 "Jagdeep Pahwa")
Five months of discussions and a meeting with media baron Rupert Murdoch in New York sealed one of the biggest deals for three-year-old real estate portal PropTiger. A few weeks back, Murdoch's News Corp announced picking up 25 per cent stake for about $30 million in the parent company.
Started by Harvard Business School classmates Dhruv Agarwala and Kartik Varma, along with Prashan Agarwal, an alumnus of the Indian Institute of Technology, Kanpur, in 2011, the firm offers end-to-end solutions to property buyers. It also has various business-to-business products for providing data to financial institutions, developers and other entities.
"It was a meeting of like minds," Dhruv Agarwala said, after striking the deal with News Corp.
"They were looking to invest in India, we happened to connect. They aspire to have a global footprint in the digital real estate. They must have reached out to others as well for the potential deal. It is a great endorsement of what we have done so far that they decided to move forward with us."
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Area of business: Online real estate Founded: 2011 Funding: $30 mn from News Corp in Nov 2014; $7mn from existing investors - Accel Partners and SAIF Partners in Nov 2014 |
Dhruv and Kartik had met Murdoch for the first time over 12 years ago, at Harvard, when the media baron came to teach a class. "I reminded him of our meeting at Harvard when we met this time," Dhruv said.
The Noida-based portal also has other institutional investors - SAIF Partners, Accel Partners and Horizen Ventures - which have pumped in a total of $14 million.
Two months ago, News Corp had agreed to buy Move, which operates a US property website - realtor.com - for $950 million. The New York-based company also holds a majority stake in REA Group, which operates Australian residential property website realestate.com.au.
"News Corp had invested in the Australian real estate portal at a time when that company was around the same size as we are now and they have nurtured that into becoming a multi-billion dollar company," he added.
Customer is king
"Handholding a customer through the entire process of buying a home was missing in other portals, which provided only search and identification. That led us to the idea of creating PropTiger," Dhruv said.
With a team of over 500 people across eight cities - Noida, Gurgaon, Mumbai, Pune, Bangalore, Chennai, Kolkata and Ahmedabad - the portal offers people a complete solution for buying property, starting from home loans, site visits, documentation to the various data related to prices. It also gives construction updates to its customers, sends reminders of installment payments and price trends on their properties. According to an expert based in Mumbai, PropTiger has a strong hold over the research segment, including the data on prices. They also offer their data products to developers and banking institutions as well, apart from the consumers, which is their strength.
Prashanth Prakash, a partner at Accel Partners, added: "PropTiger helps the customer through the entire process of real estate buying - searching, shortlisting, deciding which one to buy and actually buying - through in-house, fully trained real estate brokers. This end-to-end approach is a key to a great customer experience. Other portals are mainly listing sites and connect a buyer to any real estate broker, where the quality of the interaction cannot be controlled."
According to estimates, the residential domestic real estate market stood at about $50 billion in 2013 and is expected to go up to $150 billion by 2020.
"At a two per cent commission level for real estate brokers, this is a $1-billion market for real estate brokerage which will triple in the next five to seven years," Prakash said.
Road ahead
PropTiger now wants to use the funds from News Corp in enhancing its products and technology platform and is also looking at entering the secondary market, which it has not ventured in till now. It claims to have a different business model compared to competitors such as Magicbricks, 99acres and Commonfloor.com, which mainly earn from advertising on their sites.
The portal makes money by charging commission from the developers, which varies depending upon the deals.
The portal claims to have sold 10,000 units worth $1 billion since inception in 2011. For the ongoing financial year, it is targeting to sell $400 million worth of properties.
Said Prashan Agarwal: "We will be aggressive in hiring now and will deepen our base in existing cities as well as add on more cities. In the next six months, we will be launching our services in 10 more cities including Hyderabad, Kochi and Chandigarh and the plan is to reach 25 cities across India in the next two years."
"Technology capabilities will be enhanced to improve on process gaps in the sales process. Also, we will invest in hiring quality talent to raise the bar of our teams. A part of the investment will also go towards increasing of brand awareness and footprint to other cities."
Founders
PropTiger is the second venture of Dhruv & Karthik, who had started a financial advisory firm for individual investors called iTrust in 2006. This company was sold to Karvy Group in 2011, after which they decided to focus on real estate. Prashan was earlier working with Allcheckdeals, under InfoEdge and used to give iTrust leads on home loans, where all three became friends. Before PropTiger, Dhruv was the CEO of GE's Infrastructure business in India, and also led institutional sales for GE in the country. He has previously held various senior roles with GE in the US as well. He holds a BS in Materials Science from Northwestern University, an MS from Stanford University and an MBA from Harvard.
Prashan was earlier into the real estate brokerage business in India. He has worked on senior roles with GE, ITC and Sapient and holds a Bachelor of Technology from IIT Kanpur and an MBA from the Indian School of Business, Hyderabad.
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However, as the company grows and expands beyond eight to 10 cities, the sales teams will be dispersed. The challenge then would be to maintain standards of customer service. It will be necessary to invest in strong systems and training.
PropTiger's recent entry into the resale market for homes seems like a smart move. This market, which is much larger than the new-home market in most cities, is much more fragmented and is dominated by mom-and-pop firms, which operate only in their own respective micro-markets.
With the recent technological developments and increase in Internet penetration, it is a matter of time before the resale market consolidates. However, the resale business is very different from the new-homes business and it will be interesting to see whether PropTiger can use its strong execution capability, established brand and technology to replicate its success in this space.
Jagdeep Pahwa, managing partner, SRS Investments (India)
