FINDING OPPORTUNITY IN CRISIS – Gyanendra Khadka

Born and raised in Chitwan, Gyanendra Khadka is the Founder and CEO of XcelTrip and Gyapu Marketplace. On completing high school, he went to Singapore for his Bachelors degree and then completed his MBA degree from Singapore Management University. A venture capitalist, Khadka has funded 26 startup portfolios globally. He categorically invests in tech-based startups which deal in artificial intelligence, blockchain technology, virtual reality and artificial reality. He created a stir in the Nepali startup scene by announcing an investment offer of $20,000 to 25 tech startups so that they can work their way out from the abyss of financial crisis caused by the pandemic. Excerpts of a conversation with the versatile serial entrepreneur Gyanendra Khadka on his ventures in Nepal, cryptocurrency, the future of ecommerce and his interest in startups:

What does XcelTrip Global do and why the need to start XcelTrip Nepal?

In 2016, I had the urge to invest in my own company rather than just fund others. That is when I launched XcelTrip from the US which operates globally from four countries: Malta, Singapore, US and India. We have inventory of 15 lakh hotels and 400+ airlines. XcelTrip is an OTA platform like booking.com and Xpedia. XcelTrip is the world’s first blockchain based travel platform. Now about XcelTrip Nepal: I met Aditya Baral, Country Director of XcelTrip Nepal, who was then associated with Nepal Tourism Board, when he visited Singapore for the promotion of VNY 2020. After long meetings, it was decided that XcelTrip Global would work to promote the VNY 2020 internationally. It was a new opportunity for us and I had always wanted to do something in Nepal and for Nepal. Because of the efforts of Aditya Baral and Sarad Pradhan, Head of Business Development, XcelTrip Nepal, our company could become the official travel partner for Nepal Tourism Board. We signed a promotional campaign with NTB for four years to promote Nepal throughout the world. Besides, in our attempt to promote the country keeping VNY 2020 in mind, we launched XcelTrip in Nepal in December last year. XcelTrip Nepal is the country’s only OTA.

Instead of imposing ban on digital currencies, if the government could have regulated its usage, billions of dollars in the form of foreign investment could be brought into Nepal.

XcelTrip Global is entirely based on cryptocurrency, how does that work for XcelTrip Nepal?

Every year four billion dollars is lost in the labyrinth created by the travel network and no one knows where that large sum goes. We are actually trying to solve that problem with XcelTrip Global. We accept major cryptocurrencies. Today, there are more than 200 million cryptocurrency users in the world. I am a crypto investor myself. We accept four major cryptocurrencies: Bitcoin, Ethereum, Litecoin, Dash in conjunction with my own cryptocurrency, Xcel Token. Additionally, we accept Visa Card, Master Card, WeChat pay. We have removed PayPal because of major problems we faced. This is for international transactions. But we cannot use cryptocurrency in Nepal so we registered as XcelTrip OTA. We created a separate domain for Nepal. The system required that we accept the payment gateway in use in Nepal. We have used Himalayan Bank’s payment network for Visa Card and MasterCard and for mobile banking, we work with Fonepay, eSewa, Khalti, IME Pay, Connect IPS, Prabhu Pay, basically all Nepal’s local payment gateways. With these we can book Nepal’s 500-600 hotels and five domestic airlines as well as book hotels and airlines across the world. For example, if you have eSewa or bank card of any bank in Nepal, you can book hotels and airlines that will take you from Nepalgunj to Kathmandu, Kathmandu to Singapore, and Singapore to Los Angeles with Nepal’s card. This is a facility we are offering for the first time in Nepal. Internationally, we accept block chain technology, for Nepal, it is local currency.

What is the status of XcelTrip Nepal now since VNY 2020 has been canceled and the pandemic is hampering your prospect of dominating the domestic travel market in Nepal?

