Home >Companies >Start-ups >Droom races to unicorn status

MUMBAI : Droom, an online automobile marketplace, on Wednesday said it has closed the first leg of its pre-IPO growth funding round of up to $200 million at a valuation of $1.2 billion.

In addition to several existing investors, new investors, including 57 Stars and Seven Train Ventures, participated in the first closing of the round. The company said it is pursuing a dual-track for a possible initial public offering (IPO) and aims to be listed either on the Nasdaq or in India in 2022.

The company said it has seen strong growth in digital adoption during the pandemic besides an increasing consumer preference for ownership of automobiles. The company expects online penetration for automobile buying and selling to increase to 7% in 2025, up from 0.7% currently.

“Globally, we are seeing automobile buying and selling shifting online for both ICE (internal combustion engine) and electric vehicles. We think Sandeep and his team have built an impressive digital ecosystem that can revolutionize the automobile buying and selling experience," said Gene Pohren, managing director of 57 Stars.

While business was initially impacted due to the nationwide lockdown, Droom saw strong recovery and, by December, its transactions had passed the all-time peak seen in February, said Sandeep Aggarwal, founder and CEO, Droom, adding that the business has been growing every month since then.

“Our current annual run-rate is $1.7 billion for GMV and $54 million for net revenue. The company remains on track to touch a GMV of $2 billion and a net revenue of more than $65 million in CY (calendar year) 2021," he said.

Cars represent almost 90% of gross merchandise value (GMV), with two-wheelers making up the rest, while in terms of number of units sold cars are two-third and two-wheelers one-third of the units sold. Though Droom has primarily been a used vehicles platform, the company has started selling new vehicles too in the past three months.

“We sold new cars once in 2018, but then we stopped. Last three months, we have again started a new vehicles business, and it currently comprises 5% of the business. We are primarily a used car platform but after covid, OEMs (original equipment makers) started looking for online platforms for selling new vehicles and that’s how we restarted it," said Aggarwal.

“In coming quarters and years, new electric vehicles will be a very big opportunity for Droom because these companies want to sell EVs like how mobiles phones and consumer electronics is sold and we are the most suited platform for that opportunity," he added.

Services is another big focus area for Droom, as the company feels that this can help it significantly improve its margins.

“Services is not very big. Our monetization was primarily on the money made on the transactions executed on the platform. But this year, one big focus area for us is to attach loans and insurance on every transaction on the platform, that is a very substantial opportunity," said Aggarwal.

“Another service we are building is last-mile delivery. Besides that, we own a few tools in the ecosystem, such as one for used-vehicle pricing. We will monetize this also. So far, this product has been free," said Aggarwal.

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