Yihao International Hotel

Tiger Global-backed home rental startup NestAway Technologies Pvt. Ltd is in talks with a slew of prominent Chinese investors, including diversified conglomerate Fosun, to invest in its next $100 million funding round, said two people familiar with the matter on the condition of anonymity.

Mint first reported on 19 November that NestAway is in talks to raise $100 million. It last raised $51 million in March last year, in a Series D round led by Goldman Sachs and a joint fund between Ratan Tata and the University of California, called the UC-RNT Fund. Prior to that, it had raised $30 million in 2016 led by Russian billionaire Yuri Milner and hedge fund Tiger Global Management. Homegrown VC fund Chiratae Ventures and Sujeet Kumar, founder of B2B online marketplace Udaan, are its other investors.

NestAway’s fundraising efforts come at a time when competition in India’s co-living sector is heating up. The country’s largest hospitality startup Oyo Rooms, which has amassed a war chest of nearly a billion dollars, announcing the launch of Oyo Living, its housing rental arm, which aims to expand to the top 10 metros by the end of 2019 and offer more than 50,000 beds.

NestAway is present in 15 cities, including Bengaluru and Mumbai, as well as smaller hubs such as Kota.

Founded by Amarendra Sahu, Deepak Dhar, Jitendra Jagadev, and Smruti Parida in 2015, NestAway claims to have more than 30,000 houses and 70,000 customers.

“If Fosun participates, it will be via its Chinese fund, not the Indian arm,” said one of the persons mentioned above. “Fosun India traditionally takes more early stage bets, around Series A or B and NestAway is very clearly a mature startup,” the person said. Fosun RZ Capital, Fosun’s venture capital arm, has selectively backed Indian startups, including consumer credit startup Kissht and travel booking enabler Ixigo.

Shunwei Capital, the venture capital firm started by smartphone maker Xiaomi’s founder Lei Jun and Tuck Lye Koh, is another Chinese investor that has shown interest in participating in this round, said the second person mentioned above. Other major Chinese investors are also said to be interested in the transaction, the person said.

Shunwei has primarily invested in India’s fast-growing content and social media space, by betting on regional platforms such as ShareChat, Pratilipi, and Clip App. It has also invested in used car marketplace Truebil and reselling platform Meesho.

A Nestaway spokesperson said, “We do not respond to any rumours or speculation in the market.” Emails sent to Shunwei and Fosun did not elicit a response.

Chinese investors with deep pockets could benefit NestAway, which will look to expand to more cities to compete with a fast-scaling Oyo Living, as well as fellow home rental startup Zolo Stays, which raised $30 million in January from IDFC Alternatives, Mirae Global Asset Management, and Nexus Venture Partners.

Zolo is present in nine cities, including Mumbai where it expanded recently. Zolo is also looking to create its own ecosystem in markets such as Pune, where it has taken charge of entire complexes, or a series of buildings, along with food, Wi-Fi, laundry and other necessities.

According to the Mint report, NestAway claims to earn $7 million a month from rentals. In 2017, it acquired Zenify, which focuses on rentals for families. NestAway claims that about half of the new bookings come from the family segment.