Gurgaon-based online automobile marketplace, Droom, has raised an undisclosed amount in its series B round of funding led by BEENEXT, a Singapore-based early stage technology fund and Digital Garage of Japan. Existing investors LightBox Ventures and Beenos also participated in this round.
A couple of new investors from Japan and China also participated in this round of funding. As per Sandeep, the amount raised is significantly higher than the series A round raised last July. Earlier, there were reports that Droom was looking to raise over INR 200 Cr.
The proceeds will be used for strengthening its position in the online market for automobiles in India, to make the platform more scalable and functionally rich, adding more business lines, expanding the sales teams, and for international expansion particularly in Southeast Asia (Singapore, Vietnam, Malaysia, Philippines etc).
Founded by Ex-Shopclues CEO, Sandeep Aggarwal in April last 2014 along with Rishab Malik, Droom, allows one to buy and sell used and new automobiles. Last July, it raised about $16 Mn in a funding round led by Mumbai-based LightBox Ventures & Japanese internet firm Beenos. Droom had raised two seed funding rounds before, one of which was raised in May 2014 and the other one in October 2014.
In March this year, Droom launched an auto inspection app Eco in association with Carnation Auto, aimed at improving the transparency and authenticity of automobile checks, and thereby increasing buyer’s confidence before buying a used car. The 150 member Droom team is also working on formulating a Car history repository called Droom History, which will be similar to US-based CARFAX. Last September, it also launched Quicksell – India’s first C2B (Consumer to Business) marketplace.
Sandeep stated, “We have been witnessing tremendous growth over the past 16 months in terms of adoption by sellers, number of categories and listings, geographical presence in 142 cities across India, and GMV/transactions. Droom is permanently changing how automobiles should be bought and sold online by creating tools for 21st century for trust, transparency, pricing, and convenience. We are delighted that BEENEXT and Digital Garage have liked the Droom journey so far and the future potential, and decided to lead the round.”
Cracking The $125 Bn Market
Talking to Inc42, Sandeep agreed that while the funding environment is tough this year, Droom was lucky to get the support of the investors on account of the market they have chosen to be in. Given the fact that India is the third largest automobile industry in the world, there is much truth to the argument. The automobile market in India is pegged at $125 Bn. However only 3% of it is currently online. The market is expected to reach $250 Bn by 2020 and online penetration is expected to hit 8% by then. Droom is aiming to touch 50% of the online auto market by 2020.
Currently, Droom has over 47k+ sellers, over 57k+ listings on its platform, 23.6+ products in 16 categories, 1.74 Mn community members and has a listed GMV of INR 2326 Cr. The app has recorded downloads to the tune of 2.47 Mn. Over 3.2 Mn visitors visited its site last month with mobile driving 65% of this traffic.
Droom is the only marketplace in India which follows all four models of operating, i.e. B2B, B2C, C2C, C2B. As far as revenues are concerned, it charges minimum cut for the transactions done through its platform which varies from service to service. Such as, on sale of cars it takes 1.5%, for two wheelers – 2%. Whereas for services like Eco, it charges 15% and for rest of automobile services such as insurance and warranty it is about 12%. It also has a subscription plan for sellers, where it charges INR 15K for offering value added services. Also, in plans are advertising opportunities for bigger sellers.
It faces indirect competition from classified companies like OLX, Quikr, Carwale, Cardekho.com and others like Spinny, and Zoomo. Sandeep however does not see the online classifieds sites as competition as Droom is transaction based, differentiating it from its competitors. In the pipeline, are plans to reach 200 cities, a listed GMV of $1 Bn, and 100k B2C sellers by 2017. By 2020, it aims to grow to 250k sellers with a GMV of $8 Bn. Interestingly, Sandeep’s earlier venture Shopclues, which he had to exit on account of insider trading charges levelled against him, now stands valued at $1.1 Bn with its latest round of funding in January. Shopclues also counts BEENEXT as one of its investors.
Besides Droom, BEENEXT has invested in more than 40 Indian startups. This year it has invested in Bangalore-based P2P rental marketplace NoBroker, Bangalore-based logistics management startup Locus, Mumbai-based technology recruitment marketplace WorkIndia, and Noida-based ecommerce marketing software startup Betaout.