. If this happens, it will open a multi decade opportunity for Stackbox to earn above cost of capital and make it very valuable.

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Phenomenal team?– Stackbox has a team with huge domain expertise. People who have built businesses in this domain and exited. Four founders to take care of various responsibilities. Equitable equity distribution across team. They have built the entire business so cost efficiently that you will have to check the numbers again. And finally, a very simple and humble Venky.?