Exclusive: NoBroker raises $29 Mn from General Atlantic

Continuing its fundraising spree, online real estate rental startup NoBroker has raised another $29 million or Rs 216.13 crore in a fresh round led by General Atlantic. This is the third round of investment by the Singapore-based private equity firm in NoBroker.

General Atlantic had invested $50 million in NoBroker’s Series C1 back in June of 2019. Four months later, it participated in another funding round led by Tiger Global in the subscription-based house hunting platform.

The C2 round seems to be an ongoing one and it could see more investments.

Following the fresh fund infusion, General Atlantic has become the largest stakeholder in NoBroker. According to fresh regulatory filings, it now controls 30.89% stake in the company while SAIF Partners and Tiger Global command 20.08% and 10.17% respectively. 

The six-year-old startup’s co-founders Amit Kumar, Akhil Gupta and Saurabh Garg have diluted their combined shareholding to 18.97%. According to Entrackr’s calculation, NoBroker has been valued at about Rs 2,790 crore ($372 million) after this investment.

NoBroker’s financials in FY19

The fresh capital for NoBroker has come after it posted its financial results for FY19. During the year, the company’s operating revenue grew 2.1X to Rs 18.07 crore from Rs 8.6 crore in FY18 with subscription income being the biggest contributor comprising 85.2% of the revenue.

The company, which also provides end-user services such as house maintenance and packers & movers, has registered the biggest growth in its rental agreement service. Income from rental agreement services grew almost tenfold to Rs 1.08 crore in FY19 when compared to the previous fiscal.

However, the company burnt a huge pile of cash to achieve the growth in scale. During FY19, total expenses surged by 40.4% to Rs 63.56 crore from Rs 45.3 crore in FY18 with employee benefit expenses of Rs 36.4 crore making up 57.3% of the total expenditure. 

During the same period, NoBroker’s CDO and cofounder Saurabh Garg saw his salary swell by 3.4X and he received ESOP benefits worth Rs 2.35 crore. 

Even with the increase in scale, the accelerated rate of cash burn caused the company to lose Rs 46.53 crore in FY19, growing by 48.4% as compared to losses of Rs 31.35 crore in FY18.

The profound interest of venture capitalists, private equity investors and hedge funds in NoBroker indicate that investors see a huge potential in subscription-based real-estate. The reason for their belief in such a model has emerged after the dismal performance of advertising and lead generation-led plays in the segment. 

Companies such as 99acres, Magicbricks, PropTiger, Housing, Quikr and OLX have been struggling and to a large extent failed to solve the pain of house hunting. Despite raising a significant amount of investments, these companies have barely impacted the unorganised sector led by brokers.