Commodity management is the process of developing a systematic or an organized structure to the entire life cycle of distinctive group of items. Companies trading in commodities such as energy, utilities, precious metals, electricity, oil, etc. always have risk of huge trading losses or unoptimized hedges, which occurs due to poor spreadsheet-based risk management.
To counter these issues, Hyderabad based startup Risk Edge Solutions has created world’s first and only advanced risk management software – RiskEdge for Commodity Management. Started in May 2013 by three commodity domain experts – Nitin Gupta, Deep Janardhanan and Santoshi Ippili, they provide software product as well as consulting services for risk management.
The risk management system and solution is $500 million industry. Nitin says, “ We are helping large Commodity Trading companies by managing their Market and Credit Risks better, with a user-friendly and fast web-based software.”
RES’s innovative and cost effective product- RiskEdge is a real time commodity risk management platform having powerful position and risk analytics tools, which is extremely useful for major players trading in global energy and commodity market. It is web-enabled, easy-to-configure and hosted application, which is also integrated with world’s biggest derivative instrument pricing library of algorithms.
He adds, “Most commodity companies have huge exposure to commodity prices but run with very inadequate and antiquated systems for managing their risks. Risk Edge gives them a powerful and sophisticated Risk Engine that allows them to integrate Risk Management into their daily operations with reports and analytics that help them make better decisions. It also integrates with any internal commodity management / ERP system that companies may have.”
Their main goal of starting RES is to help companies achieve high performance in commodity trading operations. Their target customers are mid to large-sized energy and commodity trading companies with turnover of at least $1 bn.
It is completely bootstrapped startup with initial investment of INR. 50 lakhs. Presently, they have partners and associates in six different countries and in future, they want to completely dominate the industry.
While speaking about the hurdles during the inception of RES, Nitin says he has to take tough decisions for keeping all the costs under control and most importantly to avoid spending money on unnecessary campaigns and hirings.
He says, “We found low cost and even no-cost solutions to a lot of things, and keeping team small gave us enhanced productivity.”
RES derives their revenue from licensing their software product and consulting services. Their consulting service consists of outsourced risk services, bespoke financial modeling, risk policy preparation, and many more risk management services.
With Financial Engineering Associates, Numerix, Brady Plc, and Open link as their competitors, RES wants to become de facto risk engine choice for all energy and commodity trading companies in the world.
When asked about the work culture in their startup since they have offices in 6 different countries, Nitin says, “Despite being geographically dispersed, the team work is always well coordinated due to past working relationship between founders. The entire team is highly qualified and experienced, and therefore, professionalism comes through easily. We also do team lunches, which are done over Skype video!”
Nitin, who have done PGDM in Finance from Goa Institute of Management, has received gold medal for dissertation on an investment model, built using game theory. Due to his vast experience in Commodity Risk Management domain, he introduced several pioneering concepts in this field.
He has word of advice for fellow entrepreneurs, as he says, “Understand growth hacking deeply – only this can and will work for you.”