<article>A fortnight ago, <a style="color: #000080;" href="https://www.commonfloor.com/" target="_blank">Commonfloor</a>’s 1,000-odd employees, most of them at the Bengaluru headquarters, huddled together for a townhall meeting.</article>

A fortnight ago, <a style="color: #000080;" href="https://www.commonfloor.com/" target="_blank">Commonfloor</a>’s 1,000-odd employees, most of them at the Bengaluru headquarters, huddled together for a townhall meeting.
Such meetings are business as usual every three months, but the one on 8 October was different.
People were concerned, even anxious. They wanted to know whether maxHeap Technologies Pvt. Ltd, the company that owns the property search and listings platform, was up for sale. Over the past few days, separate media reports had suggested that online classifieds company <a style="color: #000080;" href="http://www.quikr.com/" target="_blank">Quikr India</a> Pvt. Ltd was in the process of buying Commonfloor.
The deal size, going by the reports, could’ve be anywhere between $50 million and $160 million, depending on whether Quikr would go with a partial or complete buyout.
The reports further suggested that New York hedge fund Tiger Global Management Llc, a significant investor and shareholder in both Commonfloor and Quikr, was the principal architect of the speculated deal.
Commonfloor, founded in 2007 by Sumit Jain, Lalit Mangal and Vikas Malpani, has so far raised more than $60 million from Accel Partners, Tiger Global Management and Google Capital over multiple rounds.
The company reported losses at Rs.28.82 crore on revenue ofRs.21.97 crore for the financial year ended 31 March 2014, as per filings with the Registrar of Companies (RoC).
In a recent interview, Sumit Jain, the company’s chief executive, spoke about the speculation over his company being on the block, plans to raise fresh funds and the challenges of building a property search and listings business in India.
Edited excerpts:
People at Commonfloor must be worried. What kind of questions did you get at the town hall?
Most questions were around the normal quarterly update, what are the next steps for the company&#8230; There were concerns around future plans, some questions about strategy and a few questions around whether there was any truth to the news floating around.
Is there any truth? How do you react to reports of Commonfloor being acquired by Quikr?
We are exploring various opportunities for growth through investments and partnerships globally.
Right now, we are uniquely positioned in terms of market, product, strategy and team.
We have enough money sitting in the bank for the next 18 months. As we get more clarity, maybe in a month or two, we will inform everybody, including the media.
How do you think the speculation started in the first place?
I think it’s because over the last few months we’ve visited the offices of some of the companies funded by Accel Partners and Tiger Global. Somebody may have seen us and things just started rolling from there.
But there can’t be smoke without fire&#8230;
Considering the sensitivity of the matter, we are talking to multiple people. Right now, we are not in a position to comment on smoke or fire. But there are a lot more interesting things that are happening internally.
You’re raising a new funding round? How much? Are you bringing in new investors? Will your existing investors participate?
We’ve recently started talking to investors to increase the available capital pool. We are evaluating multiple options.
In a month or two, you will get to know about it. Our existing investors are already in. They are ready to write the cheque tomorrow. It’s up to us to decide whether we want to raise it now or club it with a bigger round.
How much are you raising? Your existing investors can write you a large cheque if they want. Why do you need to bring in new investors?
(Laughs) I can’t tell you how much we’re raising, obviously. Having a diverse set of investors always helps. At the same time, having too many (investors) can lead to management overhead. We are fortunate to have three high-quality investors on board and are open to 1-2 new investors who can add value.
You’ve been around longer than many of your competitors. But you’ve raised much less than some of them. Why?
Raising funds is one thing but deploying them is a trickier problem. We’ve burnt probably half the money that we have raised in the last seven-and-a-half years. We are not in the business of building property or holding inventory. We don’t like to waste money.
So, yes, we have raised less than others. You must remember that we come from a time when taking a $1 million cheque was a milestone. That was in 2007-2008, in the middle of the sub-prime crisis. The times have changed since then. Now even $100 million is not enough.
If you get money in stages in multiples of two times, three times or five times the value of your business, then as a business you mature. But when you get money which is disproportionately higher than the value of the business, it does more harm than good.
Like Housing.com? To what extent has that incident (public stand-off between Housing founder Rahul Yadav and its investors) affected your sector?
I would not like to comment on any specific company. There are two parts. One is that companies have raised a lot of money and are not delivering solutions to the end user. Second, people don’t know how much money is required to build a business in India.
I would say that there have been a couple of cases that have put investors on wait-and-watch mode, especially when it comes to writing bigger cheques. But businesses are built over the long term. Accidents happen. That doesn’t mean you stop driving.
So, how capital-intensive is the property search and listings business?
This business doesn’t require a lot of capital. What’s worked for us is that we started generating revenues very early on. Our expenditure comes from revenues, currently growing at 25-30% month-on-month. So yes, it’s not capital intensive, but India is expensive from a brand-building point of view. But you have to first build a great product and to build a great product, you don’t need $100 million.
The property search problem in India still remains largely unsolved. What do you think it will take to crack it?
For us, we are fortunate to be solving a problem that is the biggest in India. The sector suffers from lack of transparency, lack of professionalism, no organization, no certification and no standardization.
There are multiple stakeholders involved, starting from the government to builders to buyers to brokers.
Our aim is to be the Google of real estate in India. Every problem in the world can be attributed to lack of data. If we solve the data problem, we solve the problem. A typical buyer in India takes a year to buy a property. Our mission is to reduce that to half a day.
We want to map every property in India on Commonfloor and organize the ecosystem. That means we have to get every detail for every property. The information must be accurate, adequate and actionable. If we can give so much information to the end user, the user will feel empowered to take decisions.
How is property different from horizontal classifieds? Can it survive and scale as an independent vertical in the long term?
Real estate has the highest potential for growth compared to any other classifieds vertical. The horizontal play works best in C2C (consumer-to-consumer) categories such as used goods and so on. In India, among verticals, we currently have more mature players in jobs and matrimony. Real estate is still getting disrupted. We believe we can build the largest company compared to any other vertical player.
You said your revenues are growing 25-30% month-on-month. How do you generate revenues?
Our revenue model is cost per lead. We follow the Google model, by coincidence and not by design. The service is free for users and paid for businesses. We don’t charge the seller for listing a property. Sellers have to buy a subscription package. Every time they get a lead, the credits are deducted from their account. An average lead costs anywhere from Rs.50 and Rs.2,000. We don’t charge individual sellers, only brokers and builders. It’s organic search. You can’t pay to showcase your property. It has to be chosen by the buyer. It cannot be pushed on to the buyer.
Let me take a minute to explain why the cost-per-lead model is better than the cost-per-listing model. The competition charges about $1 a listing, which is peanuts. And they sell 500 listings packages to brokers. So, brokers end up posting property with incomplete information, there are duplicate listings and so on. When you charge cost per lead, if a broker doesn’t post complete and correct information, he gets a bad quality lead. Since he’s paying for it, he takes it seriously.
And profits?
We’re targeting profits in a year and a half from now. We have turned profitable multiple times in our history, but the advantage of raising funds is that instead of turning profitable, we can increase top line and grow faster. We are growing revenues much faster than we are growing costs.
<h4>This article was first published on <a href="http://www.livemint.com/Companies/VhOh1ejTrYE6nAsb1YY3dM/Mahindra-launches-SmartShift-to-connect-cargo-owners-transp.html" target="_blank">Livemint.com</a></h4>

India: On buyout buzz by Quikr, Commonfloor CEO says no comment on smoke or fire

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