Start-up aims to make the process broker-free.
BENGALURU: NoBroker, a peer-to-peer property listing start-up that wants to eliminate the need for brokers in the Indian rental market, has closed a $3 million round of Series A funding to expand service beyond its current bases of Mumbai and Bengaluru.
“We feel that a peer-to-peer chain has to happen,” Agarwal, formerly with PWC and ANZ Bank, told TechCrunch in an interview. “[Online property sites] have become a sort of advertising portal for brokers … yes, you can find properties on your own, but you still have to pay the broker, he will take his pound of flesh when you go there physically.”
Agarwal disclosed brokers can pocket up to 18 percent of an annual rental agreement via charges to both the tenant and home-owner. His conservative estimates place the total rental brokerage market at about $4 billion per year and about $200 billion on a global scale.
“Nowhere in the entire world, and in no other industries, is there such a high charge set against a value-add that is very, very low,” he declared.
NoBroker was born in 2013 after Agarwal and co-founder — now CTO — Akhil Gupta reflected on their experiences renting in India and “realized that the fundamental point is to move away from brokers altogether.”
TechCrunch reports in addition to listing properties for rental, the two entrepreneurs created an algorithm that allegedly scours the internet to verify each new sign-up is a prospective tenant and not a broker — many of whom scout online rental sites to boost their business or appropriate new listings. Agarwal declined to explain how the algorithm works, but claimed it is “99.9 percent effective.”
The company recently expanded to Bengaluru from Mumbai, where it has 5,000 listed properties, and could eventually spread to overseas markets as well. The NoBroker founders believe their formula has the potential to succeed abroad, but intend to focus on Indian territories for the time being.
Agarwal said he is aiming to reach 20 new Indian cities within the next two years — a target that he admits is likely to require further funding in the near future.
SAIF Partners and Fulcrum Ventures participated in the Series A. The startup raised an undisclosed amount during its seed round from Saurabh Garg, an angel investor who co-founded the Four Fountains Spa chain.