A few months after he co-founded Mettl, an online assessment platform, with his friend, if there was one request Ketan Kapoor was never shy of making to the people he met, it was to connect him with the top HR executives of large companies. This was in 2010. Mettl was a young startup and Indian HR industry was not yet lapping up disrupted talent assessment offerings for recruitment in a major way. But Kapoor knew he had to get what he calls “champions” for Mettl’s offerings. These champions would talk about the platform from experience.
His persistence paid off. Soon, someone connected him to a senior executive in Capgemini, a multinational professional services and business consulting corporation. A long meeting in Pune and tens of questions later, the executive told Kapoor that he wanted to invest in the company. While this would be music to the ears of a majority of entrepreneurs, Kapoor wanted a business client, who would pay and also be a champion for Mettl. He politely persisted and Capgemini came on board, becoming one of Mettl’s large clients for a long time.
“Given that we were an India focused business and offer SaaS (software as a service) product to HR (human resources department), our target market were these 20,000 or so companies that have revenues above ₹50 crore. We knew reaching out to each one of them is a slow cook…..it’s like cooking biryani compared to snack food. It takes time,” Kapoor tells Fortune India over a call from Gurugram.
Persistence and having complete faith in the power of its offerings is probably the reason why the eight-year-old Mettl is today a leader in cloud-based technology and data sciences-driven talent assessments and one of the most talked about startups in the country.
What started from a garage in Sushant Lok in Gurugram with Kapoor’s and co-founder Tonmoy Shingal’s savings of ₹ 8 lakhs, Mettl was earlier this month acquired by Mercer for nearly ₹250-300 crore (all cash).The deal is easily the first and most successful exits for stakeholders in the Indian entrepreneurial ecosystem in the rather difficult enterprise SaaS product space. Over the last eight years, the company had raised a mere $4.5 million in funding from angel investors and venture capital firms Kalaari Capital and Blume Ventures, which means the exit gave whopping returns of 8x to 10x to its backers.
While the return multiples in itself makes for headlines, Mettl has a lot more than most probably know about. To begin with, the enterprise SaaS product firm has the world’s largest share of 60% when it comes to proctored assessments. It uses artificial intelligence to prevent cheating in real time for online talent assessments and conducted 10 million tests last year.
Mettl offers precise, multilingual assessments conducted via a SaaS platform assisting over 2000 global companies, 24 Sector Skill Councils and 15 educational institutes across more than 80 countries. It has a client retention rate of almost 94%, which is not small feat. Its platform includes proprietary content to measure personality, ability and job-specific skills. Mettl also licenses its platform as a stand-alone technology for clients’ own content.
Mettl was recognized as one of the twenty most innovative and high-growth companies in India by London & Partners’ IE20 list in 2017 and was retained as an assessment provider by the Ministry of Skill Development & Entrepreneurship (MSDE) for the Skill Development Initiative (SDI).
“Online assessment is an area of low innovation. Its still multiple questions, essay questions….not much has changed. There are so many aspects like creativity and multi-tasking that one cannot assess through them. We have psychometric tests to measure the four key aspects of human personality,” says Kapoor.
On the back of its unique offering, Mettl has been growing at CAGR of 102% year-on-year and has been profitable for the last three years. Most of India’s unicorns — whether its Flipkart, Ola or Swiggy — are grappling with losses, even as their valuations shot up exponentially over the multiple rounds of funding. While Kapoor refused to divulge the company’s financials, several media report say Mettl posted revenue of ₹38 crore in FY 2017 and could be closing FY 2018 with a turnover of ₹ 55 crore.
The focus on profitability and sustainability is important, says Dr Puranjaya Singh, advisor and chief psychologist at Mettl, adding that though it is easy to get carried away by the example of unicorns that are raising capital and growing without profitability, it will ultimately help entrepreneurs to focus on self-sustainability.
“I think for an organization like Mettl, which is in the space of B2B (business to business) enterprise SaaS product, the market is not as huge as e-commerce. The focus then should be on becoming sustainable,” says Singh, who is also an angel investor in the company, adding that when one dilutes too much stake, it gives investors the leeway to tell the entrepreneurs what to do next. “But if one is operationally profitable, then there is no need to rely on investors and one can build on the vision they has started with.” This is potentially what helped Mettl too in making its vision a reality.
Mettl’s profitability is also important in the context of SaaS product firms and their slow growth in the country. India as a market does not pay well for such offerings, which is a huge challenge for such firms. “It takes longer to break even in the Indian market. Also, the cost of customer acquisition is high and sale price is low, which is why we see many Indian SaaS companies focusing on overseas market for sales as the prices are better there,” says Anil Joshi, founder and managing partner at Unicorn India Ventures, an early stage VC fund based in Mumbai.
But the overseas market did not work well for Mettl in the first go. In 2012, after it raised its Series A funding from Kalaari Capital and Blume Ventures, Mettl decided to expand its horizons and enter the U.S. market, where several other Indian SaaS firms were present. As it was still trying to perfect its product to fit the U.S. market, cash burn ensued. A year later Mettl turned homeward and decided to focus on the domestic market.
Growing fast globally in a big way is probably one the key reasons for joining hands with Mercer, which has presence in 130 nations. “We can grow 2.5-3 times in three years. We are seeing strong, positive traction and leads are coming from the Middle East and Malaysia,” says Kapoor.
With this acquisition, Mercer enters the rapidly-growing global talent assessment market and further enhances its position as a trusted strategic talent advisor to companies.
“Online talent assessment is a powerful tool that helps companies unlock the potential of their people. Mettl is a disruptive HR tech start-up that has pioneered a robust assessments platform,” said Anish Sarkar, chief executive, India, Mercer. “The combination of Mercer’s pedigree and talent industry experience in India and Mettl’s leading-edge and scalable proprietary technology platform, will enable companies in India to improve their workforce as they prepare for the future of work amidst rapid digitization,” Sarkar added.
Co-founder of InMobi, Naveen Tewari, who is an angel investor in the company, says Mettle is created on deep technology, not capital, and this focus will help it march ahead in years to come. “The online assessment is an industry where Mettl, with Mercer, can go all out with and could become the Uber of the assessment world,” he says.
Will Mettl become the Uber of the assessment world, only time will tell? But Kapoor is persistent and going by the company’s track record, it may surprise us.