DARE - Because Entrepreneurs Do

Venu Donepudi and Vijay Gummadi

Lack of funds has been a perpetual problem for entrepreneurs in India and abroad. While many businesses fold up mid-way due to insufficient funds, majority of them fail to even take off. But Venu Donepudi and Vijay Gummadi, didn’t give up. It is true that they didn’t have the money, but certainly they had the will.

On the fourth day of DARE E-Week, speaking on the topic, how to start a capital intensive business in India, Donepudi and Gummadi narrated how they started CarZ in a dingy room of 300 sq ft. and dreamt of setting up 300 centres across the country. They are not too far from achieving it.

Having worked in the automotive industry, the duo wanted to start something in the same domain. They realised while the increased disposable income in the hands of middle class families led to an increased sale of cars in India, the car servicing industry was still fragmented and unorganised.

They decided to capitalise on the gap. Wasting no time, they got down to the brass task. They travelled several times to India to collect data regarding the car servicing market, the existing players, the strategies they followed, requirements of customers, what more did the customers want from the car servicing agencies, etc. They also took trips to Japan and several other countries to understand what state-of-art technologies were they using.

Convinced, they were ready to start, Donepudi and Gummadi took a 300 sq ft office area and started operating. They invited several vendors to their office and told them what they were doing and what they planned to do in future. But vendors didn’t care much about what they had to say. They thought the two guys were crazy.
Unfazed, the two carried on with their vision. They invested all the money they had and borrowed more from family and friends. And put it all into building their operations.

It was important to build a strong operations base as they were competing against 3 major players in the markets. They built facility that not just looked nice but functioned just like the ones the top-players provided in the market, but they offered all of it at one fourth the price.

Their manta was—Better, Faster, Cheaper. Unlike the big players who serviced all makes and models, Donepudi and Gummadi decided to service only the top seven models of cars in the market. Doing so helped them control their expenditure as they didn’t have to stock up with spares of several cars. Again, they kept their service menu limited, so the number of equipments required was less. Also, since the number of service limited, they need not train much, thereby curbed heavy expenditure on training.

This way, they started their business with an inventory of just Rs 3 lakh, while their competitions start-up cost varied between Rs 30-40 lakh.
They started with just one location. With the help of an architect, who had exposure to the western world, they modified a 9000 sq ft area into a service area where they had space for car wash, parking, research area, and much more.

“We took a small place, but a place within the city limit and closer to customers,” said Donepudi. Since the place was small, the rent was less.
The small business that started with a major cash constraint has 12 outlets across the country today. The venture has been successful in getting a VC funding of 5 million.

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