Quikr sews up blue-collar market with Babajob deal
21 Jun 2017
The rumor mongers started spinning their stories early in June, but now it’s official: Quikr will buy blue-collar job site BabaJob in a mostly-stock deal.
After turning profitable in the jobs vertical in January this year, Kinnevik-backed classifieds company Quikr India is all set to buy Babajob, Sean Blagsvedt confirmed to us today. Blagsvedt is CEO and founder of Babajob.com. Bengaluru-based Quikr’s co-founder and chief executive Pranay Chulet has also confirmed the acquisition.
When in the bag, the acquisition will help Quikr consolidate its already strong position in the blue-collar section of India’s online jobs market. The deal will make Babajob co-founders Blagsvedt and Vir Kashyap, and investors Seek Ltd (Australian hiring firm), Khosla Impact and Grey Ghost Ventures, shareholders in Quikr.
Australia-based online jobs marketplace Seek Ltd holds 40 percent of Babajob.
Blagsvedt and Kashyap will stay on as advisors to Quikr for a short while, but will then leave to pursue other options, it was reported in the media.
“The board of Babajob, Vir (Kashyap) and I decided that joining forces with Quikr will give us the best chance of scaling Babajob … Quikr raised $350 million U.S. from a stable of top global investors and – with its vertical focus – QuikrJobs has achieved profitability and a leadership position in India’s blue-collar jobs market. The combined entity will be the largest marketplace in this market segment by far in India,” Blagsvedt wrote.
Although there are no official estimates available, India’s fragmented, blue-collar market is huge and is served by a clutch of relatively young sites, such as Babajob and Aasaanjobs. Nearly 430 million of the country’s youth are believed to be entry-level job seekers. Babajob’s multilingual recruitment service, which is also voice responsive, is very popular with this user base.
To date, Babajob has raised $10 million U.S. in two rounds from Seek Ltd., Khosla Impact and Gray Ghost Ventures. The site claims to have more than 8.5 million verified job seekers and 5 million employers listed on its platform, which is available in 20 cities, including Coimbatore, Bhopal, Indore, besides Bengaluru, Mumbai, and Delhi.
“I’m very proud of what Babajob has achieved since Vir Kashyap, Ira Weise and I founded it a decade ago. We built an incredibly talented, dedicated and mission-driven team and received support from great investors, including our friends and family, angel investors, Seek, Gray Ghost Ventures, Khosla Impact and USAID. We innovated and scaled telephony, chat and mobile solutions to connect multilingual job seekers and employers. We defined a category and, perhaps most importantly, showed the market that there was a need and business opportunity to build a job site for everyone, even those with little education, knowledge of computers or command of English,” Blagsvedt said in his statement.
QuikrJobs claims eight million active profiles on its platform with 2 lakh additions per day. Babajob would be Quikr’s second buy in the online jobs space after Hiree. Economic Times reported in May that after the Hiree acquisition, QuikrJobs reached breakeven at the end of FY2017. Hiree strengthened Quikr’s position at the white-collar end of the market, which is dominated by InfoEdge’s Naukri.com.
Quikr, a member of the Indian unicorn club, has raised $350 million U.S. until now from marquee investors such as AB Kinnevik, EBay, Omidyar Network, Tiger Global and Warburg Pincus, and was last valued at close to $1.4 billion. Taking an inorganic path to growth in various verticals (recruitment, real estate, automotive, home services, and c-to-c), Quikr acquired CommonFloor, Grabhouse, Stepni, ZapLuk, Salosa, StayGlad, and Hiree – all in 2016.
“We initially started with a broad focus on consumer transactions. As of today, we are a collection of verticals focused on a few key categories that have traditionally seen chaotic transactions,” Quikr founder-CEO Pranay Chulet told NewsCorp-owned VCCircle, a day after the acquisition. Sounding ecstatic over the long strides made by the company in these few years (12 serial acquisitions in various categories in just two years) and the aggressive inorganic path to growth that the company has chosen for itself, Chulet quipped, “Leadership without profitability or profitability without leadership doesn’t excite us much.”
Is the gamble paying off?
It’s too early to give a clear-cut answer. The financial results and market comments are mixed.
In FY2015/16, Quikr’s loss grew to $83.4 million U.S. (Rs.534 crore) from $69.7 million U.S. in FY2014/15. The picture improved in FY2016/17, after it cut back on marketing expenditure.
Remarking on Quikr’s relentless acquisition spree, Anup Jain, founder and managing director of Redback Advisory Services, told VCCircle, “Quikr now needs to demonstrate that there is a path to sustaining itself with profits – and not equity capital. Simply adding revenue without turning profitable is not a good strategy,” he said.
On a more positive note, Ankhur Bhisen, senior vice president of retail consulting firm Technopak, said, “For an aggregation-based business model, expansion through acquisitions is a tried-and-tested method. Besides, within the broad e-commerce space, such a model typically works on the premise that there is space for two to three players at the most.”
“The acquisition route works for an asset-light business model that’s looking to scale up,” Mrigank Gutgutia of market research firm RedSeer, told VCCircle.
Many market watchers say, however, that going horizontal will – in the long run – be the only way to grow in a space in which network size and the range of services on offer are the chief differentiators.