A startup that is attempting to significantly improve the way how Indians rent or buy an apartment just raised a substantially big amount to further pursue its mission. Bangalore-based real estate property operator NoBroker said today it has raised $51 million in a new round of funding.
The Series C financing round for the five-year-old startup was led by General Atlantic. It valued NoBroker at about $200 million, a person familiar with the matter told TechCrunch. Existing investors SAIF Partners and BEENEXT also participated in the round. NoBroker has raised about $71 million in capital to date, it said in a statement.
NoBroker, which operates in Bengaluru, Chennai, Gurgaon, Mumbai and Pune, has quickly emerged as one of the largest players in the real estate business. It operates over 2.5 million properties on its website and has already served more than 6 million users to date — up from 1.5 million customers two years ago. The startup helps Indians looking for an apartment avoid the brokers — hence the name NoBroker — and connects them directly to property owners.
Real estate brokers in India, as is true in other markets, help people find properties. But they can charge up to 10 months worth of rent (leasing) — or a single-digit percent of the apartment’s worth if someone is buying the property — in urban cities as their commission.
Amit Kumar, CEO and cofounder of NoBroker, told TechCrunch in an interview that the startup will use the fresh capital to expand its operations in the nation. “This current funding round will support us in our plans to expand our operations. Our objective is to accelerate customer and deal-closure growth and continue to deliver value to customers across the country. We will also invest in our home store and financial services products,” he said.
Kumar said the startup, which generates revenue in two ways, is increasingly reaching profitability. First, it lets non-paying users get in touch with only nine property owners. Those who wish to contact more property owners are required to pay a fee. Second, property owners can opt to pay NoBroker to have its representatives deal with prospective buyers — in a move that ironically makes the startup serve as a broker.
As noble as NoBroker’s mission sounds, its path to expansion is filled with challenges. The startup is competing with a number of players including heavily backed NestAway, which counts Goldman Sachs and Tiger Global among its investors. NestAway operates in eight cities and has raised north of $100 million to date. Budget hotel startup Oyo, which now counts Airbnb as an investor, also entered this space with Oyo Living. India’s real estate industry is estimated to grow to $1 trillion in worth by 2030.
Besides, there are some other local challenges. Brokers are unsurprisingly not happy with startups such as NoBroker and have grown hostile in recent years. They continue to attack and harass NoBroker employees. So much so that the startup had to delist its address from Google Maps.
“We have been extremely impressed by the strength of the NoBroker team and their relentless focus on using technology to create an improved user experience in the large real estate market in India. We look forward to supporting them in their journey of making real estate transactions easier and convenient,” said Sharad Bhojnagarwala, VP of General Atlantic, in a prepared statement.