Droom raises funds from Beenext, others
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New Delhi: Online marketplace for pre-owned automobiles Droom, run by Droom Technology Pvt. Ltd, has raised an undisclosed amount in Series B round led by Singapore-based early stage technology fund Beenext and Japan’s start-up investment and incubation firm Digital Garage, the company said on Wednesday.
Existing investors, including venture capital firm Lightbox and Beenos besides a few new and undisclosed Japanese and Chinese institutional investors, also participated in the round.
The company, which has raised close to $20 million until now, is believed to have raised about $25-$35 million in the current round, taking its valuation to around $200 million, according to three people aware of the development.
Droom declined to comment on the funding round or the valuation.
Droom was started by Sandeep Aggarwal in 2014, after he quit ShopClues, the e-commerce marketplace which he founded, in 2013 when he was arrested for insider trading in the US.
Droom will use the money to scale its operations within the country and also expand overseas. It will also expand its team and enhance its technology platform.
It targets to expand to 200 cities by 2017. The company expects to launch its international operations in Indonesia by October, to be followed by launch in Malaysia, Thailand and Philippines.
Singapore-based Droom last raised Rs.100 crore in July 2015 in a round led by Lightbox.
“India is the third largest automobile market after China and the US. It is a $125 billion industry with roughly $60 billion new and $40 billion used (automobile) and $25 billion of services like auto loan insurances, warranty, road side assistance inspection etc. And as per our estimate, 0.3% is online. We think this market will grow from $125 billion to $250 billion by 2020 and 0.3% will become 8%,” said Aggarwal.
Droom, currently has 47,000 business-to-customer sellers (B2C), 23,600 products and 57,000 listings on its platform. It claims it had 3,500 transactions in April.
Currently, the company is doing $160 million in annualized run rate of gross merchandise value (GMV or cost of goods sold) and targets that number to grow to $500 million by March 2017.
The company which has so far been selling used automobiles also plans to enter into a new automobile category and will launch the same in July. The segment will allow OEMs (original equipment manufacturers) to have their own brand stores where they can have videos, brochures and announcements. They will also be able to offer extended test drive to customers.
Droom currently gets 65% of its orders from the two-wheeler segment, 30% from car and the rest from services. The average ticket size in the scooters category is Rs.40,000 and Rs.68,000 in motorcycles category. In the cars segment, the price ranges around Rs.3.5 lakh.
The company is an end-to-end marketplace for selling used automobiles across categories such as car, bike, scooter, bicycles, super bikes, supercars, vintage scooters etc. Besides these, it also offers auto inspection, warranty, roadside assistance, rentals and services and repairs.
However, over 95% of its business currently comes from sale of second-hand vehicles. The company acts as a platform for buyers and sellers to connect and charges anywhere from 1.5%-2.5% commission on every transaction.
It plans to introduce two new products in the next two to five months to add more revenue streams. “We are working on a vehicle history database that will allow consumers to check records of any vehicle from the time it is manufactured to end of life. We are building our own database by reaching out to OEMs, police and other large repositories that store this information,” said Aggarwal.
It is also working on a financial product where in consumers will get access to insurance and loans on Droom’s platform.
The company competes with Girnar Software Pvt. Ltd run Cardekho which also raised an undisclosed amount of funding from Google Capital, a late-stage growth venture capital firm and existing investor Hillhouse Capital in March. Another firm Cartrade (MXC solutions Pvt. Ltd) last raised $145 million from Singapore state investment firm Temasek Holdings, US-based March Capital and existing investor Warburg Pincus in January.