Backed by SAIF Partners, NoBroker wants to eliminate the system of brokers when buying, selling or renting real estate in India. In the next three to five years, it aims to cover at least 70 per cent of the US $2 billion brokerage market in the country
When management graduates, Akhil Gupta and Amit Kumar, turned first time entrepreneurs with NoBroker their goal was quite simple; to eliminate the brokerage system when buying, selling or renting real estate in India. Of course, they always had in mind that their business had to be impactful and the idea came to life when they personally experienced the travails of finding a good home in Bengaluru through a broker. “The first few homes we were shown (by a broker) when we moved into the city were quite downtrodden. He even tried to convince us that these were good options because he would get a higher commission if he pushed the non-fast moving deals quickly,” recalls Kumar.
We can always spend some money and gain width (geographical expansion), but gaining depth (more customers in same cities) is something which is more meaningful to our existing customers. More depth means the ability to monetise will also increase. And, sooner or later, every investor is bound to ask every startup about business profits.
Frustrated by the flawed system, they engaged in research for the next few months, having conversations with buyers, owners, industry experts and brokers themselves, to understand the pain points which needed to be addressed. Soon after, in March 2014, they launched the technology platform where buyers and sellers (or owners and buyers) could connect directly. “We are talking about a US $2 billion brokerage market here. We want to claim at least 70 per cent of it,” claims Gupta.
In the early stage, the company’s positioning was quite articulate; to skip the middlemen in the process of purchasing or renting homes and to give the potential buyer a wider access pool to real estate than a single traditional broker would. “We also developed a proprietary algorithm to scan the owner and the buyer’s social footprint within two minutes of their registering on the platform, to verify their genuineness,” explains Gupta. While it began as a free portal for both owners and buyers, it has now entered into a subscription-based model, offering free registration for the owners and a Rs. 999 and Rs. 1,999 fee per year for the buyers. Not just that. The platform now has an upgrade feature wherein a customer can opt for a relationship manager to assist in property buying or selling and view the number of clicks, views and ratings on a property to make informed decisions.
Currently active in Bengaluru, Chennai, Pune and Mumbai, it has 7,00,000 active users on the platform, and adds 2,000 new home-seekers and 1,000 new properties every day. “We are looking at a steady growth and we might be exploring global markets like South East Asia in the next two to three years,” cites Gupta.
Soon after its launch in 2014, Kumar recalls him and his team walking across streets, trying to identify real estate they can list on their platform. “Once we approached a few owners and enlisted them on NoBroker, we thought, why not crowdsource more customers through a refer and reward policy?” he shares. Hence, after the launch of their Android mobile app in June 2015, the team introduced a ‘Click & Earn’ policy, wherein every time a user clicked the photograph of a To-Let or a For Rent Board, the referrer would earn Rs. 100 after the notice was verified by the team. “Effectively, we didn’t have to spend additional money in hiring new employees. Our customers base became our remote employees through this system,” says Kumar.
While this was a successful model, signing new customers did pose a significant challenge to the team in the initial stage, primarily because the owners are typically between 45 and 60 years of age with limited access and use of the Internet and technology. To tackle this, NoBroker introduced a Whatsapp Listing option, where all a customer has to do is send a message to a Whatsapp number and the customer support team would call them for further details and create a login for them.
Curating a need-based service
As the company scaled and entered into other cities, it also began introducing need-based features on its platform including paperwork and documentation services relating to lease agreement registrations, bank franking, police verifications, society approvals and such. “When we entered cities like Pune and Mumbai, we realised that getting an agreement in place is a cumbersome process. Hence, we introduced this feature wherein we could complete the necessities on behalf of the customer for a service fee in three working days,” explains Gupta. Owing to its model of eliminating the middlemen in real estate, in September 2015, the office was also attacked by a mob of brokers who claimed that the model was robbing them of their livelihood.
Seeking external investments
During the founding year, the company raised an undisclosed amount of angel funding from Saurabh Garg, the co-founder and director of Four Fountain Labs, who later came on board the company as a co-founder and mentor. Later, in February 2015, it raised a Series A of US $3 million from SAIF Partners (and other investors) and followed it up with a Series B of US $10 million in February 2016. The latest round was led by BEENEXT & Digital Garage, along with other investors namely BEENOS, Qualgro, Mamoru Taniya of Asuka Holdings and existing investors, SAIF Partners. “One of the primary reasons we were able to attract a good set of investors was because of the strategic support we received from Garg,” notes Gupta.
Interestingly, instead of spending the money on rapid growth and expansions the company has kept the Series B round funding and a portion of the Series A round in debt funds across various maturities, on an annual return of 7.5 per cent. “Given the scale at which the product is being consumed, we realised that real success of our venture lies not in just customer acceptance but in delivering financial profits for our shareholders as well. We believe this is the right time for us to focus on monetisation rather than just growing customer base. Our focus now is to chase profitability,” says Gupta.
In the last one year alone, NoBroker claims to have grown 15 times in terms of website visitors, registered users and property listings. In fact, the company also has an eye on the global markets, which it plans to enter in the next two to three years. What remains to be seen is, just as the movie or travel booking industry has evolved today (with the need for agents coming down drastically), can NoBroker manage to eliminate the business of brokers in India?
Founders: Amit Kumar, Akhil Gupta and Saurabh Garg
Concept: A platform free of brokers to buy, sell and rent real estate
Investors: Saurabh Garg, SAIF Partners, BEENEXT & Digital Garage, BEENOS, Qualgro, Mamoru Taniya of Asuka Holdings
Impact in Numbers
- 15 Times: 2015 company growth in terms of website visitors, registered users and new property listings.
- US $2 Billion – Brokerage market in India
- US $ 200 Billion: Global residential rental brokerage market