Bengaluru's Zolostays, a co-living and student housing platform, targets Rs 500 crore in revenue by FY 2023–24. Seeking $75 million in series-D funding, the company’s revenues are said to have surged from Rs 140 crore in March 2022 to about Rs 300 crore in March 2023. The company turned profitable in Q1 of FY24. Despite the current challenges in fundraising, Zolostays plans to expand its student housing to more cities and add around 300 properties to its co-living portfolio. The firm's strategic approach reflects a commitment to growth and sustainability.
Zolostays, headquartered in Bengaluru and specializing in co-living and student housing, aspires to achieve a revenue milestone of Rs 500 crore by the fiscal year 2023–24. With this goal in mind, the CEO and co-founder, Nikhil Sikri, is actively aiming to secure approximately $75 million in the series-D funding round for the company. He stated that having transitioned from Rs 140 crore revenue in March 2022 to an approximate Rs 300 crore run rate in March 2023, their goal for this year is to nearly double it, propelling it to Rs 500–600 crore and beyond. In the initial quarter of this financial year, they achieved profitability.
To date, Zolostays has successfully secured around $90 million. In its 2020 Series-C funding round, the company garnered $30 million at a valuation of $150 million. Sikri articulated that they are presently engaged in their series D-round fundraising initiative with the aim of securing between $50 and $75 million. These funds will be allocated towards expansion, given that we are already a profitable corporate entity. However, he pointed out that the current environment for raising funds has grown more challenging, especially amidst the ongoing funding downturn. He observed that capital has become costlier globally, leading to a reduction in risk appetite.
Moreover, excessive investments made during the pandemic by funds in pure tech businesses, based on assumptions that weren't sustained, have led to a shortage of capital for new ventures. The company operates in two segments: student housing and co-living. Presently, both of these divisions contribute equally to revenue, with aspirations to maintain this equilibrium in the near future. Sikri elucidated that both segments offer a favourable risk-reward ratio. Co-living carries a slightly higher risk due to its pure B2C nature, whereas student housing involves less risk as it operates more like a subscription business. Co-living tends to be more profitable.
Regarding student housing, Zolostays currently maintains a presence in Tier II cities, primarily in South India. The plan is to expand to 5-7 more cities within a few years, with the immediate goal of adding 3-5 cities this year. The company has partnered with over 100 colleges and approximately 10 universities across India to address the issue of under-utilized campus hostels. The quality gap and focus on academics have often led students to prefer off-campus accommodations. Zolostays charges the institutions based on the number of students in hostels each month.
In the co-living sector, it presently boasts 300 plus properties in tier-I cities and envisions adding around 300 more within the next year. Sikri emphasized that the co-living market still has ample room for growth despite increasing competition. He noted that while entry barriers are low, scaling the business presents its own challenges. Sikri projected that in the co-living segment, they could align prices more closely with those of paying guests (PGs). With GST regulations and government taxation measures coming into play, he believes they can achieve this due to their economies of scale. The average rent for a co-living space in Bengaluru is Rs 10,000–10,500 per person per month, while in Noida it's Rs 7,000, and in Mumbai, it ranges from Rs 15,000–Rs 18,000 per person per month.
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