SoftBank’s Rajeev Misra, Vijay Shekhar Sharma Back D2C Footwear Brand Yoho

A meeting between two friends, Prateek Singhal and Ahmad Hushsham, in the leather city Kanpur sparked the idea for a direct-to-customer (D2C) footwear brand. While Singhal brought the consumer tech experience to the table, Hushsham brought his learnings from the fashion footwear industry to create Yoho back in 2021.

The year-old startup deploys state-of-the-art technology and AI-powered solutions to manufacture lightweight orthopaedic footwear.

Speaking to Inc42, Yoho’s founder Singhal said, “We are building footwear for India, for Indian climate profile and Indian feet. We work with orthopaedic physicians and polymer scientists to solve for material and ergonomics of footwear, without compromising on good looks.”

Building on the idea, the D2C startup has just announced that it has raised INR 20 Cr ($2.43 Mn) in a Pre-Series A funding round led by marquee names such as SoftBank Investment Advisers’ CEO Rajeev Mishra, Rukam Capital, Paytm’s Vijay Shekhar Sharma, among others. 

The D2C brand plans to use the funding to scale up capabilities for new product offerings. The startup also plans to deploy the investment to shore up research and development (R&D) and to hire across R&D, marketing and product design verticals.

“We are extremely delighted that some of the country’s top investors and business leaders have shown faith in us… This funding has come at a crucial time and will help us to invest in new technology to build new product propositions and build scale,” said Hushsham.

Echoing the sentiment, SoftBank’s Rajeev Misra said, “India’s potential in the consumer segment is still relatively untapped, especially in fast moving product categories. With strong in-house R&D, right price point and a compelling product offering, I can see Yoho becoming a preferred comfortable footwear brand not just in India but eventually in global markets as well.”

Going forward, the startup also plans to spin off a new technology venture that will collect a database that will host the ‘feet profile’ of Indians across the country. The project which the startup aims to undertake in the next 3-4 months will enable customers to scan their feet and accordingly get suggestions on what kind of footwear they should wear. 

The startup currently only sells slippers in three variants. It claims to have sold more than 1 Lakh pairs (with a 22% repeat rate), since emerging out of its stealth mode in April this year. It claims to have tested close to 700 prototypes before launching its current product lineup.

Singhal also highlighted Yoho’s plans to dive into the shoes and loafers segment to scale up its offerings for customers.

The Ecommerce Over-Dependence?

The startup sells its products across ecommerce portals such as Amazon, Flipkart, Myntra and Tata 1mg. Singhal told Inc42 that close to 83% of its sales come from ecommerce portals, with the brand website accounting for the rest. 

In response to a question about the platform’s over-dependence on ecommerce marketplaces, Singhal said that Yoho’s market is spread across multiple ecommerce portals, adding that it diversifies the risk.

“Marketplaces are good places to start off because the intent of the audience is much higher and you can get the best buck out of your marketing money. We are also confident that we will be able to increase the direct website revenue going forward as we intend to launch more SKUs and come up with offerings in the shoes and loafers segment. Once we increase the spending on branding, we are sure that we can easily scale up the contribution of our website sales to 40%,” said Singhal. 

The startup also has future plans to foray into the offline space and open storefronts as well. 

In terms of its target audience, Yoho largely caters to customers in the age range of 28-40.

The startup largely works with contract manufacturers in Delhi-NCR, Agra and Chennai to fulfil customer demand. It claims to have around seven suppliers that can purportedly scale its production to 10X of the current levels. 

With a gross margin of around 70%, the startup still continues to burn cash. However, the founders say that they are focused on positive unit economics and aim to target a run rate (ARR) of INR 30 Cr by January.

The startup had last raised seed funding in 2021 from a clutch of marquee angel and institutional investors such as Rukam Capital, Sequoia Sprouts, Paytm’s Vijay Shekhar Sharma, CRED’s Kunal Shah, Zomato cofounder Pankaj Chaddah, Ashneer Grover, among others. 

Yoho primarily competes with the likes of startups such as Doctor Extra and Ortho+Rest and offerings of conglomerates such as Apollo, in the orthotics footwear segment.

According to a report, the Indian footwear market posted a revenue of around $13.5 Bn in 2021, and is projected to grow to $27.8 Bn by 2027. 

In the past few years, the Indian D2C landscape has emerged as an avenue of choice for young Indians looking to shop online and an increasing disposable income among the middle class. While the current high inflation levels have dampened some of the sales, the landscape continues to notch higher numbers.

An Inc42 report estimates the country’s total ecommerce market opportunity to soar to $400 Mn by 2030. With the highest number of unicorns in the Indian ecommerce ecosystem, the D2C paradigm has also opened new avenues for founders to sell their products to customers.

In 2022 alone, Indian D2C brands have raised close to $1.4 Bn in funding.