Home rental startup Nestaway sold at 95% discount amid worsening funding winter

Nestaway’s last funding round was in 2019 when it raised money at a valuation of $220 million (Rs 1,810 crore) from blue chip investors like Tiger Global, UC-RNT Fund, Flipkart, Goldman Sachs and Yuri Milner.

Goldman Sachs and Tiger Global-backed home rental startup NestAway has been acquired by Aurum, a company that makes software for real estate businesses, in a fire sale of Rs 90 crore, after raising Rs 905 crore ($110 million) through the years, at a time when unicorn valuations have nosedived and funding to Indian startups has fallen to a fifth of last year.

NestAway’s last funding round was in 2019 when it raised money at a valuation of $220 million (Rs 1,810 crore) from blue chip investors like Tiger Global, UC-RNT Fund, Flipkart, Goldman Sachs and Yuri Milner. This means NestAway’s sale has not only happened at a valuation that is less than a tenth of the money it has raised from the private market, its valuation has also dropped by 95 percent.

According to an exchange filing by Aurum, one of Nestaway’s co-founders, Jitendra Jagadev, who left the proptech startup in 2019, is also a director of one of Aurum’s subsidiaries. This subsidiary is a co-living company called HelloWorld Technologies, which was acquired from Nestaway in March 2022 for a cash consideration of Rs 42 crore.

In a filing to the exchanges, Aurum has said that it will provide a capital infusion of Rs 30 crore to help stabilise the business of NestAway. This investment demonstrates a strong belief in the potential of the $20-billion rental housing market, the company said.

Prior to the COVID-19 pandemic, NestAway boasted a platform with 50,000 properties and achieved an annualised revenue of Rs 100 crore.

At present, NestAway has scaled down to featuring 18,000 properties and has an annualised revenue of Rs 30 crore, the release said. Despite the drop in listings, the platform continues to maintain a consistent level of website traffic, attracting 600,000 visits, according to Aurum.

NestAway recorded revenues of Rs 25.43 crore in 2022, Rs 52.05 crore in 2021 and Rs 78.27 crore in 2020.

Jitendra Jagadev and Ismail Khan, who were originally part of NestAway's funding team and later became founders of HelloWorld, will now take on leadership roles within NestAway following the acquisition, the company has said.

Aurum shares closed 6.6 percent higher at Rs 125.55 apiece on June 2. It currently has a market capitalisation of Rs 359.45 crore.

Private equity and venture capital (PE/VC) funding to Indian startups fell 79 percent to $3.3 billion in the January-May period from $15.7 billion a year ago, according to data shared by Venture Intelligence. Startups secured 247 funding rounds in this period against 613 in the first five months of 2022, the data shows.