Droom Valuation: Indian Auto Marketplace Reaches $1.2 Billion

Droom Achieves Unicorn Status as Indian Auto Marketplace

A digital platform dedicated to the sale of automobiles has recently joined the ranks of Indian startups achieving a $1 billion valuation, commonly known as unicorn status.

Droom, headquartered in Gurgaon, announced on Wednesday its intention to secure up to $200 million in a pre-IPO growth funding round. This new capital injection, a portion of which has already been obtained, has elevated the company’s valuation to $1.2 billion. This represents a significant increase from its previous valuation of approximately $500 million in October 2018.

Funding Details and Backers

The funding round was led by 57 Stars and Seven Train Ventures, alongside contributions from existing investors. Droom previously secured around $125 million in funding and boasts early support from prominent investors like Toyota and Lightbox.

Droom’s Marketplace Functionality

Droom facilitates the buying and selling of used vehicles across multiple categories, including cars and motorcycles, within the Indian market. The platform offers buyers access to verified listings and provides tools for viewing details, arranging inspections, negotiating prices, and communicating directly with sellers.

Sellers benefit from tools designed to manage their listings effectively, estimate vehicle values, and resolve potential disputes.

Financial Performance and Future Projections

According to a company statement, Droom’s current annual Gross Merchandise Value (GMV) run-rate stands at $1.7 billion, with a net revenue of $54 million. The company anticipates reaching a GMV of $2 billion and a net revenue of $65 million by the end of the current calendar year (2021).

Path to Profitability

Droom asserts that its current scale, technology-driven approach, and operational efficiencies are positioning it for near-term profitability.

IPO Plans and Competitive Landscape

The company, which operates in a competitive landscape alongside firms like Spinny and Cars24, is actively preparing to file for an Initial Public Offering (IPO) and aims to list its shares on either the Nasdaq exchange or an Indian stock exchange in the coming year.

Founder’s Statement

Sandeep Aggarwal, founder and CEO of Droom, stated, “We have dedicated substantial resources – both financial and human – to construct a comprehensive, technology-based marketplace for online automobile transactions.”

“Our development encompasses a complete technological infrastructure, ranging from initial services like OBV, ECO, and History, to mid-level services such as loan and insurance options, and concluding with last-mile services like doorstep delivery. Droom has experienced consistent growth following the Covid-19 pandemic.”

He further noted that while the automotive retail sector is the largest, it remains significantly underpenetrated online, and anticipates a rapid shift towards online buying and selling in a post-pandemic environment.

India’s Growing Unicorn Count

Droom marks the 17th Indian startup to achieve unicorn status, reflecting increased investment from prominent investors in India, the world’s second-largest internet market.

Update

Updated at 1:06 pm on July 28: The article has been updated to clarify that Droom is seeking up to $200 million in funding, and the full amount has not yet been secured.