The firm is looking to expand to northern India, invest in mobile commerce and incorporate more features on its website
The company that owns real estate classifieds portal IndiaProperty.com is raising over $50 million to fund expansion plans, a top executive said.
Existing investors are participating in the programme, said Ganesh Vasudevan, chief executive officer of Chennai-based India Property Online Pvt. Ltd.
“The money is being raised to support scale-up of the business further in terms of expanding to newer geographies, new products, technology investments and potential acqui-hire," Vasudevan said.
Acqui-hiring refers to buying a firm primarily to acquire its talent base and not its products or services. India Property is looking to close such an acquisition in the next few months, Vasudevan added.
IndiaProperty.com, which is currently focused on south India, is looking to expand to the northern parts of the country. It will also invest in strengthening its mobile commerce sales and incorporate more features on its website.
In December 2013, the company had raised $12 million in a series B round, led by Bertelsmann India Investments (BII), along with existing investors Canaan Partners and Mayfield India. So far, the firm has raised $19 million.
BII, which focuses on investments in the digital, education, media and services sectors, is the strategic investment arm of German media company Bertelsmann SE and Co. KGaA in India.
Recently, JP Morgan Asset Management acquired the India portfolio of Canaan Partners, which was one of IndiaProperty’s initial investors, said two people familiar with the development. JP Morgan, in an emailed statement, declined to comment on the acquisition.
IndiaProperty earns money by providing assisted home search services to customers, besides advertising and marketing initiatives with developers.
According to VCCEdge, the financial research platform of VCCircle, online real estate classifieds companies collectively, raised $140.06 million in 2014. Most of it went to Locon Solutions Pvt. Ltd, which runs Housing.com, which raised $113.78 million across three rounds of fund-raising from various investors, including SoftBank Corp. of Japan.
In January, Cryptopy Technologies Pvt. Ltd, which owns Grabhouse.com, raised $2.5 million in seed capital from venture capital funds Kalaari Capital Fund II and Sequoia Capital India IV Ltd. With increasing Internet penetration and rising willingness to explore and buy property online, real estate portals have picked up in the last couple of years.
“Unlike in the past, we are seeing substantial venture capital funding based on the expectation that housing demand will increase going ahead, given the housing shortage in the country," said Anshuman Magazine, chairman and managing director of CBRE South Asia Pvt. Ltd, a property consultancy firm.
Many portals are investing to create 3D models of housing spaces and virtual viewing options through special devices, apart from assisted self-services and new products such as home insurance for under-construction projects.
“Entry barriers in this segment are low, but competing and sustaining in this market requires a lot of effort. Private equity funding has helped these companies to improve their technology platforms and some of them are seeing good traction; but, overall, the space is still a very small size of the market as of today," Magazine added.