Quikr buys Grabhouse in all-stock deal
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Bengaluru: Online classifieds company Quikr India Pvt. Ltd has acquired home rental start-up Grabhouse in an all-stock deal.
The two companies didn’t disclose the size of the deal, but three people familiar with the matter said Quikr paid $10 million for the start-up. They spoke on condition of anonymity, as the terms of the deal were private.
The move is likely to bolster Quikr’s so-called verticalization drive, under which the company has identified five key segments—automobiles, real estate, jobs, services and customer-to-customer sales—to explore new sources of revenue and fend off competition from other start-ups that have emerged in each of these categories.
“We are very excited about the launch of our managed rentals model—it brings convenience to consumers while eliminating cash from property rentals, and we are excited to start it with the acquisition of Grabhouse,” Quikr chief operating office Atul Tewari said. “Our business here will also benefit from unique competitive advantages as the Grabhouse target market has a great match with many of our other businesses such as C2C and bikes. On the cost side, the operational costs of the business will directly get shared with our services business.”
Grabhouse (Cryptopy Technologies Pvt. Ltd), backed by India Quotient, Sequoia Capital and Kalaari Capital, has been scouting for a buyer for some time now, as the company struggled to scale fast and consequently lost the confidence of existing investors. The company was also in talks with bigger rival NestAway Technologies Pvt. Ltd and budget hotel aggregator Oyo (Oravel Stays Pvt. Ltd), Mint reported on 12 September.
The company, founded by Prateek Shukla and Pankhuri Shrivastava in March 2013, has so far raised about $13 million, the last being a $10-million round from Sequoia Capital and Kalaari Capital in October 2015.
“Talks with NestAway did not materialize finally, mainly because their (Grabhouse) scale of operations was not very significant. NestAway, for instance, has at least five times more inventory then Grabhouse. Their inability to scale cost them hard. Despite Grabhouse having about $2 million left, investors chose to sell it off,” said one of the three people cited above.
Grabhouse did not scale up as per expectations because of competition from the likes of NestAway and NoBroker, which have raised significant amounts of funding in the past six months, this person said.
For instance, NestAway has raised about $43 million from Tiger Global Management; IDG Ventures India; Yuri Milner, founder of venture capital firm DST Global; and Ratan Tata, chairman emeritus of Tata group, among others. NoBroker has received about $13 million from SAIF Partners, BEENEXT, Beenos Partners and Digital Garage, among others.
In December last year, Grabhouse had laid off at least 100 employees following a restructuring process. Currently, it operates in 11 cities, including Bengaluru, Mumbai, Delhi, Gurgaon, Chennai and Kolkata.
Quikr chief executive Pranay Chulet said listings on flats for rent on QuikrHomes, its home vertical, and subsidiary Commonfloor will be made available on GrabHouse, which will continue to function independently.
“We will have synergies as the inventories on QuikrHomes and Commonfloor will be available on GrabHouse. Besides we can also sell QuikrServices (the company’s home services vertical) to customers coming on Grabhouse,” said Chulet.
Quikr, which has so far raised $346 million from investors such as Tiger Global Management, Warburg Pincus and Norwest Venture Partners, among others, is growing beyond a listing platform to a one-stop shop for used goods by enabling payments on its platform, as well as facilitating logistics, a move likely to throw open additional revenue channels.
Quikr posted net sales of Rs41.24 crore for the fiscal ended March 2016 as against Rs24.78 crore in the year ago, according to documents filed with the Registrar of Companies, and commands a valuation of $1.5 billion.