INTERVIEW: Urbanclap claims it can turn profitable in 3 months but it won’t – here’s why

• Gurugram-based home services startup Urbanclap plans to launch in 4 Indian cities in the next quarter.
• The startup recently announced its plan to expand to Abu Dhabi.
• Two new services – men’s grooming and on-demand maid for cleaning – which are currently live in Delhi will soon be launched across India.

Urbanclap was a small startup based out of Gurugram in 2014, offering home services digitally. Today, it has operations across 10 cities in India, Dubai and Abu Dhabi.

It recently announced its Abu Dhabi expansion, and plans to grow its UAE business twice over, on a monthly basis. What’s more, the company has plans to become a ₹100 billion company!

In an interview with Business Insider, Varun Khaitan, co-founder, Urbanclap said that there are many plans in store for their India business as well.

Urbanclap will soon launch in four more cities by the next quarter. Two new services – men’s grooming and on-demand maid for cleaning – which are currently live in Delhi will be launched across India. “Our investments are on constantly improving the business,” said Khaitan.

Profitability vs Scale

UrbanClap recently raised ₹16 million from Flipkart CEO Kalyan Krishnamurthy, according to paper.vc, a business intelligence firm. It has marquee investors like Ratan Tata, SAIF Partners, Accel Partners and Bessemer Venture Partners on board, and raised a total funding of $110 million.

The startup has about 6 lakh users per month with 20,000 service professionals on-board. But the main question is – how far is profitability?

“If we want to, we can turn profitable in the next three months. Instead, we want to invest in our future and build our scale to one day make Urbanclap a ₹100 billion company,” said Khaitan.

Recently, Urbanclap reported a 309% jump in its operational revenue to ₹450 million for 2017-18. The losses however were at ₹750 million. “In the last three years, our jump in revenue has been significant while the losses in quantum have remained flat. The amount of burn remaining flat with revenue increases, is a sign of scale. If you want to keep growing, you will have to be investing for tomorrow’s growth,” said Khaitan.

An offer they couldn’t refuse

All the founders Abhiraj Bahl, Raghav Chandra and Khaitan, came back from the US hoping to build a business.

They had the common goal of solving a problem for the masses. After extensive research, the idea of helping people run their homes appealed to them. They also realized that professionals like electricians and beauticians too barely make any money due to middlemen or employers.

“We realised very early on that the problem that we were solving was not just building a marketplace and connecting users. We ended up removing the middlemen and transitioning these employees or service professionals into microentrepreneurs,” said Khaitan.

Service professionals like electricians, beauticians and carpenters had nothing to complain as Urbanclap made them an offer they couldn’t refuse.

“We told them you keep 80% of the earnings, Urbanclap will keep 20%. Overnight their earnings went up. Today, every other service professional through Urbanclap earns makes an average of ₹40,000 per month. Hundreds of our beauticians make more than ₹1 lakh a month,” said Khaitan.

Making a difference to professionals also improved service quality to consumers. When they started, the founders were hoping to have at least 100 users per day, by the end of 2015. However, they had 1000 per day.

The founders got what they wanted – solving a systemic problem in the country – as opposed to building a business, to sell and chill in a yacht.

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