I see opportunity in every crisis. I take risk in every venture that I plunge myself in. When I provide funding for any start-up, it is the concept that I fund, we don’t see anything with physical existence. Three years back, I had come to Nepal to invest but I was thoroughly demotivated. But not now. When I launched XcelTrip in Nepal, I found that Nepal does not have any OTA platform and the market is dominated by OYO and booking.com. When I came back to Nepal, I studied the country and travelled within. As a result of an intensive research but largely credited to the mammoth experience of our core team members in the travel sector in the country, the team could take control of Nepal’s tourism network. However, the pandemic rained our parade. Even then, we have meetings almost every day. Prior to the lockdown, we had readied packages for domestic tourism. Take for instance “Ramro Pokhara, Ghumaou Pokhara” campaign. With this slogan, we had partnered with 28 hotels in Pokhara and had already started the Pokhara campaign. But we stopped our work after the lockdown was announced. The good thing from the lockdown is that for the next one to one and a half years, we will be unchallenged in Nepal’s domestic tourism market. I am very much excited on behalf of XcelTrip because now we need not compete with OYO or booking.com for the next 12 months or so since they will not operate in Nepal. We are encouraged by that. Nonetheless, the bad thing is that Nepal’s entire tourism sector was dependent on international tourists. Hotels and airlines might not get international tourists for the next 8-12 months or even longer. A few months back, hotels in Nepal did not know of our existence, and since OYO and booking.com won’t be in the market, now we are the only company that will bring customers to their hotel rooms. That is the easy route created for us by the COVID 19. Now, we need to work on ‘how do we cash in on this opportunity’ and ‘how to penetrate the domestic market’. For that we are all geared up and prepared for when the lockdown is eased and we march into promoting tourism for domestic travelers. We have readied 19 destinations and we have already partnered with a few travel agencies and have prepared tour packages, also for the Kathmandu Valley. Circular economy is very important for a country like Nepal. Domestic tourism immensely supports the circular economy of any country. Today, the world is talking about circular economy; if we look at the size of domestic tourism in Nepal, it can sustain tourism in Nepal. That’s why I am very excited about XcelTrip Nepal.

Why venture into the ecommerce market in Nepal? What does Gyapu Marketplace strive to fulfill?

The lockdown launched Gyapu Marketplace in the ecommerce market in Nepal. It was never our plan to launch Gyapu so soon, however the situation tempted us to launch it sooner than anticipated. Gyapu Marketplace was launched three days into the lockdown. When it comes to ecommerce, whatever the existing ones like Daraz, Sastodeal and the others are doing, we are also doing the same thing. Technology is not different. The only difference is ‘what new’ are we offering to the customers which the existing ones have failed to do. Operation and service wise, definitely we have taken a new and different approach. Even if the ecommerce market is moving ahead creating disruption in the field of technology, vendors are not pleased with the ecommerce platforms. Vendors complain that even the biggest ecommerce platforms do not pay them even after 1-2 months. We have already started listing more than 100 vendors from Civil Mall. We are approaching other malls as well. Malls have not been in operations but we are approaching the vendors with the deal that we will make their products sell.

The good thing from the lockdown is that for the next one to one and a half years, we will be unchallenged in Nepal’s domestic tourism market.

