Mumbai: Online home design firm Livspace is in advanced talks to raise $100 million at a valuation of over $500 million, said two people aware of the matter, requesting anonymity.

The round is expected to be led by Kharis Capital, a European investment management firm, along with Singapore’s growth stage investor Venturi Partners, said one of the two people cited above.

Its existing investors, including private equity firm TPG Growth, Swedish furniture firm Ikea and Ratan Tata’s UC-RNT Fund will also participate in the round.

Livspace plans to utilize the money to expand its footprint beyond metros in India, and to ramp up its operations in Singapore. It plans to launch its services in Chandigarh, Kanpur and Lucknow, the people added.

Livspace was launched in late 2014 by Anuj Srivastava and Ramakant Sharma, former senior executives of Google (Alphabet Inc.) and Myntra Designs Pvt. Ltd, respectively. It offers an online marketplace for home interior solutions. It also offers software tools for designers to streamline their workflow. While Livspace declined to comment on Mint’s queries, Kharis Capital and Venturi Partners did not respond to email queries.

Though Livspace is yet to file its annual results for fiscal 2019, a third person said estimated revenue was at $20 million, and may be in the range of $60-80 million for FY20.

For FY18, Livspace’s loss doubled to 95 crore on a revenue of 41 crore, which had grown 80% year-on-year, as per regulatory filings. Mint, however, could not independently ascertain the loss figures for FY19 and FY20.

Livspace will use the fresh capital to expand offline through its “experience centres" from the existing four stores to 12-15 over the next one year.

Among new investors, both Kharis and Venturi have their origins in Verlinvest, a Belgian firm that is active in India. Verlinvest’s Indian bets include online education firm Byju’s, Sula Vineyards and Veeba Foods.

Daniel Grossman led investments for Verlinvest before founding Kharis, while Nicholas Cator, who now heads Venturi, used to lead Verlinvest’s Indian deals, according to a report by The Economic Times on 5 November.

Online furniture startups, including retailers such as Pepperfry and Urban Ladder, and design-focused firms, such as Livspace and Homelane, have seen user traction and investor interest of late. These companies are looking to formalize a fragmented market, which counts on unskilled labourers and contractors who could be undependable and risky, said a fourth person tracking the sector, requesting anonymity.

“The furniture and home design space has massive potential online, given rising internet penetration and demand from tier-II, III and beyond. Further, with the government’s focus on infrastructure and ‘housing for all’, online furniture and home decor businesses are expected to see significant growth," said Anil Talreja, partner, Deloitte India.

“However the sector’s challenge comes when different customers have varied needs and one size doesn’t fit all. To address this, pure-play online firms are opening, or have opened physical stores, which give limited, but comprehensive choice, and the requisite touch and feel of the product," he added.

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