In today’s generative AI age where services are mushrooming at a fast clip, customers increasingly want the option to pay for products and services based on what they use, especially if the usage is erratic. This is pushing companies to rethink their pricing models.

Three Chennai-based entrepreneurs have understood the unique challenge, and opportunity, this presents. Their 18-month-old start up Togai is the answer for companies wanting to give their customers a consumption-based, optimal pricing solution.

The idea behind Togai hinges on metering and rating, i.e., powering a company’s business model so that the end-customer pays for only what they use.

Started by Abhishek Rajagopal, Aravind Sriraman and Tholkappiyan ‘Thols’ Velavan, Togai is built to be easily configurable, making it a plug-and-play for any kind of billing model, and effectively supporting companies in monetizing their offerings.

The tech behind the product is so well executed that on 30 April, Zuora, a publicly listed American company, announced its planned acquisition of Togai.

“We’re really excited for what comes next. We can now reach a larger audience. Togai is developer-first, and Zuora understands how this can impact the usage-based monetization model,” says Abhishek. 

The metering concept isn’t new, but the challenge so far has been in creating a dynamic pricing system that can track customer usage effectively and is scalable.

“The market is still nascent; it’s evolving,” says Aravind, adding, “We want to build the market ourselves by launching an extremely configurable yet sophisticated product that can help us to become a market leader.”

Agreeing, Thols says they are all about the growth mindset and building a product that delivers the best experience in terms of ease of product adoption, function and output.

Togai is the second time all three founders have come together to build a product that solves an omnipresent problem.

The first time they worked together, they created Hypto. If you’ve tracked the crypto sector over the past 4-5 years, you will have probably heard of the company, which was a payment platform for blockchain transaction. At its peak, Hypto processed over $30 billion in transactions, making it a market leader in India in about a year. 

While the co-founders had originally not set out to build a payment platform for blockchain companies, they pivoted to the idea when they realized it was a niche market they could succeed in. 

With Togai, they are doing it again.

Togai was registered as a company in November 2022. In June 2023, the team announced they had raised $3.1 million in seed funding, with BoldCap and Together Fund being the major investors.

BoldCap was the first to commit to the seed funding and also played a part in the acquisition process.

“BoldCap was helpful (in the acquisition process) and backed us,” says Abhishek, adding that the acquisition was handled well. “It was ethical and timed well.” 

Sathya Nellore Sampat, in fact, was our first believer, says Aravind, talking about BoldCap’s General Partner. Sathya had reached out to the founders when they were still working on Hypto, but at the time, the trio didn’t want to raise more funding. 

The founders eventually decided to wind down Hypto given the macroeconomic factors and the regulatory climate.

As it happened, they had by then built a usage-based pricing model for Hypto, and realized this was a product other companies would be willing to pay for.

“Consumption-based billing is growing at a fast pace, largely fueled by AI companies. We observed most of the companies that power recurring revenue, including Zuora, which was the largest, were entering into this category. Togai had built a great metering product, and the founding team had the most relevant experience in this domain, hence leading to this acquisition. We are excited for the team to continue building within Zuora,” says Sathya Nellore Sampat, General Partner of BoldCap.

Middle-class beginnings to Market-leading ideas

Abhishek jokes he decided to become a businessman because knew he wasn’t athletic enough to be a sportsman. Born and raised in Chennai, he describes his growing up years as “very middle-class, education-first.” His father was a banker and mother a homemaker.

“I always had this notion that I would start my own thing. After I did engineering, I gravitated towards more analytical processes and math. I would look for problems to solve. I wanted to start a business right after engineering, but there was inertia since I didn’t really have a solid idea,” says the 35-year-old.

Abhishek graduated from VIT as a mechanical engineer, and later from ISB. While at ISB, he realized he was ready to start out on his own. 

“After ISB, I joined a couple of young startups. While the pay was less, I was able to do quasi-founder roles and really understand the nitty-gritty of a company. The second company I worked at (Zarget) was acquired by Freshworks in 2017. I didn’t want to work at a big company; I wanted to work on building my own venture. I had got some liquidity from the acquisition, and decided to start something with Aravind. By then, I was 28 years old and thought to myself, ‘If not now, when?’” 

Abhishek and Aravind go a long way back, all the way to standard one when they were classmates. A lot of their lives have since intertwined.

“We actually became much closer after school,” says Aravind, adding, “With maturity, we realized we had complementary skills.”

The childhood friends say they always knew they wanted to start a company together. “We’re both big believers in building something of value. So, we wanted to be able to spend quality time in building our venture and making sure it was valuable to our customers,” says Aravind. 

Thols joined the duo in 2018 when they were looking for a technical expert. “Neither Aravind nor I could code, so we were looking for someone to fill those shoes,” says Abhishek. 

After starting two companies in six years, the three have seen their partnership grow organically; it’s the bond that drives Togai.

Thols is in-charge of everything tech, Aravind’s domain is product and Abhishek handles sales and business. Their roles are well defined, and each respects these boundaries. 

“You have to trust by default; everything else will fall in place. Our careers are literally in each other’s hands,” says Thols.

Though not originally from Chennai, the metro city has been home for Thols since 2000. Much like Abhishek and Aravind, Thols says he was always keen to build his own company. An important memory and inflection point in his life was winning a computer science award in standard 12, beating a peer whose parents were working in a software company.

“Winning that was a big deal for me. It was an indication to me that I could consider a future in computers,” says the 32-year-old whose father had a transferable job with the Tamil Nadu government. 

Thols’ first and only job before becoming a founder was at Freshworks. From there, Thols took away important lessons on building scalable solutions. “I got the confidence that I could do the 0-to-1 journey well.” 

Around that time, the SaaS boom slowly started, and the race for Chennai as the SaaS capital kicked off. 

“I felt that I wanted to contribute towards putting Chennai on the global tech map. That was my ambition,” Thols says.

Finding the Real ‘Togai’

It’s hard to miss the emphasis the Togai team puts on value, which is also how they came to name the company.

“Togai comes from the Tamil word த ொகை (Thoggai), which means value or price,” explains Abhishek. A happy coincidence is that it also has AI in the name. “We could always call it Tog.AI if required,” he chuckles. 

As first-time founders with Hypto, the trio had a steep learning curve, especially when it came to building a product. However, it was less so on the marketing front since they had inbound demand. This is where the experience with Togai differs to an extent. 

“At Hypto, we had built for a first customer and then realized a market existed beyond that. With Togai, there’s a need to educate the market on the product. We need to keep building to get access (to customers), to attract talent and money,” says Abhishek. 

“On the tech front, our goal now is to be an extremely flexible product that works for any pricing model. The more flexible we are, the more personalization/customization we can do for our customers,” says Thols.

Aravind summarizes to say dynamic pricing is the game. “Like how Uber invented surge pricing to incentivize Uber drivers and thus increase their own revenue significantly, we can help our customers optimally monetise their product.” 

Collecting usage data is a problem to solve at large. Automating that and enabling implementation without much developer effort or code change are milestones Togai will need to cross. 

“Pricing models will change in the next 10 years. Decisions will have to be data driven.”

“With Zuora, we see we can be a part of their story. In our minds, they were the competitors to watch, so this acquisition makes a lot of sense,” says Aravind.

The founders are excited for what they can do together, and have this parting word of wisdom for founders like them and otherwise. 

“Don’t build to optimize for an exit. It’s very easy to get distracted. It’s exactly like fundraising, in a manner of speaking,” says Abhishek. 

As an engineering-first, product company, Togai is clearly focused on not just building and expanding the usage-based pricing engine, but also driving market change.

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