Introduction:

Urban Company — India’s largest tech-enabled home services platform — has now become a case study for startup founders and investors in the unlisted and listed market. The company, which started its journey as UrbanClap in 2014, has not only revolutionized the home services sector in India but is now rewriting the rules of how startups should approach profitability and IPO readiness.

Recently, the company received approval from its shareholders to go public but surprised the market by reducing its IPO size from the earlier planned ₹3,000 crore to just ₹528 crore.

This decision highlights a new trend in India's startup ecosystem — the era of valuation-driven growth is slowing down, and profitability-driven growth is taking center stage.

A) Brief History & Business Model of Urban Company

Founders & Incorporation:

Urban Company was founded in 2014 by three IIT and IIM graduates:

• Abhiraj Singh Bhal

• Varun Khaitan

• Raghav Chandra

Business Model:

Urban Company operates as a tech-enabled marketplace for home services like:

• Beauty & Salon at Home

• Cleaning & Repairs

• Electrician, Plumbing, AC Servicing

• Appliance Repair

• Fitness & Wellness

Revenue Model:

1. Commission-based — Charges service professionals a percentage of every order fulfilled.

2. Subscription Model — For premium service partners (Urban Company Partner Program) with benefits like training, financing, product supply, insurance, and platform support.

3. Direct Product Sales — Recently ventured into selling D2C beauty and wellness products.

B) Funding Journey of Urban Company

Urban Company has raised over $400 million across multiple funding rounds. Some of its prominent investors include:

• Tiger Global

• Steadview Capital

• Vy Capital

• Bessemer Venture Partners

• Accel Partners

Last Known Valuation (2021):

Urban Company was valued at ~$2.8 Billion in its last funding round in 2021.

C) Why Urban Company Decided to Reduce IPO Size from ₹3,000 Cr to ₹528 Cr?

Key Reasons:

D) Financial Performance (FY24 & Q1 FY25)

This shows a clear shift in business focus from aggressive expansion to sustainable growth.

E) New Strategic Focus Areas Post IPO Announcement

1. D2C Product Launch

Urban Company is moving towards launching beauty, wellness, and personal care products directly to consumers, leveraging its large customer base.

2. Technology-Led Efficiency

• 15-Minute Service Booking Facility for Customers

• AI-based allocation of service partners

• Skill development and financing for service partners

3. Cost Optimization

Company has worked extensively in reducing partner acquisition cost and improving margins.

F) IPO Backed by Leading Investment Banks

• Kotak Mahindra Capital

• Goldman Sachs

• Morgan Stanley

G) Key Learnings for Unlisted Market & Startup Investors

1. Valuation Reset is Real

The IPO size cut is a strong message — The market is no longer willing to pay 10x or 20x revenue multiples for loss-making startups.

2. Profitability is the New Growth Metric

Companies which are close to profitability or have clear path towards it will attract higher investor interest.

3. Cash Burn vs Sustainable Growth

Capital raised through IPOs will now be used for selective expansion and operational excellence — not for reckless cash burn.

H) Final Take from UnlistedZone

Urban Company is a textbook example for India's startup ecosystem:

"Build a business for customers and profits — Valuation will follow."

As a leading platform in the unlisted space, we at UnlistedZone believe this is a defining moment for startup founders, VCs, and investors.

Even if Urban Company shares are not traded with us, such developments provide key strategic insights for our investor community.