Urban Company crosses $2.1 bn valuation, plans international expansion

Home services startup plans to go to 100 more Indian cities after raising $255 million in funding

Urban Company, the online home services startup, has raised $255 million in a Series F round led by Prosus Ventures, Dragoneer and Wellington Management.

Urban Company, which is largest of its kind in India and UAE, is now valued at $2.1 billion. The investment round included a primary capital infusion of $188 million and a secondary sale of approximately $67 million by select angels and early investors. Vy Capital, Tiger Global and Steadview participated in the funding round as well.

Urban Company, which plans to expand in 100 Indian cities and international markets, said it would use the funds for innovation, training, product development, quality control and safety measures.

“With this funding, we plan to rapidly scale our business while continuing to invest further in the safety of our consumers and service partners, training of partners and product development,” said Abhiraj Singh Bhal ,chief executive officer and co-founder, adding that business was growing as people stay at home due to Covid-19.

The company’s funding and valuation was reported in April based on the regulatory filings.

Urban Company has more than 35,000 service partners across 35 cities in India, the UAE, Singapore, Australia and Saudi Arabia. The marketplace offers a variety of home services to consumers, including beauty treatments, haircuts, deep cleaning, plumbing, carpentry and appliance repairs. The company will continue to penetrate into existing markets while venturing into new overseas geographies this year.

“Our business has been extremely resilient,” said Varun Khaitan, co-founder of Urban Company, in an interview. “All the categories that are allowed to operate under government regulations, they are doing well as they were in the month of March. They are largely unaffected by the second (Covid-19) wave.”

Khaitan reckoned that services now shut would recover soon, as lockdowns are more methodical this year to contain Covid-19 cases.

Urban Company has witnessed a huge demand for its home services business like includes repairs, cleaning and disinfection, Khaitan. “In some categories, there are tailwinds--like in men's haircuts. There we will see even more growth compared to last year, where volumes grew 6-7 times

“Similarly, our home cleaning business doubled and home painting business grew 3-4 times.”

He expected lockdowns would be off by the end of July and company see recovery and growth in the festive season.

“The existing service ecosystems are weaker and less mature in tier-2 and smaller cities,” said Khaitan. “As a result, when we launch, we see very rapid uptake from customers.”

Khaitan said Urban Company’s rapid recovery and scale-up despite the pandemic, restored the confidence and reinforced in everyone’s minds including the investors about the power of the firm’s business model and the technology platform.

Ashutosh Sharma, head of investment for India at Prosus Ventures, said Urban Company has changed a large, fragmented industry. As a technology-enabled platform, it has been able to achieve the "very difficult task" of productizing services.

“In addition, the initial traction with international expansion in geographies we know well is encouraging and presents an opportunity for significant growth into the future,” said Sharma.

Eric Jones, partner at Dragoneer Investment Group, said the investment firm has been extremely impressed by Urban Company’s success in digitally unifying the fragmented residential services market, both in India and abroad. He said the firm has an extensive network of highly skilled home service professionals, along with a vertical-tailored technology platform. This has driven customer satisfaction and advocacy that is unparalleled in this sector.

“No company is better positioned to capture the growing global demand for convenient digital access to help with everyday home tasks,” said Jones.

Urban Company was founded in November 2014 by Abhiraj Singh Bhal, Varun Khaitan and Raghav Chandra. It counts Accel Partners, industrialist Ratan Tata, and Flipkart CEO Kalyan Krishnamurthy among its investors.