We entered the market with a tactic and that was a promise to the vendors that we will pay them within a period of 3-5 days. We don’t want to earn money by holding the vendors’ money. We need to do our own business. Secondly, the ecommerce platforms have suffocated the vendors. I have come to know that ecommerce platforms get upto 40% commission which in a way is also a trend everywhere. The new approach we have adapted is for the next 12 months we are not charging any commission, zero percent commission from the vendors. Now how do we profit? For the next 12 months, we will only invest. We need to pay only for the staff and operations and marketing cost. To capture the market, we have introduced this new strategy. Thirdly, the trend is that customers need to pay delivery charge. For the first 12 months we are not charging delivery fee either. We will deliver your products at your given address for free. Besides, during lockdown almost all ecommerce platforms and delivery companies delivered the product within 2-4 days. Three days after the lockdown we launched our ecommerce site, but we delivered within 24 hours of the order placement. We got hold of vendors like Vishal Group and other business houses overnight which ensured a good inventory of products. Another issue was that of vehicles for swift delivery. I asked around, got my friends cars, my wife’s car, my own driver had to do double shift. That is how we collected seven vehicles and delivered products within the valley. All we were concerned was to establish the concept in people’s mind that Gyapu delivers products on time. Now we are scratching our heads to come up with ways to make the products available to the customers within six hours of the order. Currently, we have 3500 plus products listed on our website. In the initial phase of the lockdown we did not have many products but over time we have accumulated enough vendors. We have also partnered with Salesberry and FabIndia. Daily we have 200-300 products listed. You have been hailed as a game-changer for blockchain startups in the Silicon Valley and worldwide. What made you bet on the blockchain technology? What is its future in Nepal? I was operating a garment factory in Thailand where we manufactured baby mattress called BabyTemp. The inventor of Tempura brand, a Swedish brand, after he sold the company to an American company, I got hold of him and worked with him to conceive the idea for BabyTemp. There have been cases of infant mortality worldwide when babies turn on their tummies in sleep. To solve that problem, we created a product called BabyTemp which consisted of four products: baby positioner, a mattress, a pillow and a quilt. The package was very costly and we sold at 250 euro and we sold in Sweden only. These were made in Thailand. That business, plus I had three hotels in Bangkok. During the same time, energy drink products were trending.In 2013, one of my American friends was about to manufacture an energy drink called Oregan Bang. I was requested to invest in that company and therefore I became the Chief Investor. I invested a total amount of 1.4 million dollars in his company in multiple installments. To my great dismay, without informing me, he sold the company to a buyer. had taken a risk without paper work, trusting a friend and had invested such a huge amount in his company. I then headed to the US to sue him. While in the US, I was introduced to the world of blockchain. I was offered to invest in Bitcoin. I started investing in blockchain with an initial amount of $300,000. I then moved back to Thailand because that is where my business was. When Bitcoin started doing well and Ethereum was introduced and the blockchain technology was hailed from all corners, I started travelling to the US often. Then in 2014, when I entered the Silicon Valley, a great atmosphere had already been created of blockchain technology. Within a week, I invested $60,000 in 2-3 companies. Instead of working in the hotel business for more than a decade in ROI, I thought why not I sell everything and start investing in this since I saw tremendous potential and future in it. In 2014, after selling everything there, I moved to the US. I started a venture capital firm and that is when I started funding startups in California. The companies I started investing in were all tech-based: AR, blockchain and some mobile apps. Currently, I have investment in more than 26 startups. It is said that all your ventures are self-funded despite being from a humble background and being self made. How did this happen? And how do you decide which startup to invest in? My father was a teacher and my mother a homemaker. I established everything myself. I am a selfmade man. The BabyTemp mattress that my company manufactured did extremely well in Sweden. The product had huge margin. It did not even cost me 40-50 euro. All the three hotels in Bangkok were my own but I did not own the land. I also invested in the stock market. I have been a trader since the beginning of my career. But the main breakthrough happened after 2013. I invested cheaply in bitcoin. Moreover, the tech companies and startups that I had invested in experienced 5000 to 10,000 times profit. There was this Canadian company where I had invested $66,000 in 2016, and I received 20% stake. But I sold it for $3.2 million. That company raised 20 million. I got lucky. That is just a solitary case. Largely because of my investments in blockchain and bitcoin, I could fund other companies and startups. Also I was an early adaptor for Ethereum and Litecoin. There were companies from China and South Korea entering the Silicon Valley offering one share for 10 cents. And when I invested $10,000 in those companies my return was multifold. The valuation in equity kept on increasing. I started my own company in 2016. I have not taken any money from anyone. But from 2021, my aim is to get funding for XcelTrip Global. From the 26 companies, my time for exit from 5-6 companies is this month. I will get money from them. There is no such profit like investing in startups. I invest in startups but I pay them for example $20,000 or $40,000 in a period of two years. These startups are based in the US, Mexico, Brazil, Canada, Switzerland and Isreal as well. The startups are into Artificial Intelligence, Blockchain, Virtual Reality, Imagine TV in Canada, Artificial Reality.

Your views on Nepal Government’s take on digital currency.

