Home interior services startup HomeLane has acquired smaller rival DesignCafe in a share-swap deal that values the combined entity at Rs 3,000 crore.
After the acquisition, HomeLane raised Rs 225 crore from new investors, including Sunil Kant Munjal’s Hero Enterprise and Claypond Capital, the family office of Manipal Group’s Ranjan Pai, with participation from existing investors such as WestBridge Capital and others.
After the merger, which is subject to regulatory approval, the joint entity is on track to hit Rs 1,000 crore revenue in the ongoing fiscal 2025, up 31.4% from Rs 761 crore in FY23, HomeLane cofounder Srikanth Iyer told ET on Wednesday. The company is also targeting profitability at the Ebitda (earnings before interest, taxes, depreciation, and amortisation) level.
Currently, the combined entity has annual recurring revenue of Rs 900 crore and is cash-flow positive.
HomeLane and DesignCafe will continue operating as independent brands, each targeting distinct market segments, Iyer said. They operate 82 stores nationwide and have around 2,750 employees.
“We believe that the brands will continue to exist. Indian consumers in interior design want choice and we want to give them that choice. So, we are looking at this as different brands serving different sub segments in the ecosystem that we are serving right now,” said Iyer.
The company is also eyeing an initial public offering within the next 9-15 months.
“As we start thinking about an IPO in the short to mid term, we want to make sure that we are well capitalised in case there are any sort of shocks. We are seeing a real purple patch in terms of how the real estate market is growing,” said Tanuj Choudhry, cofounder of HomeLane.
The consolidation between these two firms comes amid slowing business volumes in the home services sector and a funding freeze.
HomeLane, founded in 2014, operates brands like Doowup, Cubico, and Wrapzap and has served around 45,000 customers across 30 cities through more than 60 experience centres.
Before this deal, HomeLane had raised $133 million in total funding, while DesignCafe had secured $79.1 million, including $5 million from WestBridge Capital and venture debt from Alteria Capital in March 2023.
In June 2023, HomeLane raised $9 million through convertible notes.
Iyer said the fresh capital infusion will be used to drive growth and technology investments, with a focus on profitability. He emphasised the company’s strategy to invest in expanding its presence in the middle and lower-middle market segments.
“We think that there is quite a bit of trust deficit that is there in this segment which can be bridged by building a brand which can be looked at as trustworthy in the longer run and for that there is a consistent investment that is required,” he said.
In 2022, DesignCafe introduced Qarpentri, while HomeLane launched Doowup in 2023.
Meanwhile, Livspace, backed by Ikea–the largest player in the home decor space, is also considering an IPO by 2026, as ET reported on September 18. Livspace was previously reported to be in talks to acquire HomeLane.
“HomeLane has been a great tech platform and DesignCafe has built a great design DNA. Both the companies are coming together in a way that will fill each other’s gaps and it accelerates the path to a public event for us and our shareholders. From that perspective, it seems the most rational thing to do,” said Shezaan Bhojani, cofounder of DesignCafe.
“Our investment reflects confidence in their business model and it also presents meaningful synergies with Hero Realty. We look forward to seeing the innovation and growth that this partnership will bring,” said Munjal, chairman of Hero Enterprise.
Source Homevior.in
