Droom raises $30 million in fresh funding round

NEW DELHI: Droom Technology has raised $30 million (about Rs 221 crore) in a fresh round of equity financing, led by two new investors, and which comes barely four months after the Singapore and Gurgaon-based company raised a similar amount from a clutch of investors.

The Series E round of funding was led by the family office of Joe Hirao, founder of ZigExN, the Tokyo-headquartered company that owns and operates a number of content-focused websites, ranging from jobs information and search and real estate, to the used car listings segment.

Additionally, a second new investor has also entered the company’s cap table. While the name was not disclosed, it is believed to be the family office of the founder of one of Japan’s largest auto dealership chains.

The company, according to Sandeep Aggarwal, chief executive of Droom, will use the proceeds to further ramp up Droom Credit, its fin-tech product launched last year, and which provides auto financing to, both, dealers and buyers in the used car and bike segment.

“The latest round of fund will help us in our expansion goals and, accomplishment of our growth objectives and scaling up our technology to build efficiency. A substantial portion will also go towards building up Eco, the company’s automobile inspection services,” Aggarwal told ET.

According to the CEO, Eco, which was a marketplace model, connecting customers with mechanics, will also now have mechanics, who are on the Droom payroll, providing doorstep services.

Droom’s existing investors, which includes, Toyota Tsusho Corp, a unit of Toyota Motor Corp, the world’s largest auto maker, Digital Garage and venture capital firms, Lightbox, Beenos and Beenext, among others, have not participated in the latest round of equity financing.

It is, however, yet unclear if there has been any secondary transactions, along with the infusion of primary capital. Including this latest fund infusion, Droom has now raised $125 million in funding, since inception. It also values the four-year-old startup at about $750 million, post money.

The company is also undertaking a buyback of shares from employees. Aggarwal told ET that the Droom Board had approved a buyback up to Rs 50 crore, with the shares being acquired by the company at its last round’s valuation, which is estimated to be about $550 million.

“There are about 63 employees, who have spent over three years with the company, and hold stock options. We have decided to give them liquidity,” Aggarwal said. The development comes about four months after Toyota Motor Corp, the world’s largest auto maker, made its debut investment in India, after leading a $30 million equity financing round in the automobile marketplace and auto services startup, and which was co-led by the latter’s existing backer, Digital Garage, in May.

The company, which is expected to enter the Malaysian and Thai markets by the end of the calendar year, reported revenue of $11 million in financial year 2017-18, up from $3.8 million in the previous fiscal.