The Indian market has been on a downward spiral for the past one and a half years, with many consumer internet startups shutting down, scaling back, or cutting hundreds of jobs — thanks to a steep fall in foreign investments. Behemoths like Flipkart and Ola have been struggling to raise fresh capital, forcing their desperate founders to call for favourable government policies to protect local businesses from threats posed by foreign giants like Amazon and Ola.
That said, companies that disrupt the market have not been affected by the funding slowdown much. NoBroker, an online real estate marketplace that connects flat owners and tenants directly with each other and thus eliminating the middlemen, is one such company that has just closed a US$7 million funding, led by KTB Network, a leading VC fund in Korea. This is the first investment ever made any Korean VC firm in India.
e27 talked NoBroker Co-founder and CEO Amit Agarwal to learn about the company and the investment.
Here are the edited excerpts:
No Korean VC firm has invested in Indian startups before. What made KTB Network invest in NoBroker?
India as a market is behind China, and it presents a large opportunity. We have a very young population and the smartphone penetration is growing.
As you said, no Korean fund has invested in India before this. They approached us for investment. We met KTB executives a year back. They stayed in our office for a couple of days.
When KTB came to India, they spoke to our customers. They also learnt about our peers and the overall online real estate market in India. They saw good value in us, as they were convinced that we are solving a genuine problem faced by the Indian realty space.
They were convinced that ours is a scalable model. They typically invest in companies that are questioning the status quo by disrupting existing business models. Ours is not a ‘West-copied East’ model, and there is no equivalent for us anywhere in the world.
Unlike other companies, we don’t burn money like crazy. We have a very low capital-intensive model. We have operations in Pune, Mumbai and Chennai, but don’t have a physical presence in any of these cities, except our headquarters Bangalore. They took into account all these factors before investing in us.
What are the mutual benefits that NoBroker and KTB get from this investment?
What KTB gets from this investment is that they get to learn the Indian market. They are getting an entry into the second fastest-growing market in the world. They also want to use NoBroker to understand India better and then invest more in the country.
Our benefit is that we have a global aspiration. Our plan is to expand to Southeast Asia and other parts of the world after reaching certain milestone in India. Korea also presents a good opportunity for us. We will also get a chance to learn a lot from successful Korean companies. We are also seeing a good opportunity in China.
How is your business model different from peers like Housing, etc.?
As the name indicates, we are an online real estate marketplace that connects flat owners and tenants directly with each other by eliminating middle men. For instance, if you are the owner of a property and want to list it on our platform, you can send us a few pics of the property via WhatsApp.
Nobody from our office will come to your home; our algorithm will check whether you are a broker or not. After that, the customer who see your photos will approach you.
We follow a freemium model. We charge INR999 (US$15) and INR1,999 (US$30) from customers.
We add around 100,000 customers a month.
Over the past few months, several M&A deals took place in India. Do you think India is mature enough to see more M&As in the real estate space in the coming future?
I think this market is huge, and it is a natural phenomenon for companies to join hands together. It will keep on happening. This market is not a ‘winner takes all’ market. There is room for multiple players.
The Indian real estate is a very localised business. It requires a lot of ground knowledge to operate in India. Still a major chunk of the realty market is dominated by brokers.
While you have a unique model, companies like Housing are far ahead in terms of funding and revenues, etc.
No, we are the largest in terms of closed transactions in all the four cities we operate. We are ahead of everyone else. We have the highest number of owner properties across all these cities. The beauty of the internet is that if you have a unique model, you can grow 10 times in a month. You don’t need to have a brick and mortar office.
Our metric is not traffic or absolute customers. Our metric is the number of closed transactions. We close 5,000 transactions per month. We help our customers save roughly INR240 crore (US$35 million) of brokerages a year. That is huge. That’s why brokers attacked our office. Our business model upset them.
Was the attack on your office by brokers a blessing in disguise in reality? Did it help you get more popular?
Many people have asked us this question. The fact is that this incident actually pushed us back by at least two months. We incurred huge losses. Our staffers were unable to come to the office. Our female staffers were being followed. The vehicles of our colleagues were damaged. We had to open two temporary offices during those times. Our customer care number was not operational, either.
The only upside of the incident is that it tested our will power. We were a 100-people team then. Despite all this, none of our employees left. It actually made us strong.
You have raised around US$20 million to date. If you are a low capital-intensive business, why do you need this much money?
Yeah, we have a very low capital-intensive model. Our customer acquisition cost is one-fifth or one-tenth of the cost spent by our peers. Now our revenue play book is getting ready. We are now becoming number one. Many users don’t know us. This money is mainly for marketing to make people know about NoBroker.
What have you been your key learnings?
When you start a company and create a product, there are two ways you can go from there. One, you can make it as glamorous and sexy as possible. Second, you can create a product according to customers’ needs and tastes. Our main objective should be to solve customer problem.
Image Credit: NoBroker