Bengaluru: At a time when a slowdown in funding has stoked concerns of a downslide in valuations of large consumer Internet firms, online classifieds portal Quikr’s valuation surged 3.5 times in the 12 months between 31 December 2014 and 31 December 2015, according to an annual report published by its Swedish investor AB Kinnevik on Thursday.
Kinnevik, which holds a 19% stake in Quikr, marked the fair of value of its holding in the company at $186 million on 31 December, which implies that Quikr’s valuation was $979 million. It marks a 257% increase from Kinnevik’s stake value of $52 million as of 31 December 2014.
Founded in 2008 by Pranay Chulet and Jiby Thomas, Quikr is one of the best funded home-grown consumer Internet start-ups. The company has so far raised $346 million from investors such as Tiger Global Management, Warburg Pincus and Norwest Venture Partners, among others.
It last raised a $150 million round in April 2015 from Kinnevik, Tiger Global and Steadview Capital.
According to the Kinnevik report published on Thursday, Quikr has 4.2 million listings on its platform. The company has so far invested $107.5 million in Quikr.
“The valuation of Kinnevik’s shares in Quikr was based on the value implied by cash transactions made in secondary Quikr shares with various preferential rights in July 2015 at a valuation of $900 million. The size of the transactions, approximately 6% of the company’s diluted share capital at that point in time, was considered sufficiently large to be applied to Kinnevik’s entire shareholding in Quikr,” the company said in the annual report.
The Times of India reported the development on Friday.
Quikr’s valuation surge comes at a time when investors have increasingly become cautious about infusing more capital into start-ups, which has led concerns about valuations.
For instance, in February, Morgan Stanley Institutional Fund Trust marked down its investment in Flipkart Ltd by 27%, from $80.6 million in June 2015 to $58.9 million on 31 December.
This implies that the fund valued Flipkart at $11 billion, as against $15 billion in June when the company raised $700 million from Tiger Global Management and Qatar Investment Authority, among others.
Quikr’s valuations seem disproportionate to its revenue. Quikr reported sales ofRs.24.78 crore for the year ended 31 March 2015, according to documents with the Registrar of Companies.
Classifieds platforms such as Quikr are given more generous valuations because of a large customer base that can potentially be monetized in future through advertising and the winner-takes-all nature of the business.
In January, Quikr bought online real estate portal Commonfloor (maxHeap Technologies Pvt. Ltd) for $120 million to penetrate deeper into the real estate sector.
The company is also growing beyond a listing platform to a one-stop shop for used goods by enabling payments on its platform, as well as facilitating logistics, a move which is likely to throw open additional revenue channels at a time when the slowdown in external funding is prompting start-ups to reduce cash burn and focus on profitability.
Quikr has identified five key business segments—automobiles, real estate, jobs, services and customer-to-customer sales—to focus on, in an attempt to explore new sources of revenue and fend off competition from other venture capital-backed businesses that have emerged in each of these categories.
The company currently has revenues flowing in through third-party advertisements, lead generation for car dealers and real estate brokers and paid listings by sellers.
As a classifieds portal, Quikr has just one rival: OLX, which is backed by Naspers Ltd, a South African mass media company. However, each of the verticals the company plans to focus has seen the emergence of a number of well-funded start-ups.
In the automobile segment, Quikr competes with the likes of CarDekho and CarTrade, while the real estate segment has businesses such as Housing, Magicbricks and PropTiger, among others. Similarly, the hyperlocal services segment has deep-pocketed start-ups such as Housejoy and UrbanClap, while in the jobs category, the likes of Babajob and AasaanJobs compete with Quikr.