Circa 2008: India’s online travel agency (OTA) market is the most competitive segment of the country’s nascent digital economy. MakeMyTrip has raised $38 million from Tiger Global and is the market leader. Cleartrip has raised $25 million from Silicon Valley’s Kleiner Perkins and Mahindra Group; Yatra has secured nearly $30 million from Norwest and Network18 Group, and Travelguru has $25 million from Sequoia and others. Global players including Expedia, Travelocity and Tripadvisor are also entering the market.

Amidst this, Ixigo emerges as a metasearch engine offering comparisons of prices sourced from these agencies. Founded in 2007 by Aloke Bajpai and Rajnish Kumar, former software engineers at travel tech solutions firm Amadeus, the startup raises about $1 million over the next two years.

Circa 2021: Cleartrip, which is backed also by SAP-owned Concur, is acquired by Flipkart for a reported $40 million—cents on the dollar considering the over $70 million it had raised. Yatra, which has so far raised about $100 million in venture funding and another $100 million through a US listing in 2016, has a market capitalization of $111 million on Nasdaq. MakeMyTrip acquired Ibibo in 2016 and remains the largest OTA in India with a market capitalization of $2.6 billion, but profit still eludes it.

Ixigo has pivoted to emerge as India’s second-largest OTA in terms of operating revenue and gross bookings, and has squeaked out a profit of Rs 7.5 crore (about $1 million). On its heels is Easemytrip, which also claims to be the second-largest OTA in India. The bootstrapped company listed its shares on the stock market in March this year.

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India’s online travel market, one of the top segments of India’s digital economy in terms of user penetration, is also one of the most brutal in terms of competition. It’s attracting a new set of competitors—including Flipkart, Amazon India, Paytm and Phonepe that are looking to sell more services to their hundreds of millions of users.

Ixigo survived in this market with about $22 million raised in primary funding until recently. With an IPO in the works, more capital has started flowing its way. Last month, it announced a $53 million pre-IPO round, of which about $37 million was primary capital. (Ixigo is still one-ninth of MakeMyTrip in terms of net revenue and one-fifth in terms of gross transaction value.)

THE UPSHOT

By becoming an online travel agent with a focus on train and bus ticketing and keeping costs at a minimum, Ixigo has boosted its topline and bottomline. Whether it can move to higher-margin businesses in bus ticketing and hotels is the big question

The company is looking to mop up Rs 1,600 crore (about $215 million) through its IPO, of which Rs 850 crore (about $ 115 million) will be a sale of shares by existing backers including Elevation Capital and Micromax, as well as its founders. The remaining Rs 750 crore (about $100 million) will be in primary funding, nearly five times the amount it has raised in its 14-year history.

The CapTable analyses the key numbers from Ixigo’s draft red herring prospectus, how the company adapted its business model as the online travel market evolved, and how its investors are expected to fare with its IPO.

From Price Comparison To Online Travel

Ixigo’s fortunes began looking up when it ventured into the railway business in 2015. Initially, it mainly provided users free information on routes. Two years later, it signed a contract with the Indian Railway Catering and Tourism Corporation to sell tickets. It was beginning to see the advantages of being an online travel agent and not just an aggregator.