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Thursday, December 8, 2022

Device management startup Servify gears up for $2.5B IPO after raising $65M

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According to sources, the fresh fundraising has increased device management startup Servify’s valuation to close to $800 million, as the business plans a $2.5 billion IPO in the next 18-24 months.

Servify, a device management business, has secured $65 million in a pre-initial public offering (IPO) round headed by Singularity Growth Opportunity Fund.

Servify provides smartphone original equipment manufacturers with white-label warranty and after-sales support packages (OEMs). It entered the appliance after-sales maintenance industry in February of this year with the purchase of 247around. The business intends to go public in the next 18-24 months. Existing investors such as Iron Pillar, Beenext, Blume Ventures, DMI Sparkle Fund, and new investor AmTrust also contributed to the fundraising.

According to insiders, the current financing raises Servify’s worth to over $800 million. According to the company’s founder and CEO, Sreevathsa Prabhakar, the investment round is not yet concluded and may see additional $7 million in equity injection from strategic partners such as original equipment manufacturers (OEMs), insurance players, and lenders.

The final close, which is scheduled in mid-September, will bring the investment round to $72 million. The financing comes at a time when the firm has an annual revenue run rate (ARR) of $130 million and hopes to surpass $150 million by the end of the current fiscal year, according to Prabhakar.

Prabhakar said, “The aim is to go public in the next 18-24 months, and we want to make sure we are in compliance with all reporting obligations. We expect to be profitable in a few months and to demonstrate sustainable profitability when we go public. So, it’s reasonable to estimate that when we go public, we’ll have an ARR of roughly $280 million, with 15% -20% of that going to profits.”

The startup hopes to become profitable within the next quarter. The most recent funds received will be utilised to expand into new Latin American areas, develop fresh affordable services for clients, and consider inorganic acquisitions to reach new markets and strengthen worldwide footprint.

Servify now serves over 180 OEMs in 49 countries, including North America, Europe, Turkey, and the Middle East. The business is collaborating with loan providers to assist OEMs and lenders in sweetening the deal for device purchases, as well as offering services such as device protection and promised repurchase for a subscription fee, as well as buy-now-pay-later (BNPL) choices.

It is testing this strategy in 190 stores in India and intends to expand it to the Middle East and the United States. 

Prabhakar said, “We were handling everything after the sale and wanted to enter into the sale-purchase area. The product will include a subscription as well as a (buy-now-pay-later) BNPL loan (from lenders) to give a client with extra assistance, such as assured buyback of their gadgets, device protection, and other services.” 

Prabhakar stated that the product is now only offered in offline retailers since device underwriting can be real-time. In the future, the firm intends to lend from its books and will seek to get a non-banking finance company (NBFC) licence. However, Prabhakar did not provide a specific timetable.

Servify’s funding comes at a time when Amazon has invested Rs 39.5 crore in re-commerce site Cashify, according to company documents. 

Apurva Patel, managing partner at Singularity Growth, stated, “Servify allows worldwide electronics OEMs to connect and engage with their consumers.

Product safeguarding is no longer an afterthought. It is quickly gaining prominence among both OEMs and consumers. As a result, we envision Servify progressively progressing toward global leadership,”

Singularity Growth Opportunities Fund-I, established in 2021, is the first fund launched by Singularity Asset Management. It has made investments in software companies such as Exotel and WebEngage, as well as in the direct-to-customer brand MCaffeine.

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