Droom Bags $3 Mn To Fuel Its IPO Plans

SUMMARY

Automobile ecommerce platform Droom has raised $3 Mn in an undisclosed funding round co-led by India Accelerator and Finvolve

With the freshly raised capital, the company seeks to bolster its tech infrastructure, accelerate customer acquisition and expand its footprint in India

The investment will also expedite Droom’s decision to refile its initial public offering (IPO) papers in the ongoing calendar year

Automobile ecommerce platform Droom has raised $3 Mn (around INR 24.75 Cr) in an undisclosed funding round co-led by India Accelerator and Finvolve.

The round also saw participation from a clutch of angel investors, including Rayzon Solar founder Hardik Kothiya, among others.

With the freshly raised capital, the company seeks to bolster its tech infrastructure, accelerate customer acquisition and expand its footprint in India.

The investment will also expedite Droom’s decision to refile its initial public offering (IPO) papers in the ongoing calendar year, it said in a statement.

“With this investment, we are looking forward to supporting Droom in entering its next phase of growth, towards an impactful IPO and continued leadership in the industry,” said Ashish Bhatia, cofounder of Finvolve.

This year, there is an increasing IPO activity in India’s startup ecosystem. Several major companies are preparing to go public in 2025, with quick commerce unicorn Zepto expected to file draft papers by April, while EV manufacturer Ather Energy has already filed its DRHP to raise INR 4,500 Cr.

In the automotive space, CarDekho is reportedly in talks to raise INR 3,000-4,000 Cr through its public offering, positioning Droom’s planned INR 1,000 Cr IPO as part of a broader trend of automotive platforms seeking public market capital.

Founded in 2014 by Sandeep Aggarwal, Droom is an online platform in India for buying and selling new and used vehicles. Initially focusing on budget-friendly cars, the company shifted in 2022 to mid-premium and luxury vehicles, increasing its profit per vehicle from INR 40,000 to INR 1.6 lakh.

Droom has expanded its services to include car financing, software solutions, advertising, and car rentals.

To date, Droom has raised a total funding of around $296 Mn. Besides Lightbox, the company also counts 57 Stars and Seven Train Ventures among its backers.

Droom’s Second IPO Attempt: This will be Droom’s second attempt to go public. It initially filed a DRHP with SEBI to raise INR 3,000 Cr back in 2021 but later withdrew its IPO plans due to market volatility.

It also plans to raise INR 200 Cr in a pre-IPO round from existing and new investors in a bid to increase domestic shareholding in the company, mimicking the approach taken by IPO-bound quick commerce unicorn Zepto.

Droom reported a 35% decline in its consolidated net loss to INR 40.4 Cr in the fiscal year 2023-24 (FY24) from INR 62.1 Cr in the previous fiscal year due to lower expenses.

With the improvement in its bottom line, the Lightbox-backed company’s EBITDA loss went down to INR 37.2 Cr during the year under review compared to an EBITDA loss of INR 57.3 Cr in FY23.

However, EBITDA margin fell 21 percentage points year-on-year to -44% in FY24 as Droom’s top line took a hit. Its operating revenue slumped 66% to INR 85.4 Cr in the year ended March 2024 from INR 253.3 Cr in the previous fiscal year.

Evolving Auto Marketplace Sector: The Indian automobile market is experiencing growth, with India aiming to become the world’s largest automobile market by 2030, focusing on electric and alternative fuel vehicles, besides, the government supporting this with infrastructure enhancements and EV charging facilities.

The online automobile marketplace sector is seeing rapid innovation and expansion with major players like CARS24, CarDekho, Spinny, and Droom adopting AI and Metaverse to revolutionise sales and promotion.

Recently, CARS24 entered the new car market with an aggregator platform offering AI-powered buying experiences and real-time pricing.

India’s overall automotive market (including passenger and commercial vehicles) is expected to grow from 5.1 Mn units in 2023 to 7.5 Mn units by 2030, at a CAGR of 5.7%, according to a Research and Markets report.

Key trends driving this growth include integration of AI and AR technologies for enhanced customer experiences, increasing use of digital platforms, and consumer preference for the convenience and transparency offered by online transactions.