Bengaluru: Online home design startup Livspace has raised $70 million in a funding round led by private equity firm TPG Growth and Goldman Sachs as it seeks to expand to new cities, open a large number of stores and accelerate sales growth. The Series C round of funding by Livspace (Home Interior Designs E-commerce Pvt. Ltd) is one of the largest funding rounds by a vertical e-commerce startup, many of which have struggled to attract capital in the past two years. The company’s existing investors Jungle Ventures, Bessemer Venture Partners and Helion Ventures also participated in the round.
Livspace, which has raised $105 million in funding so far, will use the fresh capital primarily to grow sales faster. The company is now targeting monthly gross sales of $11-12 million by March 2019, up from roughly $7 million currently, co-founder Ramakant Sharma said in an interview. Livspace, which is present in seven cities, will expand to six more cities by 2019.
“Already we have decent brand recall in cities likes Bangalore, Delhi and Mumbai where we are present. With this financing round, the next path is to really become a destination brand for interior design. We will also open (in) new cities and more experience centres. We will continue investing in our technology and building our designer ecosystem," Sharma said.
Livspace was launched in late 2014 by Anuj Srivastava and Sharma, former senior executives at Google (Alphabet Inc.) and Myntra Designs Pvt. Ltd, respectively, along with Shagufta Anurag, founder of architectural design consulting firm Space Matrix.
The company, which primarily competes with Sequoia Capital-funded HomeLane, as well as bigger furniture e-retailers, Pepperfry and Urban Ladder, offers a marketplace for customers to buy interior designs online from designers. It also offers software tools for designers to streamline their workflow.
Mint had reported on 20 June that Livspace was in talks to raise $50 million in fresh capital.
“Our vision is to evolve Livspace into one of the biggest and most admired consumer internet companies to emerge out of India," Srivastava said in a statement.
The interior design platform may also launch in international markets after 18 months or so.
“We believe this platform can be taken to international cities. If a city has a very fragmented seller ecosystem, where there many interior designers and contractors, and you see new homes coming up, there is a need for a platform like Livspace," Sharma said.
TPG’s investment represents a coup for Livspace. PE firms typically avoid high-risk bets and prefer backing companies that generate lots of cash, which many consumer internet firms don’t. But of late, as the business models of internet companies have become less suspect, TPG has stepped up investments in startups, like other PE firms including General Atlantic and Carlyle.
“TPG is a marque investor and their experience in building large and sustainable companies is very valuable. From their perspective, where Livspace is a match is our commercially sound business model. We make profits on each order and the market is large. Our business has negative working capital, meaning we collect more money than we pay. TPG’s investment also shows that our business model has matured and now we need to replicate it in the new cities that we enter," Sharma said.
The large fund raise by Livspace tracks the revival in funding for Indian startups this year. Triggered by the $16 billion sale of online retailer Flipkart to Walmart Inc., investors are pouring cash into internet companies after two years of weak investment activity.
Avendus Capital advised Livspace in its latest funding round.