India's Droom secures pre-IPO funding at $1.2b valuation

Commitments came from a combination of new and existing investors, with 57 Stars and Seven Train Ventures among the new entrants. The company said in a statement that it is looking to list on NASDAQ or on an Indian bourse in 2022.

A surge in technology IPO activity is expected in India, with online food services platform Zomato raising INR93.7 billion ($1.26 billion) through a domestic offering last week, and digital payments players Mobikwik and Paytm filing to list on the same exchange. Various others, including Lenskart, PolicyBazaar, Delhivery, Ola, Flipkart, and Nykaa, are poised to follow suit.

With government approval for direct listings in the US still pending, the domestic markets – traditionally skeptical about unprofitable internet companies – have emerged as a viable option. This is driven by a better understanding of business models and a desire to participate in a global technology boom that has been accentuated by COVID-19 enforced changes in consumption habits.

Founded in 2014 as an online marketplace for cars and two-wheelers, Droom now claims to process 80% of all online automobile transactions in India. Its platform covers the B2C, C2C, C2B, and B2B segments, offering more than 600,000 vehicles, including cars, motorcycles, scooters, electric vehicles, and even planes. Warranty, maintenance, breakdown, insurance, and lending services are also provided.

The company is on course to reach $2 billion in gross merchandise value (GMV) and $65 million in revenue for the 2021 calendar year. It is nearing profitability.

Droom has a presence in 920 cities across India – making it the country’s largest hyperlocal marketplace – and works with over 300,000 auto dealers. The platform has 45 million monthly visitors, and its app has been downloaded nearly 12 million times. The company has expanded into Singapore, Thailand, and Malaysia, and its orange book value vehicle pricing engine is available in 38 countries.

Prior to the pre-IPO commitments, a total of $125 million had been raised across six funding rounds, according to Droom’s website.

Lightbox Ventures and Beenos provided $15.6 million in Series A funding in 2015 and then Digital Garage led a $30 million Series B the following year, which also featured Beenext Capital Management. In 2017, Lightbox, Beenext, Digital Garage, and Hong Kong-based Integrated Asset Management participated in a $20 million Series C, AVCJ Research’s records show.

Digital Garage and Toyota Tsusho, a division of Toyota Group, led a $30 million Series D in 2018, with the family office of Joe Hirao, founder of Japanese media platform ZigExN, playing the same role in a $30 million Series E later the same year.

Droom is one of several Indian VC-backed marketplaces that sell used and new vehicles. Competitors include Spinny, CarTrade, CarDekho, and Mahindra First Choice Wheels. Last week, Spinny raised $108 million in Series D funding led by Tiger Global Management and US-based investor Avenir Growth.

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• Topics
• South Asia
• Expansion
• Technology
• Consumer
• India
• Growth capital
• automobiles
• TMT
• 57 Stars
• Beenext Capital Management