When I heard the news, it must be about three years back, that the Nepal Government has banned Bitcoin and Blockchain Technology, I was in the US and I took it as a great mistake on the part of the Nepal Government. Instead of imposing ban on digital currencies, if the government could have regulated its usage, billions of dollars in the form of foreign investment could be brought into Nepal. For bitcoin mining, electricity is required and Nepal has the capacity to produce 85,000 MW of electricity. The hydropower projects lack funding and the internal investment is not ample. And if bitcoin miners or mining companies are sent the message across that Nepal is open for mining, they would certainly come to Nepal. Individuals and companies have spent billions of dollars to have their mining companies in Vietnam, Thailand and America. I also have friends who have opened Bitcoin companies. When I was in the US, I had sent a group comprising of a Chinese billionaire’s son; Iceland has one of the biggest mining companies in the world run by Americans, I had them in the group too and two other friends. I had them meet Sushil Pokhrel who is into the hydropower business, who would further introduce them to the ministers. But after sometime of the meeting, there was news that cryptocurrency in Nepal has been banned. Still if Nepal is to regulate bitcoin mining and blockchain technology, the country can still attract billions of dollars on the ground that wages is cheap, electricity is cheap, and there are people ready to invest in Nepal. My friend has established a bitcoin mining company in New York with $250 million capital but he is always on the edge of his seat since he does not know when the Federal will trouble him. Moreover, blockchain technology has a great role in digital transformation. Only by developing software for foreign companies by Nepali engineers, Nepal will not establish itself as a country with strength in technology. There should be tech related disruption evident for the world to witness. There is a different investors’ community in the blockchain technology, we could attract them. If Nepal is made a tax haven, if the country is made fit for investment, if for 10 years ‘my second home’ system is established in Nepal, if taxation system is made easy, foreign investment can be lured in. The country, instead of going after the tax collection for those 5-10 years, if it establishes as a tax haven country, thousands of jobs can be created within. Such an environment can be created if only Nepal revisits and corrects its stand on blockchain technology. Nepal is a small market for me in terms of blockchain technology. I don’t have much interest and gain in selling and buying and trading in bitcoin. But if the technology is regulated in Nepal, the country can attract many investment opportunities.

You announced that you would support the startup movement in Nepal by offering $20,000 to 25 startups. What was the reason, especially now?

I am guided by three principles: 1.I want to establish myself in Nepal. 2. I want to invest in companies other than XcelTrip and Gyapu and 3. I need to have my startup profiling. My main identity is not the CEO of XcelTrip and Gyapu Marketplace. I am a venture capitalist. I saw the lack of investors in the startup landscape of Nepal. Traditional investors are there but in tech startups you need to invest in concept, which they fail to comprehend. Moreover, the investors want the returns within a year. I have been tempted to invest in Nepali startups for a year now. Investors are few and startups are increasing. I can invest less but can get great equity. If in the pre-pandemic time or post-pandemic time, I had invested 1 crore, maybe I could not even have received 10% equity but today in the pandemic, companies might offer me 40% equity with the same amount of investment. I am a businessman and I am guided by the same mindset. My investment might be a humongous support to the startups, but this is an opportunity for me. Venture capitalism is a fresh space in Nepal.

Every year four billion dollars is lost in the labyrinth created by the travel network and no one knows where that large sum goes. We are actually trying to solve that problem with XcelTrip Global.

Moreover, we have to encourage the startups. I want to get myself in the startup market. Therefore, I made the offer. Besides, the exposure of XcelTrip and Gyapu will be there among tech-startups. It is more advantageous for me to fund an existing company than establish my own third company. But those 25 startups are all tech-startups. So far, we have selected four tech startups. When I invest in a company, I see the person behind the concept. I don’t care if the person is a 17 year old lad or 70 year old man. If the person is a powerhouse of energy and exhibits aggressiveness to succeed I will invest in his/her company. A tech-founder should be ready to dedicate 18 hours of the day for the company. I myself work 16-17 hours a day because you as the founder need to walk that extra mile. XcelTrip and Gyapu consume my energy and time. During the lockdown, I brought 12 Gyapu staff members and created rooms for them at the office and also housed them at the nearby hotel. Additionally, the problem that the tech-founder is wishing to solve is important for me to understand. I don’t invest in ideas that are a mere duplication of existing ones. The problem-solving concept of the founder is what I look for. For a company to be strong, it is not just the marketing department that has to prove its worth and not just the founder, the concept has to be genuine, innovative, and the most important aspect is if the product is scalable. And lastly, the startup that I want to invest in, I assess how will that help me expand my two companies.

How do you read the business ecosystem in Nepal?

