A $95 million funding machine

The story of Droom is the stuff of startup legend. One that’s destined to make it to the chapters of history books written on the Indian internet startup boom. It goes something like this.

In the year 2014, Sandeep Aggarwal, 44, started Droom along with his lesser-known co-founder, Rishab Malik. Out of Sector 14 in Gurugram, a city in Haryana that borders New Delhi. Sector 14 is also where Aggarwal started his former company, Shopclues, an e-commerce marketplace that has gone on to become a unicorn.

What is Unicorn?

A unicorn is a term used for a technology company that is valued at more than $1 billion. It’s another matter altogether that, after being indicted for insider trading in the US and a divorce from his wife and co-founder Radhika, Aggarwal found himself out of Shopclues.

Bereft of both company and companion in quick succession, Aggarwal found refuge in opportunity. In another startup.

He returned to Sector 14. Back to the same office where Shopclues started; hoping that Lady Luck would smile on him again. Hoping to create another unicorn. The idea: a marketplace for buying and selling used vehicles in India. Anything from a two-wheeler to a four-wheeler, even an airplane. Everything online. A true-blue marketplace. Droom Technology Private Limited was born.

It would be fair to say that in the last four years, investors from India and overseas have made a beeline for the company. In all, they’ve put in $95 million. From seasoned venture capital firms like Lightbox, Beenos and Beenext to Toyota Motor Corporation’s subsidiary Toyota Tsusho, and Tokyo-based venture capital investor Digital Garage.

Funding required

In May this year, Droom raised $30 million in a funding round led by Toyota Tsusho and Digital Garage at a valuation of more than $550 million. Explaining its investment rationale, a Toyota Tsusho spokesman said: “We were impressed that Droom has rapidly established its position as the largest online marketplace to buy and sell automobiles in India. Droom and we share the same vision, which is bringing trust and transparency to the transactions of automobiles.”

Lady Luck it would seem, couldn’t get enough of Droom. And true to the nature of a startup on a steep growth curve, in the last four years, the company claims to have achieved several mighty feats.

For instance, Droom claims that it’s the largest online marketplace for used vehicles in India by gross merchandise value (GMV). [GMV is the sum total of the value of all products sold on a website] It also says that it connects more than 250,000 dealers across 500 Indian cities.

And that India is a $160 billion automobile market and about 0.5% of that is online. That’s $800 million. Of this $800 million, Droom claims that about $600 million in terms of the total value of transactions happens on its platform. Droom claims to be targeting a net revenue of Rs 275 crore ($37.8 million) in the year 2018, and Rs 700 crore ($96.4 million) in 2019.

Achieving the top feat

Droom says it is the sixth-largest e-commerce company in India. The company also claims to be planning an Initial Public Offering (IPO) in 2019, and that it will hit profitability by the end of this year.

For anyone looking at the company from the outside, this is as enchanting as a startup story gets.

Until you start digging deeper. Into the innards of the company’s operations. And there emerges a trifle of a problem. It all fits together just too cleverly.

The least of these issues is Droom’s myriad GMV and profitability claims, which are meant to both dazzles and distract at the same time. No. That’s not it. It is Droom itself. The very idea of a marketplace. More importantly, the company itself and the foundations on which it has been built. They exude masterful ingenuity.