Mumbai: Student housing rental startup Stanza Living is in talks to raise up to $50 million in a fresh round on the back of significant inbound interest, said two people aware of the matter, requesting anonymity.
Its existing investors, Sequoia Capital, Accel Partners and Matrix Partners, will participate in the round, said one of the two people mentioned above. Mint could not immediately ascertain the names of the new investors, but US- and Asia-based private equity funds and hedge funds are among those vying to lead the round, the person said.
Stanza, founded by Anindya Dutta and Sandeep Dalmia, offers fully furnished homes for college students with housekeeping, internet facilities and added services such as laundry, doctors and a concierge. It started in Delhi and Greater Noida and has expanded to Bengaluru, Pune, Hyderabad, Chennai, Indore, Vadodara and Dehradun this year. Its monthly rentals range from ₹7,000 to ₹20,000.
Stanza said on Tuesday that it has raised $4.4 million in debt from Alteria Capital, a venture debt firm. This takes the total capital raised by the two-year-old firm to nearly $17 million. Accel and Matrix had invested $2 million in its seed round in November 2017. It had raised another $10 million round led by Sequoia last September.
Sequoia declined to comment, while Accel, Matrix and Stanza did not respond to e-mails seeking comment.
For the current fiscal year, Stanza, run by DTwelve Spaces Pvt. Ltd, will report revenues of ₹20 crore, which it plans to grow to ₹150 crore by the end of the next fiscal year, said the second person, aware of the startup’s plans. Stanza is profitable at the unit level and does not immediately need the money it is looking to raise, the person said. The startup aims to have 100,000 beds registered under its domain by 2021. It has 15,000 beds at present, he said. Stanza caters specifically to student housing.
However, the broader co-living market has seen rising investor interest, as startups look to tap into a fragmented and unorganized market. Another student housing startup, OxfordCaps, which provides housing facilities in India and Singapore, announced on Tuesday that it has raised $8 million from Times Internet, Kalaari Capital and Silicon Valley-based 500 Startups.
Co-living and home rental startup Zolostays had raised $30 million in January from IDFC Alternatives, Mirae Global Asset Management and Nexus Venture Partners, while Mint had reported on 15 February that home rental startup NestAway is talking to Chinese investors, such as Fosun and Shunwei Capital, to raise $100 million. The country’s largest hospitality startup, Oyo Rooms, which has amassed a war chest of nearly $1 billion, launched its housing rental arm Oyo Living late last year. It aims to expand to the top 10 metros by the end of 2019 and offer more than 50,000 beds.
Co-living as an alternate to student housing is also a way for operators to increase occupancy and renewals, especially until India’s student housing inventory develops.
Cities such as Pune, Bengaluru, Hyderabad and Chennai, as well as the National Capital Region, are well-positioned to tap into the co-living market, according to a report from Knight Frank. This is evident from the gross enrolment ratios of students and job opportunities created as a result of expansion by occupiers across IT, BFSI, FMCG, telecom and media and other sectors.
However, it would be best to avoid presence in towns or cities that are heavily dependent only on education as a hub to attract millennials, according to the report. That said, the unmet demand for student housing is also a huge opportunity for the co-living sector as the end-user segment for student housing is also a subset for the co-living sector’s overall demand universe, it said.