BackGrabhouse to raise $5-8 million from existing investors
The firm is looking to expand its business to 10 more cities in the next six months
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Mumbai: Online rental accommodation classifieds company Grabhouse.com is looking to raise $5-8 million in fresh capital from existing investors and expand its business to 10 more cities in the next six months, according to a top company executive.
Backed by venture capital funds Sequoia Capital and Kalaari Capital, Grabhouse raised close to $2.5 million in January this year. India Quotient, an early-stage investment fund, also invested an undisclosed amount in 2014.
Cryptopy Technologies Pvt. Ltd, the company that runs Grabhouse, is likely to close the deal in the next 10 days, according to a person close to the development who requested anonymity.
The Bengaluru-based company, which is currently present in Mumbai, Bengaluru, Pune and Hyderabad, is eyeing tier I and tier II cities as well, said Pankhuri Srivastava, co-founder of Grabhouse.
The company lists rental properties without involving brokers. “Users put in their detailed preferences and our system suggests leads from properties listed with us. The first two leads are free, but to view additional leads, the user has to pay ₹ 99-2,000 as fee," said Srivastava. The fee depends on the locality, availability of the property and the user’s budget.
Founded in 2013 by Srivastava and Prateek Shukla with an initial investment of ₹ 5 lakh, the company is now betting on its next phase of growth. The company has raised more than $2.5 million since it started.
“The funds were used to run our pilot projects, hire technology teams and validate the product," said Srivastava. The firm is looking to have a team of 200 people by the end of this year.
Grabhouse has also entered the paying guest (PG) accommodation vertical. It has listed 8,000 PGs in Bengaluru and is looking to expand to other cities as well.
The idea of Grabhouse was conceived when Shukla and Srivastava were working as volunteers with the Teach for India programme in Mumbai. At the time, they struggled to find rented accommodations without the intervention of a broker. “The existing sites have incomplete information and details because the property is listed through brokers. Almost 90% of the transaction process, post the listing on the site, happens offline. So when users actually see the property, they are not satisfied," said Srivastava.
The company allows property listers (who are either owners of the property or family members who help in the listing process) to create profiles and charges ₹ 1,000-5,000 for suggesting specific leads.
According to Ashutosh Limaye, head of research at real estate investment management firm Jones Lang LaSalle, rental activity in India has been rising considerably.
Grabhouse lists 2,000 new properties on a daily basis (the system is updated daily to screen out properties that are not available and add new ones). On an average, it carries out 200 transactions per day.
Adequate funding and a product that allows data analytics are a must for such start-ups to compete with other firms, said Limaye. “99% of the rental home market is unorganized," he said.
Grabhouse competes with companies such as Housing.com, Proptiger.com and Commonfloor.com.
Real estate’s contribution to the gross domestic product is expected to be 13% by 2028. In absolute terms, the size of the sector is expected to touch $853 billion by that year, according to a report by KPMG. The report also states that each year, 10 million people move to cities, which is pushing up demand for rented and new homes.
The online classifieds markets in India was valued at ₹ 896 crore in December 2014, according to a March 2015 report by the the Internet And Mobile Association of India.
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