Startup Street: NoBroker's Investment & Growth Outlook
Transcript
00:00 Hello viewers, welcome to BQ prime.
00:01 This is Rishabh Bhatnagar and you're watching Startup Street.
00:04 Today we have Amit Kumar Agarwal with us.
00:07 He's the CEO and co-founder of NoBroker.
00:10 For the uninitiated, NoBroker is India's first
00:14 prop tech unicorn that became a unicorn back in 2021.
00:19 Welcome Amit to BQ prime.
00:20 - Thank you so much for having me.
00:23 - All right, for starters, Amit,
00:26 can you break down the revenue streams
00:29 that NoBroker also rank them in terms of the percentage
00:34 split of revenue that you get from each one of them?
00:37 - Sure, so the base, the core portfolio of NoBroker
00:42 is the real estate services.
00:44 So as a property owner or as a buyer or as a tenant,
00:49 you can come and you can post your property
00:50 on NoBroker for free and you can contact owners directly
00:54 without any broker in between for free.
00:57 But we also have premium packages in which we allow you,
01:00 in which we give you premium services
01:02 and in which we allow you to have top slot
01:04 on the platform, et cetera.
01:06 And which are available for a very affordable
01:08 couple of thousand rupees of flat standard fees.
01:12 So that contributes majority to our revenue.
01:16 What we also do is we also help our customers
01:19 to do packer and mover, shift their luggage,
01:22 help them in painting their home, getting their home clean.
01:26 And all of us, all of this,
01:27 we do it with the help of our partners.
01:30 So this is the second biggest source of revenue
01:33 in which customers take our help.
01:35 The third one is basically financial services
01:37 in which we help our customers get home loan,
01:40 get insurance for the movement, help them pay rent.
01:44 This forms a third portion.
01:46 - All right, can you do a revenue split also
01:50 in terms of percentage, a rough revenue split?
01:54 - So broadly 50% would be the real estate, co-real estate.
01:57 25, 30% would be backer mover and home services
02:02 and the remaining would be financial services.
02:05 - Great, great, thanks for that, Amit.
02:08 Moving on, NoBroker, the last known earnings
02:11 that you filed are for FY21.
02:13 You made about 166 crores top line.
02:17 These are standalone earnings that you filed.
02:20 On that, there was a loss of about 190 crores.
02:24 What do you expect for FY22?
02:27 I'm sure you know already internally what the situation is.
02:32 FY23 as well, and for the current fiscal,
02:35 because FY21 would have been a COVID hit year for you?
02:39 - Sure, so let the exact numbers be published.
02:44 They will be published very soon.
02:46 The audit is done.
02:47 And so you will know the exact numbers.
02:49 But broadly what I can tell you is that every year
02:52 we grow revenue at least by 100%.
02:55 Our aim is to basically grow them by 200%.
02:59 COVID slowed our growth,
03:01 but now we are back to 100% plus of yearly growth.
03:06 As far as FY23 and nowadays FY24 is concerned,
03:10 the focus is now to basically increase revenue,
03:14 but also achieve profitability.
03:16 So the aim is that slowly over the next 12, 18, 24 months,
03:21 how can we reduce the expenses in relation to the revenue
03:25 and move towards profitability?
03:27 So that is the balance that we are trying to achieve now.
03:29 - Right, so by what year or what quarter
03:33 are you looking at profitability and cashflow positivity?
03:37 - So our aim is that in the next 24 months,
03:43 we should be a bit deposited.
03:46 - All right, all right.
03:47 And that would be a sub 10 crore profit or more than that?
03:52 - So let's see that in the first month,
03:56 the objective would be sub 10 crore
03:59 and then the objective would be
04:00 to keep on increasing that number.
04:01 - Got it, got it.
04:03 Thanks for that.
04:05 Another question that I'd like to move on to is
04:09 what is the status of the funding
04:11 that you raised from Google?
04:13 I think that was a very interesting fundraise
04:16 that happened for you,
04:17 though it was small in terms of the capital raised,
04:20 it was only $5 million.
04:21 But I understood that it was more of a tech
04:25 and product led investment there.
04:28 - Sure, so while all other investors have focused a lot
04:34 in terms of what No Broker can do
04:36 for Indian ecosystem and real estate,
04:39 I think Google investment is pretty interesting
04:41 because we also have a division
04:42 which is called No Brokerhood.
04:45 And No Brokerhood basically competes
04:47 with players like Apartment Adapna Complex,
04:50 where the objective is to basically secure
04:52 the gated communities, those societies
04:55 with visitor management and ensuring that societies
04:59 are able to generate the maintenance bills monthly
05:02 and get paid.
05:03 And Google was extremely interested
05:06 because they saw the massive growth
05:08 that we are witnessing in this segment.
05:10 We are now into close more than 15,000 gated societies,
05:15 which corresponds to more than 30, 35 lakh of flats.
