Brokers, agents and middleman are the perennial pain the backside when it comes to finding and renting a new house. NoBroker, an India-based startup that operates a peer-to-peer rentals site, has closed a $10 million Series B round to continue its quest to exterminate the property broker.
The premise is simple. Agents and brokers have the supply when you’re seeking a new home, but their pay check is based on the amount you spend. They typically pocket part of your deposit and take a cut of your monthly rent. That, NoBroker argues, incentivizes them to push you into the most expensive rental, not necessary what is right for you.
To combat that, NoBroker has a peer-to-peer site that allows home owners and prospective tenants to connect directly, eliminating the need for a broker. The service is currently in four cities with around 250,000 current listings and 650,000 registered users. The startup claims it facilitates 500,000 ‘connections’ per month.
It’s nearly a year to the day that NoBroker, which was founded in 2013, closed its $3 million Series A. Since then the company has grown impressively, doubling its coverage from an initial two cities and growing from 35,000 users — but
One secret to its growth is ‘click and earn,’ a program the company runs to incentivize anyone to add listings to NoBroker from within its Android app. Users that run into a property that is listed offline, simply take a photo of the building and send the details — which could be displayed on a board or inside — inside the app. On receiving the info, NoBroker’s team follows up on the lead and calls the owner. If the property is listed, the user who snapped the first photo is compensated with 100 INR (around $1.50) inside their PayTM wallet.
That doesn’t sound like a huge amount of money, but the company said students and other use the program to make a little pocket money. The feature itself is responsible for around one-third of all new listings on NoBroker, a hugely impressive stat.
NoBroker’s mission was validated by the broker community itself, which attacked NoBroker’s office last year. A mob of around 50 brokers, presumably irritated at the company’s service cutting them out of deals, attacked its Bangalore base in September.
“Their objective was to break furniture, scare employees and force us out of the office,” NoBroker CEO and co-founder Amit Agarwal told TechCrunch in an interview. “That showed us that what we are doing is making a disruption.”
The incident galvanized the company and its mission, CTO and co-founder Akhil Gupta told us.
“We split our team into two,” he recalled, saying that half of the staff worked from a rented apartment. “It it was so exciting, we were energized and merely working from a mattress on the floor.”
A NoBroker campaign
NoBroker is up against some formidable rivals in the property space in India. Japanese telecom firm and high-spending investor SoftBank backed Housing.com, which has had well-documented problems, while PropTiger grabbed $30 million from News Corp. But Gupta and Agarwal said NoBroker has taken a more nimble and lean approach to the business — indeed, they claim that half of their previous round is still in the bank.
“I won’t name names, but many other startups have burned a lot of money without serving real customer pinpoints. We’ve been extremely level headed,” Agarwal told TechCrunch.
Now, though, the company decided it is time to bring on more money to kick things up a gear. Agarwal and Gupta believe that India’s top 20 cities have $4 billion in brokerage, so the company has its mind on expansion — but first of it all it wants to truly own its patch.
Focus On Revenue
“Right now, our single minded focus is on revenue and these four cities we service,” Gupta said. “We believe we can break even in next 18 months. When we start seeing our cities break even we’ll expand to more.”
The company recently began monetizing its service using a freemium package, which includes two paid-for package priced at 999 INR (around $15) and 1,999 INR ($30). The company also supplies the necessary legal documents, which are customized for each rental agreement and are sent direct to a tenant’s home, even on weekends. That, Agarwal said, is far more flexible than broker-led agreements which require a tenant to go to the broker’s office during the week.
NoBroker’s pricing plan
If things go to plan, NoBroker will begin to expand out in India during that period, but it also has its eyes on overseas markets. That’s where it believes its new investor base can pay dividends. The Series B was led by Japan-based investors Beenext and Digital Garage — which backed Twitter and Square — along with Singapore-based Qualgro, Asuka Holdings’ Mamoru Taniya, and existing investor SAIF Partners.
That’s a fairly diverse set of backers, and unsurprisingly Agarwal and Gupta have their eyes on Southeast Asia and Japan.
“A global expansion would come after 24 months as India is a big market and expanding too fast could be problematic,” Agarwal said. “We’re currently doing our homework, and talking to [our investors’] portfolio companies and learning from them.”
NoBroker even went so far as to run a test pilot in Manila, a city that the co-founders said they’ve never visited. The site is no longer running, but they said it attracted enough interest to assure them that their model can work and can be scaled globally when the time is right.
“This is a product that is missing in Southeast Asia,” Gupta and Agarwal said. “We know that peer-to-peer is difficult, and even harder in real estate, but because we can do it well [our investors] can help make us number one in Southeast Asia and Japan.”