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Startups to Breathe Life into the Funeral Service Industry

Investors are still hesitant to engage in the $3.5 billion Indian funeral services sector despite profitability and respectable cash flow.

“I wouldn’t want to profit from someone’s passing,” Ashneer Grover, a Shark Tank investor and the embroiled creator of BharatPe, uttered those sentiments in response to the opportunity to invest in Bengaluru-based Anthyesti Funeral Services.

Shruthi Reddy, the founder of Anthyesti, maintained her composure throughout the incident as everyone from Namita Thapar to Peyush Bansal expressed tremendous reluctance to invest in her company, which was already generating gross margins of 50%. Anthyesti was launched in 2016 by Reddy, a Bangalore-based alumnus of the Indian Institute of Management. The business offers air ambulance service and repatriation of ashes or remains from other nations.

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According to information provided by Tracxn Technologies Ltd, it has raised nearly $21,000 (about Rs 17 lakh) from the incubator of the Ambuja Neotia Group, a real estate company with headquarters in Kolkata, and Padup Ventures, another accelerator.

She stated that Reddy has recently secured another round of funding from an angel investor headquartered in Kolkata without providing any other information. Reddy is undoubtedly one of a very small number of founders who have been successful in securing funding in this industry. The nature of the funeral service sector makes it challenging to attract investment.

“The angel investor who supported me disagreed with the general public. After Shark Tank, she contacted me,” Reddy recalled. But that is unusual. The widely held belief that permeates social media is that turning mortality into a source of profit breeds “vultures.” Most investors believe it isn’t scaleable and therefore unsuitable for VC funding. Marketing is yet another important problem. It’s among the most difficult challenges. Thirdly, many people have admitted to having moral or ethical conflicts while refusing,” Reddy stated.

According to Reddy, this industry’s lack of entry barriers is another problem. “At the moment, the business relies on aggregation. Tomorrow, anyone can enter and combine services. These businesses lack IT capabilities. We connect services and clients using a methodology that is asset-light.

The second-largest participant in this market is Anthyesti. Reddy acknowledges that there is a significant difference between the top and second-place organisations. She is referring to Last Journey, a division of Ferns & Petals that offers funeral services. For a company that typically tries to link itself with “celebrating special moments” with its two-hour cake and flower delivery service, it’s an odd growth.

According to Rishabh Jalan, CEO of Last Journey, expansion comes from personal experience. “It all began when one of the family members passed away approximately two and a half years ago. We became aware that much more could be done in this area after seeing how it was being handled. Organising unorganised industries has been a major focus of FnP’s journey over the past 25 years. So, we made this choice.

The Last Journey, founded in Delhi, presently has operations in six Indian cities. “At first, it moved very slowly, and no one warmed to the notion. We now service, on average, 25 to 30 cremations every day. Reddy’s Anthyesti, in contrast, performs roughly three per day. Additionally, Last Journey has operations in the United States, Canada, Australia, Dubai, the United Kingdom, and South Africa, where it mostly repatriates human remains for Indian non-residents.

In addition, they operate using only their own assets, such as hearse vans and freezer boxes, in all cities other than Delhi. We have an aggregator model in other cities. Scaling is simpler and keeps us lean. The pandemic gave Last Journey a significant boost. Each day, they do 100–150 cremations. “It gave our business a lot of traction. People began to comprehend the need for such a service at that time. It validated us in some way. The business also has plans to raise money soon. “Investor conversations are ongoing. Most of them have been supportive of us, especially once they learned how big this sector is It is a $3.5 billion sector in India, where Tier-1 cities are the only places where 11,000–12,000 people per day die.

It is unclear whether Jalan will be able to raise money in a market that Indian investors don’t believe has much future.

The narrative is different globally. There are around 200 “death-tech” businesses, according to statistics from Tracxn, ranging from operators of platforms for delivering after-death messages to those providing funeral services to those producing jewellery fashioned from loved ones’ ashes. According to a survey by Research and Markets, the market will grow from $115.4 billion in 2020 to $152.8 billion by 2026.

The death care market in India is now worth slightly over $3.5 billion, a significant increase from the $0.98 billion it was in 2008. These firms have so far raised around $253 million globally. For their Indian counterparts, the going is tougher.

Sajith Pai, a senior venture capitalist at Blume Ventures, claims that no entrepreneurs in the field have yet caught his attention. Given that they are one-time purchases or uncommon, a low client lifetime value is a warning indication. The cost of acquiring customers cannot be high. Additionally, there are well-established hyperlocal monopolies that are summoned for any service, such as transactions, or rare, is a signal. These entities are similar to local pandits or pooja brahmins. The cost of acquiring customers cannot be high. Additionally, there are well-established hyperlocal monopolies that are called upon for any function, such as the transportation of bodies. These individuals are similar to local pandits or pooja brahmins.

In contrast to Western culture, which places a high value on burial caskets and other death rites, Hindu traditions place little emphasis on money. According to Anthyesti’s Reddy, this industry would prosper due to a shift in consumer behaviour and a noticeable improvement in the quality of services now offered. “We’ve noticed a rise in Google searches for terms relating to funeral planning and funeral services. The idea of contracting out cremation procedures to a business is gaining popularity.

She stated that there is a need for better management of cremations and funerals, as well as the quality of ambulances and hearse vans. We continue to send the same old individuals with the same old mentality and attitude because we are aggregators. It will take time to change it.

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