Laundries are attracting venture capital interest

Laundries are attracting venture capital interest. Quite so often we pass such stores, but it’s probably never crossed your mind to put money in that business.

The thought occurred to Scott Anthony, MD of Innosight Ventures, a VC firm founded by Harvard professor Clayton Christensen.
So, Innosight founded Village Laundry Service in Bangalore, whose outlets — basically booths — Chamak offer a full-service laundry. “The out-of-home laundry market is already $200 million, and is growing rapidly as household income increases. And this was a very novel way to tap into that growing market,” says Scott.

He looks at a business idea from five aspects: “First, is it a disruptive idea? That is, does it have the potential to create or transform a market?”

“Second, does the entrepreneur at least have a plausible hypothesis about an economically attractive business model? Next, does the team have the ‘right stuff’ for disruption. Ideally, they recognise that their business has some flaws, and they are trying to identify the flaws — and possible fixes — as quickly and as cheaply as possible. Fourth, can early profitability be a choice? I try to avoid businesses where you have to spend tens of millions just to figure out whether you might have a good opportunity. Finally, has the entrepreneur thought about the path to exit?” says Scott.

Scott had his share of lessons to learn as he went about giving shape to the laundry chain idea. The first step was to find out the interest for such a service. “We then wanted to make sure we could build and operate the rigs with integrated washing machines and dryers that form the essence of the business.”

“The next question related to the degree to which the business was scalable, so we started building out the team, optimising processes at existing kiosks and testing a franchise model. The key thing about all of these activities is they have been in full view of the market.”

VLS, with its Chamak brand, was founded in 2008. The company’s senior management team includes Hari Nair and Akshay Mehra, who together have 24 years of experience in the FMCG sector.
The process starts with customers bringing their clothes to the Chamak booth.

These are then sorted (whites and coloured) and tagged. Additional treatment, if any, is applied on areas with stains or dirt (such as collars), and the clothes are put in a washing machine. They are then placed in a dryer for 45-60 minutes before being ironed.

An SMS is sent to the customer to collect the clothes.
Scott is excited about the investment. “The business opens up some interesting ‘bottom of the pyramid’ employment opportunities, either to be a franchise owner or to work on the rig. It looks like owning a franchise will cost about Rs 1 lakh, which makes it accessible to a pretty wide range of people,” he says.