Exclusive: Furlenco Raises $7 Mn Debt From Northern Arc, CredAvenue

Furniture rental startup Furlenco has raised INR 60 Cr (about $7 Mn) in debt funding from Northern Arc Capital and CredAvenue.

Furlenco raised the debt through two series of non-convertible debentures — INR 50 Cr by allotting 500 NCDs at an issue price of INR 10 Lakh each to Northern Arc and INR 10 Cr by allotting 40 NCDS at an issue price of INR 25 Lakh each to CredAvenue, as per its regulatory filings accessed by Inc42.

The startup last raised $140 Mn in its Series D funding round in 2021. The funding round, led by Zinnia Global Fund, CE-Ventures and Lightbox Ventures, comprised $120 Mn of venture debt and the remaining portion was equity funding. Overall, it has raised a total funding of over $269 Mn till date.

Founded in 2012 by Ajith Mohan Karimpana, Furlenco operates an online subscription-based furniture rental platform in Bengaluru, Mumbai, Delhi NCR, Chennai and Kolkata among others. Besides renting furniture, it also operates a furniture marketplace.

In 2021, Furlenco rejigged its business model and created House of Kieraya as an umbrella brand, which houses Furlenco, remanufactured furniture marketplace Furbicle, and annual subscription vertical UNLMTD. 

Furlenco competes against the likes of Rentomojo, Cityfurnish Rentickle and Pepperfry in the rental furniture market.

The debt funding for Furlenco highlights that startups with rental as their core business are grappling with scarcity of equity capital. The growing popularity of affordable EMIs has further dented the prospects of such companies.

While furniture rental companies are growing, they have remained small. Take the case of Wakefit Innovations, which started in 2016 as a mattress startup but later diversified into selling furniture online. The furniture seller posted a 21% year-on-year growth in its operating revenue at INR 986.4 Cr in the fiscal year 2023-24.

Rentomojo, which was founded only two years earlier in 2014, generated an operating revenue of only INR 193 Cr in FY24. Pepperfry was founded in 2011. The company saw its operating revenue decline 31% year-on-year to INR 180.9 Cr in FY24. Reports surfaced last September that the Bengaluru-based startup is eyeing a public listing in the next 18 months.

Furlenco, which started around the same time, reported an operating revenue of INR 139.6 Cr in FY24, down over 10% from INR 155.8 Cr a year ago. Sheela Foam signed an agreement to acquire a 35% stake in the company for INR 300 Cr in July 2023.

It must be noted that Furlenco sacked nearly 180 employees to cut costs in March 2022. Inc42 then reported that with the job cuts, the startup was looking at achieving profitability ahead of its potential public listing.