Bengaluru-based online home design and decor startup Livspace has raised Rs 100 crore (approx $15 million) in fresh funding led by Bessemer Venture Partners to take on larger rivals Urban Ladder and Pepperfry.
Founded by former Googler Anuj Srivastava and ex-VP of engineering at Myntra Ramakant Sharma, Livspace plans to reach a run rate of Rs 600-700 crore riding on its latest round of funding. Further the company plans to reach operational profitability in the next 12-18 months riding on its capital efficient model.
"The overall gross margins of the business is about 40-45 per cent and our post marketing margin contribution that we earn is in the tune of 15-20 per cent. So on an order basis we generate a lot of cash and our level of capital requirement is never as large as traditional e-commerce models," said Anuj Srivastava, co-founder and CEO of Livspace.
This is Livspace's third round of institutional funding, bringing the total cash infusion into the company to around $27.6 million dollars. Existing investors such as Singapore-based Jungle Ventures and Helion Venture Partners also participated in the round. The founders continue to hold a majority stake in the company.
Apart from selling furniture online and offering interior design and decor services, Livspace recently started a platform to aggregate third-party interior designers and design firms. The company hopes the platform will triple its revenue to Rs 250-300 crore in the next 12 months, according to Srivastava.
Livspace will utilise the capital to grow its footprint out of Bengaluru and into metros such as Delhi and Mumbai. A large chunk of the capital will be sunk into opening experience centres for customers to touch and feel its products across these cities, a move it says is engrained into the DNA of how the company's business model works.
"We will be utilising a part of this capital to create the next-generation of experience centres so we can create a home design experience not seen in this part of the world," added Srivastava. Livspace also plans to utilise the capital to enhance its technology platform which will aid its third-party designers better serve customers and in turn help boost sales on its e-commerce platform.
Over the next few months, Livspace will add more brands to its store, increasing its marketplace opportunity and taking on rivals such as Urban Ladder and PepperFry. However, unlike the two leading online furniture sellers, Livspace says it will always remain a design-led e-commerce player which isn't as capital intensive as being a pure marketplace.