Vikhyat Srivastava and Sandeep Reddy, founders of Mumbai-based Groffr, didn’t originally plan to start a group buying portal when they took their initial steps towards entrepreneurship in 2008. The two friends from IIM Kozhikode, both working with the Mumbai-based Kotak Mahindra Group at the time, first set up Verkko, an online social network for alumni of Indian business schools. One of Verkko’s key objectives was to help people find jobs. However, in May 2009, with the onset of a slowing domestic economy, they found themselves looking at a new business idea.
“We realized that the market had slowed down and builders (real estate developers) were finding it difficult to sell projects,” says Reddy, who was a real estate analyst at Kotak Institutional Equities at the time. He and co-founder Srivastava, who was part of the team funding real estate companies at Kotak Real Estate Private Equity Fund, realized there could be an opportunity for discount group buying in real estate. After experimenting successfully with a deal in Mumbai, they quit their jobs and plunged full-time into entrepreneurship in April 2010. Groffr, which stands for group offer, went live in July 2010.
Since then, the site, whose mainstay currently is real estate deals, has sold $5.6 million worth of property, primarily in Mumbai. Relative to other group buying sites, its user base is smaller at 45,000. “The user base will be smaller because our target age group is 25 to 35 or older and real estate deals are higher-value, planned purchases,” explains Reddy. The company has a net revenue run rate of $2.26 million per month and targets a run-rate of $1 million by December. Immediate expansion plans include growing the 12-member team to 30 in six months and setting up a presence in Pune, Bangalore, Hyderabad, Chennai and Delhi.
Growing into non-real estate verticals will be a big part of future expansion plans. In March, the company acquired Mobstreet, another Mumbai-based group buying site founded by Spandan Jasmin Tolia, who now spearheads the company’s non-real estate deals verticals. The founders raised under $1 million in angel funding from undisclosed investors recently and are now in the market to raise another $5-6 million in Series A funding.
Watch Reddy, Srivastava and Tolia talk about the making of Groffr and the road ahead – Startupcentral Profiles: The Groffr Story.