Bengaluru-based real-tech startup Zolo Stays helps students and singles find accommodation with wholesome food.
At a Glance
Startup: Zolo Stays
Founder: Nikhil Sikri, Akhil Sikri and Sneha Choudhry
Year it was founded: 2015
Where it is located: Bengaluru
The problem it solves: Helps students and singles find accommodation with food
Funding: Series A - $4 million
If you are a student or an employee working in a different city than the one where your family stays, then this Bengaluru based-startup will provide you with your basic needs of roti and makan.
Most singles and students invariably find it difficult to look for a place that is convenient, affordable and also provides good food.
Similar to the co-working concept, the rise of urbanisation has also led to an increase in the co-living market in India. Zolo Stays has carved a niche in this space by catering to the co-living market.
Dr Nikhil Sikri, after completing his MBBS from All India Institute of Medical Sciences (AIIMS) Delhi in 2007, practised as a doctor for a while in Singapore IMH (Institute of Mental Health). He then went on to pursue management at the Indian School of Business (ISB) Hyderabad (2011-12).
After ISB, he worked in the corporate sector for some time with Cerner Corporation and Deloitte. At Deloitte, Nikhil met Sneha Choudhry, who later became a co-founder of Zolo, and eventually his life partner. The third co-founder is Akhil Sikri, brother of Nikhil, and a computer science engineering graduate from IIT Delhi. Akhil is the CTO of Zolo.
“Earlier, we had a product that was related to educational technology. Sneha and Akhil were working on the product called AugBrain from 2014-15. At that point in time, I was only moonlighting for them. Unfortunately, we couldn’t find a right model for the product. So we decided to start something that could impact more lives, and thus moved on from education to housing as a sector. That’s how Zolo was started,” says Nikhil Sikri, Co-founder and CEO, Zolo.
The company has 600 employees spread across five cities where it operates from.
Zolo Stays aims at managing entire end-to-end services for its customers. It started operations on the lines of OYO Rooms and ramped up its inventory to almost 18,000 beds.
However, the firm decided to change its business model after six months of operations to give more value to customers. From 18,000 beds, they reduced to zero inventory to change its business model to “full-stack,” where the firm takes care of allied customer experiences like food, DTH, housekeeping, WiFi, community services etc.
Nikhil explains the working of Zolo Stays. “We take up (on lease) residential towers from builders like Sobha in their society under our programme, called Zolo Select. We manage their towers and provide all amenities to tenants. This concept did not exist before we arrived. In our “Select” segment we have 40 percent of occupants who are above 40 years old. These tenants stay away from their families for multiple reasons including work related projects.”
It has another model called Zolo Standard. “Under this, we lease out small buildings like G+5, G+4 where premium amenities like pool, club, tennis court, etc, don’t exist. These buildings consist of 50-70 rooms,” says Nikhil.
“Fresh graduates normally prefer the Standard segment and the cost comes to an average of Rs 6,000 to Rs 8,000 per month for twin-sharing. On the select side, it is Rs 12,000 on an average. Our rooms are in Bengaluru, Chennai, NCR, Pune and Kota. We have also recently started in Hyderabad. There are a total of 10,000 beds as of now,” explains Nikhil.
The leased period with the builders are typically between three and nine years, and with customers, the agreement is for 11 months. It takes a month’s security as part of the rental agreement. It provides six amenities – food, housekeeping, DTH, WiFi, concierge, repairs and maintenance. The food provided by the firm is a mix of both South and North Indian, with a slight regional variation.
About the differentiator, Nikhil says, “Our costs are around 25 percent lower than industry standards with a very high customer satisfaction score.”
Nikhil explains that revenues come from the fee that is charged from customers for services and rentals on the property. Over the past three years, the firm says it has helped 15,000 individuals find reasonable and high-quality living facilities across its 80+ properties in five cities.
The paying guest market in India is largely unorganised, with a huge gap in affordable living space. With dirty rooms, and no focus on food, Zolo saw a potential in the market to make it more organised.
The PG and hostels market is estimated to be about $40 billion in India, and the market is growing at 16-18 percent per annum. There are a few competitors like Homigo, CoHo, Stanza and StayAbode, etc. But with more than 10,000 beds, Zolo claims to be the largest co-living space provider in India.
Talking about revenue, Nikhil, says, “Our annualised revenue run rate today is Rs 85 crore, and we are growing at 15 percent month on month.”
Zolo’s gross revenues increased from Rs 6.2 crore in FY 17 to Rs 26.4 crore in FY18.
The startup raised $4 million from Nexus Venture Partners in its Series A round in December 2016. It is planning to raise its Series B round this financial year.
The company plans to expand to around 50,000 beds by December 2019, and also start operations in Mumbai.
Nikhil says, “We are also planning to venture into two/three student cities like Manipal, Davanagere, Bokaro, Varanasi, and Coimbatore. We are already present in Kota. Student cities are places where the student population is more than professionals. We also want to go the extra mile for younger professionals in the existing cities. In our sector, the more options we explore in a city, the more amenities we can provide like - bike on rents, cars on rent, gym memberships, etc.”