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What Does A $2 Billion Unicorn Do?
Urban Company – formerly known as Urban Clap is an Indian startup company that provides home services to people in need of such services. Urban Company is an all-in-one platform that helps users hire premium service professionals, from beauticians and masseurs to sofa cleaners, carpenters, and technicians.
About the Company
The company was founded under the name Urban Clap by Abhiraj Singh Bhal, Varun Khaitan, and Raghav Chandra. Later it rebranded itself and renamed it as Urban Company. All 3 had initially invested Rs 10 lakh to kick start their idea. At that time no one was expecting it to turn out to be such a huge success.
Urban Company concept
Assuming an individual’s air conditioner unexpectedly stops working. So, to fix your AC, an individual would ask relatives if they know anyone who will fix your AC. Instead, Urban company will connect you with the concerned person who can fix your AC in no time. That’s what Urban Company does, connects the customer with the service provider without much hassle.
In the year 2014, Urban clap was founded to curb ...
... the problem in the Indian home service market this lack of credibility and transparency. To solve this problem Abhiraj Singh Bhal, Varun Khaitan, and Raghav Chandra came up with the idea of Urban Clap (now Urban Company).
In April 2015, the company received its seed funding of US$1.6 million from SAIF Partners and Accel Partners.
Urban Company raised US$10 million in Series A funding from its current investors at that time, SAIF Partners and Accel Partners.
The year was not over for the company to raise some more funds. The company later raised US$25 Million in its Series B funding which was led by Bessemer Venture Partners, SAIF Partners, and Accel Partners.
After its Series B funding in the year 2015, the company raised funds in July 2017 in a Series C round. The company raised US$21 million. This series round was led by Internet investment company Vy Capital. Early investors, SAIF Partners, Accel Partners, and Series B investor Bessemer Venture Partners participated as well.
Series D round funding was initiated in the year 2018 where the company raised US$50 million. This round of funding was led by Steadview Capital and Vy Capital. Other than the series funding the company also raised $4 million through Employee Stock Ownership Plan and angel investors stock liquidation. Investors like Accel Partners, SAIF Partners, Bessemer Venture Partners, and Ratan Tata participated. Mr. Ratan Tata was included in the board of the company as an advisor. As a part of the Series D funding round, Kalyan Krishnamurthy, the CEO of Flipkart, invested INR 1.6 crore in the company.
In the year 2019, Urban Company raised US$75 million in its Series E round funding. This fundraiser was led by Tiger Global Management. The round also saw participation from the company’s existing investors including Steadview Capital and Vy Capital. The fundraiser valued the company at US$933 million.
Urban Company in April 2021 raised US$188 million in its Series E funding round. This round was led by Prosus. It also received participation from new investors like DF International and Wellington Management. The funds were raised at the US$2 Billion valuation of the company. With this valuation, the company received its unicorn badge after 7 years of its formation.
Urban Company’s Revenue Model
The company has 2 ways to earn money. The main focus is to bring in capital in any way possible for the company.
· Commission Model
Generating nearly 85% of the total revenue of Urban Company, their commission-based services are their bread and butter. For example, in our haircut-crisis scenario, you would choose a hairdresser and pay for the service online. Urban Company will pay the service provider after deducting a minor service charge, which can range from 10-20% of the total service cost.
· Lead Generation
Accounting for around 15% of Urban Company’s revenue, their lead generation services are aimed at professionals such as photographers, wedding planners, and dieticians. The requirements of the customer are posted on the app. These requirements are then routed to various service providers as leads, who then need to pay Urban Company to contact the customer. Once they pay Urban Company, they then proceed to make an offer to the prospective customer. The fee is retained by Urban Company whether the service provider can convert the customer or not.
Evolution of Business Model
The original business model had been very successful for the company. In its first couple of years, it introduced a new revenue channel in addition to the commission and lead generation model. It also started its sponsorship model in a few years’ time. The company charged a fee for the increased visibility of freelancers in case their services were viewed and monetized via the platform. In expanding its operations, it has managed to increase its revenues steadily. In 2018, the company launched on-demand services in Dubai, United Arab Emirates, and followed up by setting up shop in Abu Dhabi the following year. It also launched services in Australia. The decision to move to UAE was an interesting one, considering the available demographic in the region. The significant Indian population in the region was a clear reason to launch operations there, while cost considerations also made it a viable move. In the UAE, customers are less price-sensitive and services are priced at 3 or 4 times the Indian prices, with costs remaining more or less the same. The move to Australia was also motivated by a similar principle.
With over 500,000 requests being served per month, Urban Company is showing no signs of slowing down. The COVID-19 pandemic was hard on localized service providers of all kinds. Urban Company helped many professionals tide over these times of crisis by giving them proper training, helping them with screenings and sanitization to ensure quality services to their customers. This led to an increase in their revenue even during the lockdown and helped many families tide through this time of crisis.
With over 25,000 trained professionals, over 5 million happy customers in 22 cities across 4 countries, Urban Company has its eyes set on growth. Urban Company helps skilled professionals reach Pro levels through intensive training modules before they can get listed on the platform. A highly selective onboarding procedure and a mission to empower millions of service professionals by upskilling and offering service-at-home uniquely have catapulted them to the trust and perception that they enjoy today.
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