Urban Company’s Journey to IPO: Growth, Challenges, and What It Means for India’s Startup Ecosystem

A decade ago, the Indian household routine resembled a hectic workweek and a chore-filled weekend. Hours were spent finding a plumber to fix water leakages, repairing home appliances, and washing the car, leaving no time to spend with family. To address this common household problem and find a conventional solution, three friends—Abhiraj Bhal, Raghav Chandra, and Varun Khaitan—founded Urban Clap in 2014, now known as Urban Company.

Urban Company operates as an aggregator, but unlike traditional platforms, it ensures quality through rigorous training programmes for its service professionals. By providing professionals with access to tools, loans, and training, the company has created a win-win model where both customers and providers benefit.

Since its inception, the company has partnered with over 50,000 professionals, served over 12 million customers, and offers its services in 60 cities in India. Additionally, it operates in international markets such as Saudi Arabia, Singapore, and the UAE.

Urban Company: Revenue Model

Urban Company’s success lies in its revenue model. At present, it has the following three revenue sources under its belt.

• The company earns a commission on each transaction between customers and service providers. The commission varies based on the service category and geographical location.

• Urban Company also makes money by offering value-added services, like training programs and technology tools, to service providers in exchange for a fee.

• The company has recently launched its own water purifiers, marking its entry into the appliance market and opening a new revenue channel.

Series of Funding Urban Company Has Received

To expand its reach and innovate with offerings, Urban Company has raised capital in the series of funding since its inception.

• In 2015, the company secured $10 million in a Series A funding round. This round was led by SAIF Partners, alongside Snapdeal co-founders and Accel Partners.

• In 2016, the company raised $25 million through Series B funding, led by Bessemer Venture Partners, with the previously mentioned Series A investors also participating.

• In 2017, it raised $21 million in a Series C funding round led by Vy Capital, with existing investors also involved.

• Urban Company secured $50 million in Series D funding in 2018, spearheaded by Steadview Capital and joined by current backers.

• In 2019, Urban Company completed a Series E funding round, securing $75 million, led by Tiger Global.

• In 2021, Urban Company secured $255 million in a Series F investment round, with Prosus Ventures leading the way, and backing from Dragoneer and Wellington Management, Tiger Global, Vy Capital and Steadview. Post this series, the company has achieved a milestone, crossing $2 billion in valuation and turning into a unicorn.

• Urban Company closed a $50 million funding round in July 2024, with Dharana Capital acquiring shares from employees and shareholders in a secondary transaction.

Decoding Urban Company Growth Through Financials

Overcoming the challenges from the past, the Urban Company has managed to improve its financials and sales numbers. Here are the details.

• Revenue Growth: Urban Company recorded a 30% year-on-year (y-o-y) growth in consolidated revenue, amounting to ₹827 crore in the financial year 2024.

• Loss Reduction: Urban Company has successfully reduced its pre-tax losses. In the financial year 2023, the loss was ₹312 crore, but in the next financial year, it dropped to ₹93 crore.

• Steady Growth: In the first quarter of the financial year 2025, the company achieved a profit before tax of ₹12 crore and generated a revenue of ₹281 crore.

• Orders: The growth of this company is reflected in the number of orders it receives. In the financial year 2024, the company received an average of 2.2 million monthly orders, with an average order value of ₹1,290.

Challenges Post Urban Company IPO Launch

Even if there are massive subscriptions, and the Urban Company IPO impacts the startup ecosystem and investor sentiment positively, the company still has to prepare itself to tackle the following potential challenges:

Regulatory Compliance
The gig economy operates in a grey area of labour laws in many countries, including India. Ensuring compliance with evolving regulations, such as providing benefits to gig workers, is crucial for Urban Company’s long-term sustainability.

Scaling Internationally
While global expansion offers new opportunities, it also comes with risks. Different markets have varied customer behaviours, regulatory policies, and operational challenges.

Competition
The home services market is becoming increasingly competitive, with local players and global giants entering the space. Standing out while maintaining service quality and affordability will require continuous innovation.

Urban Company IPO: Brief Insight

Urban Company is set to file a draft paper with the Securities and Exchange Board of India (SEBI) by March 2025 to launch a ₹3,000 crore IPO. With this move, the company aims to boost its market presence, experiment with innovative ideas and products in its segment, and attract new capital.

The company has appointed Goldman Sachs, Kotak Mahindra Capital, and Morgan Stanley to manage their IPO.

Talking about the startup ecosystem, Urban Company’s success story inspires aspiring entrepreneurs, showcasing the potential of disruptive business models and technology-driven solutions. With the IPO launch, there will also be a drastic change in the gig economy in India. With expansion on the cards, the company will create employment and provide more opportunities to professionals from the unorganised sector.

Wrapping Up

Urban Company’s IPO represents a pivotal moment for India’s startup ecosystem, showcasing the strength of innovative business models. While opportunities abound, addressing challenges like regulatory compliance and competition will define its long-term success.

*Source: Urban Company Website
The Hindu
Business Standard
Mint
CNBC TV18
Economic Times
The News Minute