Automobile marketplace Droom drives into unicorn club with pre-IPO funding

Online automobile marketplace Droom has raised the first tranche of its US$200 million pre-initial public offering (IPO) funding round, driving its way into the unicorn club at a US$1.2 billion valuation. The company did not specify how much funding it has secured in this leg of the round.

New investors 57 Stars and Seven Train Ventures, along with several existing investors such as Lightbox and Beenext participated in the round. The company is eyeing an IPO either on the Nasdaq or in India next year.

The Droom team / Picture credit: Droom

With the fundraise, Droom has become the 17th Indian startup to cross the US$1 billion valuation mark this year, coming after Digit Insurance, Innovacer, Meesho, Infra Market, PharmEasy, Cred, Groww, ShareChat, GupShup, ChargeBee, Urban Company, Moglix, Zeta, BrowserStack, Grofers, and BlackBuck.

The seven-year-old startup will use the funds to expand into the top 100 cities in India and to international markets, as well as enhance its last-mile delivery capabilities.

It competes with players such as CarDekho, Spinny, and Cars24 in the online automobile marketplace. Cars24 became a unicorn last year, while Spinny raised US$100 million in a round led by Tiger Global earlier this month.

According to Droom, the company is nearing profitability and is on track to achieve a gross merchandise value (GMV) of US$2 billion by the end of 2021. Its current GMV stands at US$1.2 billion, the company said in a statement.

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“While automobile is the largest retail category, it is the least penetrated online. In a post-pandemic world, we expect automobile buying and selling to shift online rapidly,” said Sandeep Aggarwal, founder and CEO of Droom. The company foresees the online penetration for automobile buying and selling to increase to 7% in 2025, up from 0.7% currently.

The marketplace now has over 1.1 million automobiles worth US$15.7 billion to choose from. It currently has over 20,000 auto dealers and a presence in 1,105 cities.

Correction (July 28, 2021 20:00 pm SGT): The article earlier incorrectly mentioned that Droom has raised US$200 million in the pre-IPO round of funding.