05:19 So the Google investment was primarily
05:21 as to how No Brokerhood and Google can work cohesively
05:25 to enlarge the Google ecosystem of tech.
05:29 - Right, right, very interesting.
05:33 Moving on, Amit, you have a very star studded cap table,
05:38 if I must say, there's General Atlantic,
05:41 there's Tiger Global, there's Google that we spoke about,
05:44 there's Elevation Capital.
05:45 What's been the communication like between you,
05:50 the management and the investors,
05:52 given the sort of funding environment that there is,
05:55 there's this renewed stress on the path to profitability.
05:59 What are investors telling you?
06:00 What's the communication been like?
06:02 - So first of all, I must basically admit
06:06 that Indian online real estate
06:09 has been a pretty tough industry
06:10 from a historic perspective.
06:12 In the past 10 years, you would have noticed
06:14 that there are many players which have come.
06:17 And right now we are the only player
06:20 which has touched the unicorn status.
06:23 Although many people ask as to why isn't there a DecaCon yet
06:28 in the makan of the Roti Kapra Makan.
06:31 And I hope that No Broker will be able
06:33 to achieve that status one day.
06:35 But this industry has been difficult.
06:36 And I think it has been our very ground up approach
06:41 and a very frugal approach
06:42 that has enabled us to reach this stage.
06:46 So our approach has always been very frugal.
06:48 The money that we raised almost one and a half years back,
06:52 majority of that money is still in the bank.
06:54 And the communication from us to the investors is
06:58 that it is evident that we have to achieve profitability.
07:02 And as the saying goes, never let a crisis go waste.
07:07 So we think that this funding winter
07:09 is a very good opportunity for us and for our team
07:12 to achieve profitability, to strive for it.
07:14 And that's what we are doing,
07:15 because what's the point of doing a business
07:17 unless you are profitable?
07:18 - Right, absolutely, yeah.
07:22 Also, because you said you have that much cash available,
07:27 are you looking at any inorganic expansion,
07:29 any acquisitions that you're looking at?
07:33 - So we are always on the lookout of anything interesting,
07:35 which can either basically fill up the,
07:38 give us any tech advantage,
07:39 which you don't have any specific technology,
07:42 or anything which will help us scale fast.
07:45 We did acquire a company in no brokerhood
07:48 almost two, three years back for the ERP component,
07:51 and that was a successful acquisition.
07:54 After that, we have not been able to zero down
07:56 on something which fits with us well,
07:59 but we are always on the lookout.
08:02 - Right, got it.
08:03 Are you possibly looking at 4B networks?
08:07 That's fine, you don't have to answer.
08:09 Going ahead, Amit, lastly,
08:13 what do you make of the residential real estate trends
08:16 in India, the longer term,
08:18 because your fortunes are also very much tied with it?
08:21 - Yeah, so I think that residential real estate
08:25 is broken into two portions.
08:27 One is rental, another is buy and sell.
08:30 Rental, fortunately, unfortunately, has been on fire,
08:33 especially in the metros,
08:35 and there are lots of instances
08:37 that are aware about the rapid increase in rent.
08:40 I think that is going to cool down,
08:42 that should cool down, that is good for the industry,
08:45 from next year onwards.
08:46 So real estate rentals has been doing extremely well,
08:48 especially post-COVID.
08:50 Buy and sell, I think the 2010, 2020
08:54 was perhaps a lost decade,
08:57 because the excesses of 2008 took some time to get absorbed,
09:01 plus demonetization and GST also, basically,
09:04 RERA took builders also some time to adjust.
09:08 But for the past two or three years,
09:10 buy and sell is also seeing a massive growth.
09:14 It is also coupled with rentals.
09:15 When rentals go up,
09:16 then buy and sell automatically sees
09:18 a huge demand increase.
09:20 So that's happening, and it's a seller's market right now.
09:23 I think that the next one decade will be really good,
09:26 because whatever you say,
09:28 the real estate continues to be primary investment source
09:33 for Indians, both emotionally as well as financially.
09:36 - Got it.
09:39 Amit, one last question that just popped up in my mind.
09:43 At what stage of revenues or profitability
09:47 do you see that NoBroker becomes a company
09:50 that possibly could head for a public listing?
09:55 - So public listing is basically in our mind.
09:58 We are right now only in six cities in India.
10:01 So the objective is twofold.
10:02 One is that for the next two to four years,
10:05 we want to expand to more cities
10:07 and also achieve profitability,
10:08 have a balance of this both,
10:10 so that we are able to capture a bigger revenue market share
10:13 and also basically convert it into cash profit.
10:16 And perhaps three to five years from today
10:19 is when we would be looking for an IPO.
10:21 - Got it.
10:24 All right, thank you so much, Amit.
10:26 Thanks for your insights.
10:28 Viewers, that was Amit Kumar Agarwal,
10:30 the CEO and co-founder of NoBroker.
10:32 Thanks for watching.
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