India's Droom aims to list on Nasdaq, valuation crosses $1.2 billion

Online automobile marketplace expects to benefit from customers looking to own vehicles, avoid public transport.

Droom, India’s largest AI-dri­ven online automobile marketplace, has been valued at $1.2 billion in the latest round of funding, making it the newest member of the coveted unicorn club.
 
The firm has closed the first leg of its ongoing pre-IPO gro­wth funding round of up to $200 million. In addition to participation by several existing investors, new investors, including 57 Stars and Seven Train Ventures, participated in the first closing of the round in Q2-21. The company is looking at a possible IPO and listing either on NASDAQ or in India in 2022.
 
“Over the past seven years, we have invested millions of dollars and thousands of hum­an hours to build a full technology-based end-to-end transactional marketplace for buying and selling of automobiles online,” said Sandeep Agg­arwal, founder and CEO, Dro­om. He said the company has developed a complete technology-based machinery starting from first-mile services such as OBV, ECO, and history to mid-mile services such as loan and insurance and last-mile services like doorstep delivery.

Droom’s current annual run rate is $1.7 billion for GMV (gross merchandise value) and $54 million for net revenue. The company said it remained on track to touch a GMV of $2 billion and a net revenue of over $65 million in CY2021. With the current scale, technology-oriented business, and operational efficiency, Droom is nearing profitability.
 
Droom has been on a steady growth trajectory after Covid. While automobile is the largest retail category, it is the least penetrated online. “In a post-pandemic world, we expect automobile buying and selling to shift online rapidly,” said Aggarwal.
 
Droom has seen massive digital adoption during the pandemic besides increasing preference in consumers for ownership of automobiles versus public transportation or ride-sharing. The company expects online penetration for automobile buying, and sales to increase to 7 per cent in 2025, up from 0.7 per cent at present.
 
“Globally, we are seeing automobile buying and selling shifting online, for both ICE and electric vehicles,” said Gene Pohren, managing director, 57 Stars. “We think Sandeep and his team have built an impressive digital ecosystem that can revolutionize the automobile buying and selling experience.”
 
Droom competes with players such as Cars24, CarDekho, CarTrade and Spinny. So far this year, India has seen about 17 firms enter the Unicorn club of companies or start-ups with a valuation of over $1 billion. Some of them include BlackBuck, Browser­Stack, Zeta, Moglix and Urban Company. They also include firms such as ChargeBee, Gupshup, and ShareChat, Groww and Pharmeasy.