The Indian real estate and construction industries are riddled with middlemen, hidden costs and red tapism. In a bid to hold builders and developers accountable and give rights to the customers, the government has announced the Real Estate (Regulation and Development) Act, 2016,
A major part of the hidden costs and quality concerns are with the buying and procurement of building materials. Bengaluru-based startup -- Homergize -- is taking steps to make the process simpler and to bring about transparency by connecting the buyer and vendors on its online platform.
“In India, especially, [buying] building materials, from furnishing, fitting, shelf space, to construction materials, is not a transparent market,” Vinod Kaushik, CEO, Homergize told Forbes India. There are several middlemen and the possibility of getting cheated is high, that is where Homergize comes in, he said. “I felt the need of having products available where I would know exactly what I was paying for, its quality, and also how soon I would get it,” Kaushik added.
He launched the B2B online portal in 2015. In three years since its existence, the startup now services orders worth Rs 70 lakh a month. It claims to have FY17 with Rs 6 crore turnover and hopes to touch revenues of Rs 14.5 crore for the year-ended FY18.
Kaushik came up with the idea of Homergize after the bitter experience he had at every step of renovating his house. “The entire project was one rollercoaster ride with issues around skill level, social skills, punctuality, quality of materials, and so on, which further added to the cost and timelines, impacting the quality of the deliverables,” Kaushik said.
He has over 20 years of experience in consulting for telecommunications, media and entertainment, and oil and gas industries, globally. He also specialises in corporate strategy, operations and technology.
So far, Homergize has raised a pre-series funding of $1 million from L.G. Chandrashekar, chairman, Sutures India which was used to upgrade technology, business operations and geographic expansion.
It operates through its eponymous online platform with aggregated vendors for products and professionals necessary for design and construction. Potential customers have the choice of purchasing the materials in bulk. Its usual customers include, contractors, interior designers and developers. Apart from building raw materials, Homergize also sells appliances, electrical equipment, plumbing materials, outdoor and gardening tools, as well as hardware and accessories on its portal.
“We are not just a marketplace, we are also a sourcing and a discovery platform, we’re building an ecosystem,” Kaushik said.
Shreeshand Madhavan, a recent Homergize customer said, “It [the platform] makes transactions transparent, efficient and fast; buying through the website gives us time and control to tabulate material purchases.” Madhavan, however, also added that “their pricing could be better.”
For every transaction made on the platform, Homergize charges a service fee based on the quantum of the transaction. The service fee can differ according to the quality of the materials bought by the customer, and it charges a premium for expedited delivery.
“The housing sector in India is expected to contribute around 11 percent to its GDP by 2020 and India is going to have the world’s third largest construction market by 2025,” Raj Pillai, Managing Director, Starworth Infrastructure & Construction Limited, said.
When there is a large market, there are bound to be more players. Power2SME, a company started in 2012 is a vendor for businesses to get the best price for raw materials for small and medium enterprises. It has had seven rounds of funding and raised a total of $77 million from existing investors, Inventus Capital Partners, Accel, Kalaari Capital and Nandan Nilekani with participation from IFC in 2017.
Similarly, Moglix, a Ratan Tata-backed company based in Noida, specialises in industrial goods and operates as an online marketplace. With five rounds of funding, they raised $16.2 million in total from World Bank's investment arm, International Finance Corporation (IFC) and Rocketship.vc, a San Francisco-based venture fund co-founded by Venkat Harinarayan of Junglee Corp. back in July 2017.
Kaushik is looking to raise more money for the platform in the next round of funding. In the next 24 months, the aim is also to expand Homergize to three-five cities in India. Plans are also afoot to build offline experience centres to improve customer engagement and create brand awareness about the products offered on its platform. Kaushik believes the offline experience centres will also impart information about wholesale products, and introduce new products and technologies to the market.