Hyperlocal marketplace for home services, UrbanClap has raised equity funding of $50 million led by Steadview Capital and Vy Capital. In addition, there was secondary ESOPs and angel investors stock liquidation of $4 million. The founders' stake wasn’t diluted in this round of funding.
The company’s other investors include Accel Partners, SAIF Partners, Bessemer Venture Partners and Ratan Tata.
This is the second time that UrbanClap has gone through a secondary sale. Earlier, the core team had given the option to its employees in June 2017, when it was raising its Series C funding of $21 million. Abhiraj Bhal, Co-founder of UrbanClap says that they gave the option to over 100 employees and a few of their angel investors.
Speaking of the use of ESOPs, he says,
“Even today, the share price of our ESOPs' stock is Re.1, although the going price of the share in the market with this round is at approximately Rs 69,000. We have always believed that ESOPs in India aren't understood and exercised in the right manner. But, we at UrbanClap want to change that, and give the power to the employees."
The funds raised will be deployed for service partner onboarding, invest in team building, accelerate customer growth. They also intend to invest in enhancing in the supply chain of consumables, build training capabilities, and expand in across tier-II and tier-III cities in India. The team will first be launching in Chandigarh in the coming week.
Founded in 2014, UrbanClap is one of the few survivors of the 2016 hyperlocal slump. It, along with competitor HouseJoy, are the two big players in this space.
Speaking of the fundraise, Vamsi Duvvuri of Vy Capital said, “We remain deeply impressed with the focus and execution of UrbanClap team. We are happy to continue supporting them on their mission to turn 1 million service professionals into micro-entrepreneurs delivering high-quality home and local services"
Raghav Chandra, Co-founder of UrbanClap, says,
“We have a mission to create more than 1 million micro-entrepreneurs for India and other emerging markets. Today, approximately 15,000 service professionals earn their livelihood through the UrbanClap platform. We would like to grow that number 100 times over the next 5 years, while providing high quality, delightful services to our end users. This will require strong execution, and ahead of the curve investments into our technology platform and operational leadership.”
UrbanClap works closely with its service professionals (SPs) – providing them with a steady stream of orders, branding, loans, insurance, training, bulk procurement of consumables etc. Consequently, these SPs operate as micro-franchises of UrbanClap, allowing it to standardise the user experience.
The team claims that prior to joining UrbanClap, SPs typically earn Rs 10,000 to Rs 15,000 per month. UrbanClap’s operating model focuses on transforming these SPs into micro-entrepreneurs, multiplying their earnings by 2-3 times.
Has the home services market changed? Abhiraj says, “We generally avoid talking about that."
Ravi Mehta, Founder and Managing Partner of Steadview Capital, said, in a statement,
“UrbanClap’s tech-centric approach of building quality supply in a trust-deficit market is solving a big consumer need and is enabling service professionals to be micro-entrepreneurs. The company’s focus on customer experience stands out, and we think very highly of the founders and the team.”