“We are at that stage where we can grow at least 30% year-on-year on the back of societies and advertising revenue. With some new verticals and experiments, we may be able to drive 50% growth,” said Abhishek Kumar, co-founder and chief executive of the company, for beyond 2024-25.
For this financial year, Kumar said the startup achieved company-wide profitability and was on track to almost double its revenue during the fiscal year, adding that the company can easily keep the momentum for 30-50% growth.
In 2023-24, the company posted a revenue of ₹110 crore and reduced its losses by 82% to ₹40 crore.
Sharp focus
The founder told Mint that the company is past early distractions and focused on building a sustainable business and going public. He did not disclose any timelines for the initial public offering (IPO) but said the company has seriously started thinking about it.
The main driver for the growth is the acquisition of new societies and homes. While the company is currently present in about four million homes, it is adding about 100,000 homes every month.
“There are 25 million households in gated communities as per our estimate, and we are present in just four million households. Every month, we are acquiring communities, and as the target increases, the team keeps on increasing,” he said.
While 65-70% of the revenue comes from advertisements right now, about 30% comes from software as a service (SaaS). Advertising has allowed it to become a very viable business, according to Kumar. While It’s a comfortable split, SaaS share may increase a little bit, he noted.
Talking about the challenge with the software offering, Kumar said, “We thought integrating SaaS with societies would make money, but you can’t make money in India just with SaaS. India is a software exporter of the world, but non-Indians pay for that software.”
He added communities are almost always short on cash. “It’s very tough as a resident welfare association (RWA) member to run it as an enterprise. They have a different full-time job, and they are going out of their way to do this very thankless job. Residents also don’t pay on time. You’ll always find them thinking we need to pay vendors less. Now, with ads, we have created a win-win situation,” he said.
The sector hasn’t seen much activity recently because of the struggle with scaling SaaS offerings in society management. Indian customers are price-conscious, making it difficult to price solutions competitively while maintaining profitability. Freemium models often result in users staying on free tiers without converting to paid plans.
MyGate’s main competitors include ApnaComplex (acquired by real estate services firm Anarock), Adda, and the deep-pocketed NoBroker.
NoBroker’s entry into the residential society app market in 2018 marked a turning point for MyGate’s strategy, when the company shifted its focus from generating revenue to aggressively acquiring customers. As it became harder to convert customers to pay, MyGate shifted focus to a sustainable model and advertising has started to pay off.
As part of its new experiments beyond advertising and SaaS, the company launched MyGate Locks, its range of smart door locks, in September 2024. “We are looking at this as an option value right now. We’ll scale this up when we believe that we have solved the profitability problem. It is still at a very early stage,” said Kumar.
Hard lessons
The company has experimented with many things and burnt money. Now, it plans to build the business slowly and sustainably, according to the co-founder.
“The first distraction is that I don’t want more money in the bank than we need. Let’s say some venture capital (VC) money comes and says, oh, you are doing great, take $100 million; I don’t know if I will be super happy with that. It will be a major distraction for us,” he said.
“Whatever funds we raised, we have locked in the bank. Safety net is enough, and it allows us to also do some experiments, which is what we are doing with smart devices,” Kumar added.
Talking about the past mistakes, Kumar said the company’s monetization journey should have started earlier than it did. “We started monetizing from 2021. So, if you see, the history of MyGate revenue, 2020-21 was ₹8 crore, but we started from 2016-17. We had ₹10 crore of yearly revenue, which for a company that has raised $60 million was nothing,” he said.
MyGate has raised about $80 million in funding from investors like Tencent and Tiger Global Management, among others.
According to Kumar, the scale still remains a challenge, but he is optimistic. “The vision is that of 25 million homes in gated communities in India using MyGate.”