Pepperfry.com raises $8 million from NVP2 min read . Updated: 01 Apr 2013, 05:49 PM IST
The proceeds would be utilized for increasing the number of offerings at the website, said CEO Ambareesh Murty
Mumbai: Pepperfry.com, an online lifestyle store run by Mumbai-based Trendsutra Platform Services Pvt. Ltd, has raised $8 million from Norwest Venture Partners (NVP) in its second round of funding. In its first round, the company had raised $5 million from NVP in December 2011.
Ambareesh Murty, founder and chief executive of Pepperfry.com, said the proceeds would be utilized for increasing the number of offerings at the website and for setting up more fulfilment centres in Kolkata, Bangalore and Chennai. Currently, the company has fulfilment centres in Jodhpur, Mumbai and Delhi. Fulfilment centres are the hubs where a company adds value to a product that has been ordered by a customer like pleating and packaging after which it is couriered to the buyer.
“We are currently having a turnover of about a couple of million dollars. We expect to reach close to a break even or actually break even over the next 12 to 15 months," Murty said, adding that the company would focus on home and lifestyle products as the mainstay of the business.
Niren Shah, managing director, NVP India, said the company was doing well and has a market leadership in the home space. “This excites us. It is a big category and the opportunity is about $20 billion to $25 billion. They are seeing good traction also," Shah said.
The investment by NVP comes at a time when the majority of e-commerce firms in the country are struggling to raise their next round of funding. In the last three years, 52 e-commerce start-ups raised $700 million in VC funding, but only 18 companies were able to attract any follow-on investments, according to a report by investment bank Allegro Capital released in December. According to the report, an estimated 70-80% of VC funded e-commerce companies are on life support, in dire need of funds.
“In the frenzy of 2011 and early 2012, VC firms may have overexposed themselves to e-commerce without properly estimating the capital requirement of the sector. It is unlikely that any of these firms will invest in new e-commerce ventures," the report said.
“The market is just beginning to open up for follow-on funding. I would agree that many seed-funded companies could not graduate to series A or series B funding but that’s just not restricted to e-commerce or India. This happens across sectors and in mature markets like the US too," Shah said.
According to market researcher Forrester, the e-commerce market in India is set to grow the fastest within the Asia-Pacific region at a compound annual growth rate (CAGR) of over 57% between 2012 and 2016. India’s e-tailing market in 2011 was about $600 million (about ₹ 3,000 crore) and expected to touch $9 billion by 2016 and $70 billion by 2020, at an estimated CAGR of 61%.