Square Yards raises $10M in convertible notes from multiple investors

Gurgaon-based Square Yards, a real estate investment advisory player, has raised $10 million in the form of convertible notes from multiple individual investors.

According to Tanuj Shori, Founder and CEO, Square Yards, he wanted to maintain a healthy mix in their balance sheet without diluting too much of equity at this stage of growth. The notes are issued for a fixed term at a pre-determined coupon rate and with an option to convert into equity (at a discount) on reaching the next funding milestone.

“A part of the investment will go into strengthening all the three verticals — NRI market, global real estate, and mortgage broking. The funding will go into it to grow the market share. Another part of the investment will be utilised to launch some new initiatives such as broker aggregation and property management. The new financing will help us accelerate our expansion into newer international geographies and at the same time strengthen our existing distribution network in over 10 countries,” says Tanuj.

This is Square Yards’ second round of investment in three months, the previous one being the $12 million equity funding raised from the Reliance Group’s private equity arm last November. During May last year, Square Yards had raised an amount of $11 million in pre-Series A funding from a clutch of investors in Singapore and Hong Kong, who hold senior-level positions with leading asset management and private equity houses. The new investment takes the total amount of funds raised by the company to approximately $33 million since its inception in 2013.

Square Yards claims to have acquired a leadership position in the transactions space. It currently boasts of a net revenue run rate of around $1.5 million and also claims to have crossed $1 billion in gross transactional value (GTV) in terms of total value of properties sold on its platform.

Market analysis

According to IBEF, the Indian real estate market is expected to touch $180 billion by 2020. The housing sector alone contributes between five and six percent of the country's GDP.

There is a horde of players who offer solutions to the realty market — both offline and online.

In the online category, Magicbricks, 99acres, PropTiger, DoorKeys, and many other players provide selling, buying, and renting facilities.

In the past two years, the real estate startup market has observed many new developments.

The PropTiger-Housing merger was the most recent development in this category. In April 2015, PropTiger had announced the acquisition of Makaan.com for an undisclosed amount.

During early 2016, online classified major Quikr acquired realty portal CommonFloor for an undisclosed amount. During November last year, QuikrHomes, the real estate arm of e-commerce marketplace Quikr, acquired Bengaluru-based home rental marketplace Grabhouse.

Experts say that the consolidation hasn’t impacted the market much, rather helping it maintain its sanity.

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