Young boy builds an online kabadiwala biz after being inspired by his uncle's scrapyard 'heaven'

• ScrapUncle offers scrap recycling services via its own website and app to homeowners and offices.
  
• ScrapUncle received a grant of ₹23 lakh from Columbia University.
  
• Sharks got into a bidding war over the startup, leading to its valuation getting doubled in a matter of minutes.

In season 2 of the reality show Shark Tank India, multiple entrepreneurs pitched products that aim to solve the nation’s problems. The latest startup that pitched the show, ScrapUncle, also falls into this club.

Started in 2019, ScrapUnce is a Delhi-based startup that positions itself as a modern-day ‘kabbadiwala’ (scrap dealer), which aims to bring “a systematic change in India's recyclable waste management problem”.

ScrapUncle offers scrap recycling services via a website and an app. Customers can book trained and verified agents to collect scrap from their homes or offices. These agents accurately weigh the scrap and provide the best value for it, claimed the founder, Mukul Chhabra. The startup also promises ‘responsible recycling of scrap items’ on its website.

“Customers and scrap dealers face problems because this sector is extremely unorganised and neglected. But when local sellers are online, then why not scrap dealers?” said Chhabra on the show.

Chhabra also stated that in two years, ScrapUncle has completed over 22,000 pickups in the Delhi-NCR region, and sent 14 lakh kilograms of scrap for recycling.

Finding heaven in a junkyard

A BTech graduate from Indraprastha Institute of Information Technology in Delhi, Chhabra always had an entrepreneurial bent of mind. Before starting ScrapUncle, he co-founded DroneMed in 2017.

DroneMed was a startup in the field of unmanned aerial vehicles i.e. drones. It received various awards and recognitions from organizations like DST, Tata Trusts, Indian Air Force, etc. including a grant of ₹10 lakh but the startup had to be shut down.

However, 25-year-old Chhabra was always interested in setting up ScrapUncle.

“I was interested in robotics since childhood. My maternal uncle is a scrap dealer. I’d visit his junkyard and look for electronic equipment for my robots and projects. For me, it was heaven. That’s also how I got a fair idea about how the sector functioned,” shared Chhabra on the show.

From visiting various junkyards to moving scrap dealers in his apartment to understand their challenges, Chhabra researched the industry in detail before launching the business.

Normally, a scrap dealer earns ₹30,000-35,000 on a monthly basis, but ScrapUncle collection partners earn anywhere between ₹60,000-70,000, claimed Chhabra. The startup also received a grant of ₹23 lakh from Columbia University.

The company, which was founded in 2019, started full-time operations in August 2020, and currently, has monthly sales worth ₹27.5 lakh. Chhabra claimed the business grew 4x during Covid — as more people went in for decluttering. It achieved yearly sales of ₹35 lakh in FY21 and ₹1.48 crore in FY22. Chhabra also projected sales worth ₹6 crore for FY23.

After hearing Chhabra’s pitch and vision, sharks Namita Thapar, Anupam Mittal, and Aman Jain commended him for providing dignity to the profession, and for his knowledge of the sector.

Fighting for ‘scraps’ of equity

The co-founder of boAt, Aman Gupta, was the first one to back out from investing because he believed the startup was at a stage where it needed a lot of work. However, he shared that he was impressed by Chhabra’s earnest approach to the business.

Impressed by his passion and clarity, Sugar Cosmetics’ cofounder Vineeta Singh made the first offer — ₹30 lakh for 5% equity stake, and ₹30 lakh in debt at 12% interest rate, valuing the company at ₹6 crore.

“I don’t know if every city will have a ScrapUncle like this or if you’ll single-handedly be able to make this a pan-India business. But I feel you’re passionate and possess clarity. I want to bet on that,” shared Singh.

Namita Thapar, executive director at Emcure Pharmaceuticals, backed out because she didn’t believe she could add any value to the startup. CarDekho’s co-founder Amit Jain highlighted the emerging market for car scrapping and made an offer at the same valuation as Singh but without the element of debt — ₹60 lakh for a 10% equity stake.

“This (car scrapping) is an important moment for our industry, where cars that are 10-15 years old will be scrapped… mandatorily, by law” added Jain.

Shaadi.com’s founder Anupam Mittal countered with his own offer of ₹60 lakh for an 8% equity stake, raising the valuation to ₹7.5 crore. Jain instantly revised his original offer — the same investment for ₹7% equity stake, which prompted Mittal to offer a revised deal with a 6% equity stake. Before Chhabra could even respond to any of the offers, Jain made a final offer — ₹60 lakh for a 5% equity stake that valued the company at ₹12 crore.

In less than a minute the valuation doubled from ₹6 crore to ₹12 crore. Mittal then rescinded his offer, stating that Chhabra took too long to respond. Ultimately, Chhabra agreed to Jain’s offer – of ₹60 lakh for 5% equity.

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