Bengaluru-based co-living startup Zolostays on Monday announced it has raised $30 million Series B funding led by IDFC Alternatives, Mirae Asset and Nexus Venture Partners. The company had earlier raised $5 million Series A funding led by Nexus Venture Partners. The fund raise also comes in with a strategic investment from Alec Oxenford, Founder, OLX, and Chennai-based Olympia Developers and Patni Computers Family Office.
"The idea is to get strategic help in real-estate, expansion in different geographies and corporate connects, with these strategic partnerships," says Nikhil Sikri, Co-founder, Zolostays.
With this fund raise, the team is looking to expand to other cities, strengthen its footprint in the existing cities and venture into the student accommodation segment. The funding will also be used to help build technology and look at using IoT to enhance its service offerings to customers. Bengaluru-based investment bank IndigoEdge was the exclusive banker for the transaction.
Founded in 2015 by Nikhil Sikri, Akhil Sikri and Sneha Choudhary, Zolostays had started out with $1 million funding from Nexus Venture Partners. A little over a year later, they grossed Rs 6.2 crore in revenue in FY 2017. By the end of FY 2018, its revenue had more than quadrupled to Rs 26.4 crore.
Community engagement is going to be one of the prime focus of the company. "We are trying to ensure people engage with each other. Whether it is societies or co-living spaces, people rarely interact with each other, and we are bringing new initiatives - events, classes, etc. For example, if you take a class within Zolo, you get points which can be redeemed. The idea is to get people to interact, conduct events, take classes," says Nikhil.
The team claims to have seen an 800 percent growth with over 157 properties under Zolo management. The team is targeting over 50,000 beds from its current 16,000 beds by the end of the year. The company has tied up with numerous building owners and large developers to acquire supply and already has a healthy pipeline to reach its goal.
Nikhil says the vision is to change the way people imagine living.
"Co-living spaces offer immense potential as a market in India, something that we at Zolo identified and tapped into early, with Zolo being the first full stack player to enter this business in 2016. Zolo is currently the largest and the highest rated co-living player in the country. With this fresh round of funding, we plan to continue our lead as the biggest co-living brand and keep raising the bar for customer service.”
Zolo currently manages 157 properties across six cities - Bengaluru, Chennai, Kota, Delhi NCR, Hyderabad and Pune - via two kinds of models - Zolo Standard and Zolo Select.
Ashish Dave, Head, Venture Investments at Mirae Asset Global Investments (India), said in a press statement: “Zolo is addressing a large and real problem of providing quality affordable living solutions for young professionals in urban India. We are delighted to support them in their vision to provide end-to-end, convenient housing solutions to these students/individuals alike and build a successful community with strong social connect.”
Co-living isn’t a new concept. There is Delhi-based CoHo, Bengaluru-based StayAbode, YourOWNRoom and SimplyGuest, Noida-based Placio, Gurugram-based Flathood and Co-Live. So how did Zolo manage to gain the confidence of investors and users in a business dominated by larger rival Nestaway and the new kid on the rental block, OYO?
Nikhil says it all boils down to owning the experience and making it consistent across the board.
Gaurav Sharma, Partner at IDFC Alternatives, said in a press statement, “Zolo is a pioneer that is disrupting the unorganised affordable accommodation ecosystem in India. Co-living is a very large and financially attractive market, and we are happy to back a high-quality management team at Zolo in their journey to establish co-living as an asset with their promising solution.”
The team then split its business model into two. One is a revenue-sharing model where the company acts as a service provider and manages the properties and the complete experience for a commission. The second is a lease model, where Zolo leases buildings from property owners and builders for three to nine months for anywhere between Rs 50,000 and Rs 10 lakh.
Currently, 70 percent of its revenues come from the lease model and the rest from a revenue-sharing model. Zolo’s cost of acquiring a room ranges between Rs 5,000 and Rs 15,000.
Sameer Brij Verma, Partner at Nexus Venture Partners, said in a release, “Zolo has registered strong growth in a short span of three years and has emerged as India's largest player in the co-living space. We are confident that its approach and execution can extend across several other markets. We look forward to working with Nikhil and his team to reach more customers across the country.”