Unable to scale up and with existing investors unwilling to pump in more funds, WestBridge Capital-backed interior solutions provider DesignCafe has been put on the block. The company, which was last valued at 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 scale up beyond the initial traction it saw. Merging with a larger player seems to be on the cards,” the first person cited above said on condition of anonymity as the talks are private.
The company has so far held talks with two large peers in its segment, Accel-backed HomeLane and KKR-backed Livspace, for a merger, the second person cited above said. The third person said the company has also engaged with Saint-Gobain-held MyHome and the JSW Group, too. It was not immediately clear which entity within the JSW Group was pursuing this acquisition.
In an emailed response to queries, a Livspace spokesperson declined to comment, and a HomeLane spokesperson said, “We don’t comment on speculation. If anything comes up, we will let you know.”
“The company has run out of financial runway, and existing investors are not ready to pump in money anymore,” the second person cited above said. The third person said that consolidation is likely in this segment, with large players armed with more capital expanding their businesses.
A JSW spokesperson declined to comment. A Saint-Gobain spokesperson, too, declined to comment on Mint’s queries. A DesignCafe spokesperson did not respond to emailed queries.
Founded in 2015 by Gita Ramanan and Shezan Bhojani, DesignCafe has raised close to $30 million in funding so far. 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 another $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 early-stage firms such as Fireside Ventures among its investors.
DesignCafe has been focusing 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 annualized revenue 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 such as HomeLane and Livspace have been able to achieve some scale and cross the ₹1,000 crore revenue mark.
With the real estate market bouncing back, the home interiors and renovation segment has also got a fillip. Mint recently reported that Livspace’s plans to flip back to India to list locally. The company is on the verge of achieving profitability. Meanwhile, HomeLane has hit operating cash profitability and is on a ₹1,000 crore-plus revenue run rate.