Deal Radar 2008: MakeMyTrip

Rated India’s #1 Travel Website (by JuxtConsult), MakeMyTrip has carved a niche for itself in the eight years since its inception in 2000. It started out as a service for the booming USA to India NRI travel market and has now evolved to include airline tickets, hotel reservations, holiday packages, car rentals and several other services. Founded by Deep Kalra, Keyup Joshi and Sachin Bhatia, the company has over 700 employees and provides 24×7 support from its call center in Gurgaon, India.

In the current year, the company crossed $125 million in gross sales which is a 180% growth from the previous year’s sales of $42 million. According to contentSutra, the company made approximately $120 million in sales and about $6 million in commissions (5% of ticket prices). The commission number looks significantly higher than its competitors, Cleartrip and Yatra, and the corresponding revenue number, thus, sounds questionable.

In an interview with EyeforTravel, CEO Deep Kalra said the company enjoys a 45% market share and is targeting to break even by December 2008 and will reach a profitable quarter in a few months. Its closest competitor Cleartrip enjoys a 35% market share and others including Yatra make up the rest of the pie. The company is planning to go public anytime after 2008 and may be involved in some acquisitions in the online travel market this year.

They will also increase their offline presence mainly in Tier II and Tier III cities. The strategy of building a strong offline network has originally been adopted by rival site Yatra, who has the Reliance network to back this approach. MakeMyTrip secured an investment of $10 million from SB Asia Infrastructure Fund (SAIF) in May 2005 which was used mainly to roll out its India operations. In December 2006 the company secured $13 million in its second round of financing from Helion Ventures, Sierra Ventures and existing investor SAIF Partners. In 2007, the company received its third round of $15 million from Tiger Fund and its three existing investors – SAIF, Helion and Sierra Partners.

So what would $38 million dollars build? By 2010, perhaps a $30-$40 million company. Seems like way too much money has been invested.

This segment is a part in the series : Deal Radar 2008