Ratan Tata-backed home rental startup NestAway Technologies Pvt. Ltd was in news earlier this year when it bought rival Zenify.in to ramp up its offerings for families. With the acquisition serving its intended purpose, NestAway now has its sights set on breaking even and achieving profitability, co-founder Deepak Dhar told VCCircle in an interview. In that quest, said Dhar, the company will eschew distractions like getting into sale or purchase transactions or consulting. Excerpts:
How are you doing financially?
We are currently doing over $4 million (Rs 26 crore) a month in rentals.
NestAway isn’t like the typical e-commerce company, which spends on customer acquisition hoping to generate revenues later. Fortunately for us, the dynamics and economics are good. At a per-house level, we are doing well.
We are not going to be a 100-city phenomenon anytime soon. We are looking at 8-10 top cities, where we will have greater penetration. We divide cities zone-wise, and some of our earliest zones are positive from the revenue perspective.
Overall, we will attain profitability this way rather than subscribing to the e-commerce model, which first looks to acquire a user base of 1 million.
You acquired Zenify.in to ramp up the family rental segment. How has it played out?
We have started getting more business from family rentals. As much as 5-10% of our overall bookings now come from it, which means its share has risen over last year. About 40% of our new bookings come from the family segment. The ratio now stands at 65:35 for shared versus family rental houses.
As for the acquisition, the transition has been smooth. Zenify’s old management is still running it. We are trying to get Zenify to adopt the NestAway model of doing business.
Do you plan to diversify to other segments such as property sale, brokerage or consulting?
We have a long way to go in what we do. To take off as a platform business, we would need at least a lakh home-owners and a lot more tenants. We are currently at 10,000-13,000 owners and close to 30,000 tenants. We will not get into sale or purchase before we meet our goal of a lakh houses.
Though we get a lot of requests for consultation, we don’t want to lose our focus. We are not trying to monetise it right now. Having said that, we are willing to try anything that facilitates our current business.
You last raised money in April 2016. What kind of runway do you have?
We have sufficient funds for 6-7 months. If we need more, we will go to the market.
You have been looking to raise $30-50 million. Have you made any progress?
Fortunately, there is a lot of inbound interest. But for us, it is more about the positives the investment brings than the money itself.
With the capital we raise, we intend to create new technology assets that will facilitate our business in new markets—systems to predict rentals, data analytics etc. We also want to make sizeable investments in smart homes, and have already done some pilots.
Aside from these, we won’t look at any new areas for the next 9-12 months. We want to better what we already have.
Could you shed some light on the potential investors?
Our current investors continue to be interested. At the same time, we are open to new investors who can bring in fresh ideas.
There are likely to be some new investors when we raise capital next.
Online realty saw some consolidation in 2016. At the same time, older players like MagicBricks, 99acres and IndiaProperty have withstood competition while niche players like NestAway and NoBroker have got VC support…
The old segment that existed was classifieds. NestAway is not competing with either classifieds players, or the likes of Housing or NoBroker. We are trying to build a full stack renting model.
Besides, there is a fundamental difference between companies that simply do listings and us. NestAway employees need to look after their property portfolio—they lose sleep if their properties are not rented out, or when occupancy drops by a sizeable percentage.
We are creating our own category and hence no listing business can hurt us.
Where do you see yourself in this dynamic market where multiple niche and horizontal players operate?
We are very unlike-listings. Owners who come to us want us to help them manage their property. There are a lot of people who want to take the DIY approach to renting put property.
If synergies are needed, we are open to advertising with listing companies.
When do you think you will break even?
We are looking at about 50,000 houses to break even, which we are targeting by 2020. This is a business that promises returns even in the short term.
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