NoBroker, an Indian start-up meant to ease the process of leasing or buying an apartment by taking out the brokerage fee, said on Wednesday that they raised $50 million in a new financing round.
Tiger Global Management led the Series D round for the Bangalore-based real estate property operator where General Atlantic also participated. Just five years old, NoBroker has already raise $121 million, leaving its value at about $325 million according to a person familiar with the matter.
Operating in six Indian cities – Bengaluru, Chennai, Gurgaon, Mumbai, Hyderabad and Pune – NoBroker is now one of the biggest players on the field of local real estate business with over 3 million properties and 7 million users and more being added to the number daily.
In fact, it adds over 280,000 new users each month, according to an interview with Amit Kumar, co-founder and CEO of NoBroker.
The real estate brokers in India help people find properties, but, for commission, they can charge up to 10 months’ worth of rent, or a percentage of an apartment’s worth if someone is buying.
With NoBroker, however, the property owners are able to directly connect with potential tenants or buyers without the expensive middle man.
First, the non-paying users can contact up to 9 property owners before paying a fee to contact more. Second, if they want, property owners can have NoBroker representatives deal with prospective buyers, just as a broker would do!
Finally, the company offers optional end-to-end services like rent agreements, home loans, movers, and packers for a fee. To make all these transactions faster and cheaper, NoBroker says it uses machine learning.
Kumar said that currently, the start-up processes around $14 million in rent each month, but this number is steadily increasing by 25%-30% each month. In Bangalore and Mumbai, two of NoBroker’s largest cities, the company is already turning a profit.
The capital will be put right back into the business to expand it and build more products, like the community and digital management app it recently launched to keep a digital log of all the entries happening within a society as well as maintain a dialogue with other people in it.
In addition, the app enables users to exchange goods and pay utility bills.
The new financing round is smaller than the $51 million NoBroker had raised in June this year, for, according to Saurabh Garg, chief business officer of NoBroker, the founding team did not want to lessen their stake in the start-up. As a result, they simply chose a smaller round.
Companies like Proptiger, 99Acres, and heavily backed NestAway, which counts Goldman Sachs and Tiger Global among its investors, are NoBrokers competitors. Oyo, a budget hotel in NoBroker’s vicinity, has also quickly become one of the largest hotel businesses in the world.
Kumar, however, does not see other start-ups as competition but, rather, as “some of our largest clients,” he said. India’s real estate industry is estimated to grow to $1 trillion worth by 2030.
Brokers are not too happy with the business and have even grown quite hostile, presenting challenges to NoBroker. They have even attacked and harassed their employees so much that the company removed themselves from Google Maps. According to Kumar, however, this mindset is slowly but surely shifting.