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nCinga and the $15.5 million tale

By Arteculate Jan 1, 2020 #nCinga #Zilingo

Singapore based eCommerce startup Zilingo recently announced its acquisition of Sri Lankan startup nCinga for a whopping $15.5 million. The announcement comes as part of Zilingo’s efforts to expand its operations in the South Asian region. Early in 2019, the Singaporean startup talked about its plans to invest as much as $100 million for expansion efforts. The nCinga acquisition comes as part of this strategy. So, who exactly is nCinga and why is a Singaporean fashion startup buying it for $15.5 million?

nCinga: not your average tech startup

The company was co-founded by its CEO Imal Kalutotage, and CTO Vijitha Abeywardena. Their nCinga story is one that started off as a conversation over a few drinks about IoT and analytics. That conversation ended up with Imal and Vijitha incorporating nCinga Innovations as a company in 2014.

“We empower data-driven decisions because we believe companies use only 10% of the available data. 90% of the data goes uncaptured” – Imal Kalutotage

According to Imal, the past few years there has been a shift in manufacturing from mass production to mass customisation. This has been the case across different industries. The question is how manufacturers can cater to customisation on such a level. After all, economies of scale come with volume. “If you have to continuously make changes in the manufacturing lines or in your operations, you need to make quick decisions”. Essentially, this translates to the need for real-time data in the manufacturing environment. This is where nCinga comes into the picture. 

Dubbed nFactory 4.0, its nCinga’s flagship product, a SaaS-based Manufacturing Execution System (MES). The nFactory solution is the “next generation smart factory solution that enables the management to play-back or fast forward their factory operation at any time from anywhere”. According to Imal, it’s a platform that helps businesses reduce waste by reducing defects. Doing more with less, improving efficiencies and thereby enabling better bottom lines, is the company’s value proposition.

Shaking hands with Zilingo

Beginning in 2019, nCinga started working together with Zilingo. Initially, the conversation was around the idea for a partnership type of arrangement. Speaking to ReadMe, Imal shared that Zilingo was keen on taking up nCinga’s product and introducing it to their clients. The Singaporean fashion startup has already expanded efforts in the B2B aspects of the fashion supply chain. It has gone from an eCommerce marketplace to a B2B tech platform. This includes logistics, manufacturing, and even financial services. As such, providing loans and payment services for merchants are among the focus areas for Zilingo.

Zilingo is set to become the latest SoutheastAsian unicorn

So, adding in nCinga meant that Zilingo’s financial services arm could lend money at a lower risk. Why? Because nCinga’s MES allows better visibility of what’s happening. Additionally, its set of tools enables order fulfilment tracking as well. Basically, optimising the entire process. This is where Zilingo saw nCinga as a potential partner in the ecosystem.

“As we worked with them, they realised that this could be a strategic asset. A game-changer for them in their business”. By August, the conversation shifted from a partnership to something more serious. The discussions went into a term sheet, contracts, the whole nine yards. Now, it’s about completing a $15.5 million transaction.    

But what does this mean for the two companies moving forward once the acquisition is complete? For nCinga, it means deploying its MES across Zilingo’s network of 6,000 factories and 75,000 businesses. It also means easier access to different markets. Capital and resources will no longer be a problem. Zilingo itself is funded by Sequoia Capital, one of the largest investors in the world. The eCommerce startup went for a series D funding recently at $226 million.  Clearly, it has the muscle to pull through. For Zilingo, the deal would enable the company to build and expand the front end of their business. The inclusion of nCinga under their wing allows Zilingo to connect all of its factories to build a cloud factory.

nCinga’s co-founding duo, CTO Vijitha Abeywardena (left) and CEO Imal Kalutotage (right)

For nCinga, empowering data-driven decisions also meant bringing in visibility in the manufacturing environment. This, in turn, meant bringing more transparency. “We’ve been doing it as a part of giving a tool to the manufacturer”, says Imal. Now, with the acquisition, Zilingo is looking to extend this throughout the supply chain. Thereby, enabling visibility and transparency from manufacturers, to brands and suppliers.

Sri Lanka and beyond

But what about Sri Lanka? Where does Sri Lanka fit in amidst all of this? During the initial stage, nCinga was primarily focused on offering its services to large established manufacturers. But the company wanted to expand its efforts into the smaller sectors. By late 2018, nCinga joined hands with the Sri Lanka Chamber of Garment Exporters (SLCGE) association to digitise the SME sector. The partnership aimed at running an ambassador program covering 70+ manufacturers that came under SLCGE. It also looked at making the nFactory service offering more affordable for the smaller factories.

Imal notes that this strategy has proven successful in Sri Lanka as well as other markets like Bangladesh, India, Vietnam, etc. The company finds it easier to join hands with associations of this nature in catering to these markets as opposed to approaching companies individually.

ncinga in Bangladesh
nCinga at an industry event in Dhaka, 2018 together with Robi

But nCinga kicked off at a time when the maturity of the Sri Lankan market was quite low. The first days of nCinga were spent educating the market on the importance of what the company had to offer. Today, the situation is much different. Imal and Vijitha feel the market maturity is at the right level and that the acquisition would give the company enough resources to seize the opportunity. “Had it not been for Zilingo we would have still gone ahead. But maybe at a little slower pace”.  

Today, nCinga operates across 7 countries and have over 50 factories that run nCinga’s platform. Beyond Sri Lanka, the company sees promise in other markets like Bangladesh and Vietnam. Both countries are among the largest apparel exporters in the Asian region. China is the only market that’s ahead of the two. Imal and Vijitha also point out India as another promising avenue for the company. Starting operations around early April, now nCinga is part of almost 20 factories in India.

Looking to the future

Many industries today look to leverage on the ever-improving technological advances. 5G is one such technology that has continuously come up in recent conversations. Although IoT and analytics are at the core of nCinga’s business, the company doesn’t see this as a key consideration. In fact, Imal notes that the current technology stack is optimised to even run on a 3G connection. Sure, better speeds and lower latencies will help. But more importantly, Vijitha believes that technologies like 5G could push for better device adoptability numbers among the masses. “This, to me is more important than faster speeds and low latency”, says Vijitha.

ncinga in india
nCinga at the 15th International Conference on Apparel & Home Textiles in India

As far as ambitions go, nCinga is focused on two things. One is to build the team with the right people. According to Vijitha, the challenge is to find people with the appropriate set of skills and the right mindset to operate in a startup environment.

Second and perhaps more importantly, nCinga wants to build the cloud factory. The goal is to create a platform that connects all the factories. This would allow brands to come in and leverage the capacity that comes with a platform of such a scale in real-time. The Uber of manufacturing if you will.

By Arteculate

Arteculate is your guide to the Asian tech industry. We give you unparalleled insights, accurate, local tech news, thoughtful features and sometimes scathing opinions on where things are headed. Stay tuned for the best of Asia!

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