UrbanClap wants to be India’s first home services unicorn

Quick question: Which is the largest beauty services company in the country?

Lakme Salon? Naturals?

Well, no. Turns out, it’s UrbanClap, a four-year-old startup. Or, at least, that’s what UrbanClap co-founder Varun Khaitan claims.

India’s largest hotel chain

That’s right after OYO became India’s largest hotel chain without owning any rooms, UrbanClap—which provides on-demand services ranging from electrical work to wedding planning and seemingly everything in between—may just be the country’s largest beauty services company despite not owning a single salon.

UrbanClap’s success can be attributed to the highly unorganized home services market increasingly moving online. For consumers, it has meant a giant leap in convenience and service quality, for service professionals, it’s a new lease of life. For UrbanClap, which promises quick and efficient services through its network of service professionals, it’s an opportunity to impact millions of households. Through this, it hopes to join the hallowed unicorn club—startups valued north of $1 billion.

And it’s well on its way to this goal. UrbanClap survived the funding squeeze and the hyperlocal bubble during 2015- 2016, where VCs tightened their purse strings after valuations hit the roof in the preceding year. As a result, a host of startups shut down during this period in sectors ranging from online grocery to food delivery and home services. On-demand services startups such as LocalOye and Taskbob were soon pushing up daisies, while another such startup, Zimmber, got acquired by Quikr.

UrbanClap weathered the storm and has only gone from strength to strength since. In FY18, its revenue went up by 225% to reach Rs 53.37 crore ($7.27 million), while losses came down by 14% and now stand at Rs 57 crore ($7.79 million) as opposed to Rs 66.7 crore ($9.1 million) in FY17. Recently, the company raised a successful series D funding round for $50 million, which valued the company at close to $500 million. The round was led by Hong Kong-based Steadview Capital and existing investor Vy Capital.

Reasons of  the latest events

UrbanClap’s latest fundraising is important for two reasons. First, having built a strong foundation, the capital gives it ammo to scale to the next level. And second, it’s a validation of the home services marketplace model.

So far, it was all about testing the market, curating the right services and getting consumers on the platform. Now, UrbanClap’s success will depend on how fast it can implement its four years of experience to penetrate the market further. Given that the majority of the home services market is still offline, UrbanClap’s road ahead will not be easy.

While the demand side of the story seems perfect, the supply-side challenges will test its standing in the market. After four years of grinding and growing, is UrbanClap finally poised to achieve profitability? More importantly, how does it continue its ascent?

A story of persistence and execution

Khaitan says that profitability should be possible in the next 12-18 months. But before getting into profitability, it is pertinent to understand why UrbanClap has been one of the few survivors in a space that has seen heavy casualties.

The majority of the 150-odd startups that sprang up in the home services space between 2015 and 2016 have, as we mentioned earlier, either shut down or been acquired. The remaining ones have a negligible presence compared to UrbanClap. UrbanClap, meanwhile, remained stable as it patiently built each and every element of its ecosystem—supply, technology, and demand—brick by brick.

Typically, marketplaces tend to become matchmakers—here’s a need and here’s a service professional. It links one to the other. Companies in the space either connected consumers to aggregators who had a fleet of service professionals or they introduced them directly to a company. Consumers were left to figure out pricing, timing, and everything else on their own, souring the entire experience.

UrbanClap changed this.