Unable to scale up and with existing investors unwilling to inject more funds, WestBridge Capital-backed interior solutions provider DesignCafe has been put on the block. The company that was last rated close to ₹700 crore, has held talks with strategic and financial investors, three people with knowledge of the development said.
“The company has not been able to expand beyond the initial traction it has seen. A merger with a larger player appears to be on the cards,” said the first person quoted above on condition of anonymity because the talks are private.
The company has so far been in talks with two big peers in its segment, Accel-backed HomeLane and KKR-backed Livspace, for a merger, said the second person cited above. The third person said the company was also involved with MyHome, held by Saint-Gobain, and the JSW Group. It was not immediately clear which unit within the JSW Group was pursuing this acquisition.
In an emailed response to questions, a Livspace spokesperson declined to comment, and a HomeLane spokesperson said, “We don’t comment on speculation. If anything comes up, we’ll let you know.”
“The company has run out of funding, and existing investors are no longer willing to pump in money,” said the second person quoted above. The third person said consolidation is likely in this segment, with big players armed with more capital expanding. their businesses.
A JSW spokesman declined to comment. A spokesman for Saint-Gobain also declined to comment Mintthe questions of. A spokesperson for DesignCafe did not respond to emailed questions.
Founded in 2015 by Gita Ramanan and Shezan Bhojani, DesignCafe has raised close to $30 million in funding to date. In 2021, it raised $25 million from investors led by WestBridge Capital and Sixth Sense Ventures as part of its extended Series B round.
In 2023, DesignCafe raised an additional $4.8 million in a bridge round as a mix of debt and equity from investors including WestBridge, Mirabilis Investment and Alteria Capital. The company also counts startup firms such as Fireside Ventures among its investors.
DesignCafe focused on the home interiors category, which it believed was a billion-dollar opportunity. The company has a vertically integrated business model, with its own designers, workforce and a factory in Bengaluru manufacturing all its products.
The company, which also operates the Qarpentri brand of mass home interior solutions, is present in 10 cities across the country. It had an annual income run rate of ₹200 crore in March 2023.
The home interiors segment, pegged to be a $20 billion industry, is largely driven by unorganized local players and has seen very few businesses of scale emerge. Companies like HomeLane and Livspace were able to achieve some scale and cross the ₹1,000 crore revenue mark.
With the real estate market rebounding, the home interiors and renovation segment also got a chance. Mint recently reported that Livspace plans to turn back to India to list locally. The company is on the verge of turning a profit. Meanwhile, HomeLane has hit operating cash profitability and is on a ₹1,000 crore-plus revenue run rate.
(tagsTo Translate) WestBridge Capital