Scrap Uncle Shark Tank
We have seen some fantastic entrepreneurs in Shark Tank India, but there are some who simply blow your mind with their out-of-the-world style of running the business and unconventional attitude. The founder of Scrap Uncle Mukul Chhabra is one of them.
Scrap uncle is a business that aims at organizing the neglected sector of scrap collection and scrap recycling.
Vision: Make Scrap Uncle India’s biggest recycling platform.
Let us check out what is it about this founder and brand, that made judges sing his praises throughout the pitch.
Scrap Uncle Founder Mukul Chhabra
Mukul Chabbra is the founder of Scrap Uncle. He did his B.tech in IIIT-Delhi, before starting this business he was a part of a drone start-up as a part of his university project. His partners in this project wanted to do a master’s and he was unable to pursue it further.
He noticed that many entrepreneurs were organizing the unorganized sector like Swiggy, Uber, etc. At that time he realized that the Scrap collection sector is highly unorganized and had a lot of scopes.
Also, since childhood, he was interested in Robotics and his uncle was a scrap dealer. He would spend hours in his junkyard finding electrical components for his projects and robots. It was heaven for him.
He invested all his time and efforts in researching and exploring all the scrap markets and started Scrap Uncle.
When Anupam asked what his parents have to say that their IIIT son is doing business in kabad (scrap). Mukul replied that when he had done the drone start-up he had won many awards and was also given the opportunity to go to the U.S., so his parents knew that their son is intelligent and smart. When he revealed, that his family had a problem when he actually moved two kabadiwala to his apartment, the judges were shocked and speechless.
Anupam later commented that either “you are very smart or you are completely mad”
Mukul explained that he wanted to better understand how this sector works in depth, so he made the app, onboarded kabadiwala, and moved two of them into his house.
He explained that the kabadiwala is busy throughout the day from morning till 9 a.m. So that is why at dinnertime he talks with them and asks them about their day, the challenges they faced, customer experience, etc. That is how he researched the sector in depth.
During the lockdown, he realized that this is a recession-proof business because people were decluttering and they were eager to welcome any extra source of money, his business had increased 4 times.
He met with his competitors to learn from their mistakes and got to know that, they had built the tech but were unaware of how this sector actually works. That is why they were unable to scale it. This is when he decided that he will have to dive deep into this sector to study it.
Scrap Uncle Funding:
During his research, he got funding of ₹21 lakhs from Columbia university, which he used for working capital.
Social Media Accounts, website, and App
Scrap Uncle Pitch
The sharks were not much convinced about the business but they loved the entrepreneurial qualities of Mukul Chhabra.
In the pitch, Mukul explained the workings of the sector. The process starts with the kabadiwala collecting the scrap from houses, at this stage all the scrap is mixed.
Kabadiwala then segregates them based on whether they are plastic, e-waste, metals, etc. Then he further sells them to the aggregators of plastic, metals, etc.
The problem here was that in between the kabadiwala and the companies who recycle these scraps there were middlemen who were purely there because of money power. Because of this, the kabadiwala would receive less profit as compared to what he would have gotten if he would have directly sold to the recyclers.
Scrap uncle had managed to move these middlemen out of the process, leading to increased profits for the Kabadiwala.
Also, the judges were fairly impressed with his 45% gross margin, ₹27 lakhs monthly revenue, estimated ₹6 crores (2022-2023) revenue, and 40 to 50% retention rate.
They, however, were disappointed when they came to know that this business is at the no-profit no-loss stage. Mukul did explain to them that when his monthly revenue will cross the ₹1 crore mark, his expenses would not increase much, then he would start making profits.
Deal or No-deal
Original ask: ₹60 lacks for 3% equity
Aman liked the honest attitude and determination of Mukul, but he felt that there would be a lot of challenges involved in operations and backed out.
Namita found Mukul fascinating and told him that he had touched her heart. She, however, did not see where she can add value.
Vineeta was betting on the passion and clarity of Mukul and gave an offer of ₹30 lakhs for 5% equity and the remaining ₹30 lacks for the debt at 12% interest at ₹6 crore valuation.
Amit Jain offered ₹60 lakhs for 10% equity.
Anupam offered ₹60 lakhs for 8% equity.
Then a bidding war commenced between Amit and Anupam, which culminated when Anupam took his deal back stating that Mukul took a long time to make a decision.
Mukul still had an offer from Amit Jian of ₹60 lakhs for 5% equity, which he accepted, and the deal was secured.
I would like to conclude with some of the important entrepreneurship lessons that we all can learn from this unconventional entrepreneur Mukul Chabbra.
- Do in-depth Research on your sector. During the two years of his business, he had spent his maximum time researching and understanding how the sector works.
- He knows that this sector is very big and there will be 2 or 3 big players in it. He is not greedy and does not want to dominate the entire sector. He believes that there is something for everyone on the table.
- Be smart and learn from the mistakes of your competition and work on them. Also, make sure that your business is free from those mistakes. This will save you a lot of time, energy, and money.
- Keep the interest of people working with you at your heart. The kabadiwala that use to earn ₹35 thousand before has started to earn ₹70 k with scrap uncle. You can only grow when your business adds value to the life of the people involved with it.
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