The business mindset of Nepalis is limited. The problem I see is not with the business people in Nepal but with the country’s regulation. Neither could Nepali policy allow Nepalis to comfortably expand their business outside the country nor have they received any major incentives from the government’s side. Also, Nepalis have not till date invited foreign investor or investment openly. No matter how educated and technologically informed the millennial generation is, the investor is the father or the grandfather with traditional investment mindset and therefore, except for 3-4 business families in the country I have not witnessed many showing any predilection towards technology related businesses. In the next 1-2 decades, you will see today’s startups reign the business market in Nepal. They will secure the top position in the profit-making list and today’s business families will be left far behind. Change is inevitable and today’s startups are the harbinger of that change in the entrepreneurial landscape in Nepal. That is the global trend. Take facebook, tiktok or Zoom for example. Nepali entrepreneurs are smart and innovative, all they lack is proper environment from the government and from investors. I am working with the idea to expand XcelTrip and Gyapu in other parts of South East Asia in 2021. I am eyeing Vietnam. Till date, no startup has crossed the border but Pathao has entered Nepal’s border from Bangladesh and Daraz from Pakistan and Paytm might enter the country from India and might devour e-Sewa’s market share because they have the money. Except for Wai Wai, no other company has expanded outside the country. If given an opportunity, I would love to invest in Tootle. I have always shown interest to invest in it. It is a great concept. It is a workable concept. But I suppose, it requires an impetus to catapult from point A to the next level. Besides that, I am eyeing food delivery services like Foodmandu and FoodMario. I am also in talks with them. I am interested in 14-15 companies in Nepal. I am in constant talks with them.

What will traveling be like post COVID 19?

If the COVID 19 curve is flattened, domestic travel should begin from July. If people get to know that the lockdown is eased, they will come to the street in numbers. Further, people are bored stuck at home for almost three months. Those who have the spending capacity, those who know the value of travelling, those who want to travel will travel even that be for two days. Even if a mere 5% of Kathmandu residents decide to travel within the country, they will populate the hotels in Nepal. Domestic tourism should have been promoted in Nepal earlier. But hopefully because of this pandemic, the perspective of tourism ministry, tourism entrepreneurs and citizens will concentrate on domestic tourism. Let’s take the example of China and India, outbound tourism is nothing compared to inbound tourism. Domestic tourism is crucial for the reinvigoration of tourism sector and economy in the country. XcelTrip Nepal is putting its efforts together to market internal tourism. But the hotels are not ready to open before Dashain. But we are making every endeavor to persuade hotels to open up.

But HAN has stated that it will be difficult for hotels to come into operations before six months or more?

Given that everything gets better, we can open up restaurant and hotel business from July. HAN will not pay the hotelier’s loan; the state will not pay their loan either. Almost all the hotels have their share of bank loans to pay. Also for the VNY 2020, most have increased the number of rooms adding to the amounting loan. The burden of the restaurateurs and hoteliers will not be shared by anyone. The loss that XcelTrip Nepal will suffer has to be faced by me alone. The day the situation starts getting better, one by one the restaurants and hotels will open up. And Nepalis too will leave home to travel within the country. My business is by making people travel, domestic tourism will prosper and hotels will open business for guests. There is no other alternative or else they should close down forever. This is not a fallacy. Who had thought that there will be a great market for luxury cars after the WW II.

Entrepreneurs are demotivated and distraught. Before there is “business as usual” what should they be doing?

It is the right time for business people to internalise, ask themselves about the nature of their business and to identify the identity of the business. Post-pandemic for the next 12-18 months, the impact of it in their business needs to be evaluated. Keeping the nature of the business in perspective, if an entrepreneur or a business person thinks that the business won’t sustain in the next 12-24 months, s/he should close shop. If the business person himself is bankrupt and cannot even pay the rent or the staff, then keeping the business open just for the sake of keeping the business open will make no sense. You should also be able to find opportunity in distressing situations. In my case, I launched Gyapu after three days of the lockdown. Also, I realised that during lockdown, startups will start to experience financial crisis. I saw opportunity in that to invest in them. These sorts of opportunities, business people should be able to read. I doubt there will be any sort of relief package from the government or the banks for businesses. You have to be able to assess the situation and know how deep your pocket is and if you shall be able to continue shouldering the financial burden. Cash flow is important in business; you need to evaluate the situation of cash flow. The buying and selling of land will be in jeopardy, banks won’t give loan, could be that you cannot withdraw all the money in your bank account. I am not trying to paint a grim picture, but you should be able to face the worst situation.