[Startup Bharat] Bootstrapped PG venture by a student entrepreneur clocks Rs 15 lakh revenue per month
For 25-year old Sangita Dey, an MCA student from Lovely Professional University at Phagwara (Punjab), one thing was clear – she wanted to be her own boss. The girl from Tripura also realised that she was an entrepreneur at heart. So it was not long before she plunged into an entrepreneurial venture in a relatively nascent sector – coliving, or in her case PG accommodation.
At first, Sangita wanted to start an ecommerce marketplace for electronics and gadgets. Her mentor Manish Saini, entrepreneurship department head at LPU stepped in guiding her towards an idea of starting a real estate-based service. As a student from another state, the idea of starting a PG service appealed to her.
“I started providing housekeeping services to a few buildings around, and very soon I spotted a huge demand for well-managed and fully furnished PGs for students in the area,” says Sangita.
Her startup model works on a lease basis, Sangita explains,
“Let’s say the PG has 10 rooms, we close the deal with the PG owner at Rs 3,500 per room. We pay the owner Rs 35,000 for one month. The charges include maintenance as well. The PG owners convincingly agree on the terms as they do not have to separately invest in maintenance. We rent each room for Rs 5,000 at our end and generate a profit of Rs 15,000.”
The market it targets
Dealz Experts’ target audience includes students and faculty from surrounding educational institutions. Sangita, who herself understands the travails of finding suitable accommodation as a student, wanted to solve this universal problem. Low budgets, language barriers, etc, all make it difficult for students searching for a place to call home, especially in localities unwilling to rent houses to outsiders.
The team works in tandem with PG owners, mostly NRIs who face issues managing their properties or PGs. Once the deal is inked, the PGs are taken on lease, furnished, and the refurbished rooms are provided to students at affordable rates.
“Apart from offering basic PG services, we add facilities like special food services on order in minimal time, laundry, ironing, etc. We are adding more facilities customised to student needs as well - transport, grocery delivery, etc. The major challenge I faced was convincing the owners to trust me with the business at such a young age, especially since I was from another state and did not know the local market well,” says Sangita.
Sangita’s team invests approximately Rs 5 lakh per PG for refurbishing, maintenance and miscellaneous costs. It takes at least six months of research, market understanding, coordination with key people to find rooms, and later find customers looking to rent.
The team is a family
The young entrepreneur was supported by her family, her father, a retired army officer and her mother - 53-year-old Subhash Chandra Dey and 46-year-old Bithika Dey who are a part of her core team. Sangita’s father helps in the finance and technical aspects of the business while her mother runs the food, laundry and daily care activities.
To raise capital initially, they started caretaking services with one PG, soon they had 10 PGs with the team overlooking caretaking and maintenance as well.
“We currently have 22 PGs with 1,200 rooms with complete leasing rights. We also generate more value by offering food catering and laundry for our tenants. This adds a substantial amount to our overall revenue,” says Sangita.
Sangita also helps in her grandfather’s construction business in Tripura where she has helped construct four buildings, and this has undoubtedly helped her understand the business and the market.
The team claims to be generating yearly revenue of Rs 2 crore and monthly revenue of Rs 15 lakh. Dealz Experts charge students according to room size and services opted for. The rent varies from Rs 4,000 to Rs 8,000 per month.
The future is bright
Dealz Experts’ focus on student accommodations is driven towards smaller towns, a region relatively ignored by the bigger players.
“One can expect 20 percent returns per PG, which is the best value. The numbers vary depending upon the PG and services provided. We generate 15 percent from extra services (food and laundry) and 30 percent from the construction business, which is registered under a separate firm, Juno Enterprises,” Sangita adds.
Dealz Experts currently has 10 near LPU right now, and the remaining 12 are in different parts, it plans to take up a few more. The team plans to expand its services to Chandigarh University, DAV University, City University etc. in Punjab.
A booming sunrise
With the coliving and student accommodation space growing in India, many startups like OYO and Nestaway are addressing a lacuna in the market. Nestaway already had 50,000 tenants in Q4 2019 and is said to be in talks to raise over $100 million to counter OYO, which has a similar target across 10 metros for 2019.
A RedSeer report states that the market for coliving startups in India is expected to touch $2 billion by 2022. The overall segment which includes paying guest accommodation and interest from real estate players will be worth a whopping $93 billion over the next 10 years, according to a PropTiger report. The report also revealed that college hostels accommodate around 3.4 million students even though the overall requirement is over 8.9 million beds.
With over 50,000 colleges in the country and 31 million students, many who live away from home, PG and coliving startups are the need of the hour.
Student living provider Oxfordcaps claims it clocked 30X growth in less than 10 months of operations, growing from 200 beds to 6,000. The Delhi and Singapore-based startup recently also raised $8 million in Series A funding and is looking to expand in education hubs such as Ahmedabad, Bengaluru, Pune, Indore, Jaipur and Dehradun.
Other players like Stanza Living have already raised S$16.4 million in risk capital while Bengaluru-based Zolo targets growing nearly 4X to 50,000 beds by the end of the year.
For Sangita, this is the time to consolidate and expand, “I am looking to expand into the Delhi, Chandigarh and Kolkata market in the coming months. And into my hometown in Tripura in the next two years,” Sangita says.
(Edited by Suruchi Kapur Gomes)