The merger is expected to value DesignCafe at around $60 Mn, and HomeLane at $360 Mn
DesignCafe had encountered difficulties in securing a new round of funding for several months
After the merger, DesignCafe is expected to operate as an independent brand
Home interior startup HomeLane is looking to acquire its smaller rival DesignCafe in a stock-swap deal, a transaction which is expected to value the former at $360 Mn and the latter at around $60 Mn, ET reported.
DesignCafe had encountered difficulties in securing a new round of funding for several months leading up to the merger.
In March 2023, DesignCafe bagged a funding of INR 40 Cr ($4.8 Mn) led by WestBridge Capital, Mirabilis Investment Trust and Alteria Capital.
DesignCafe is approaching the merger with a focus on long-term sustainability as a business. Following the merger, the company aims to achieve revenue of approximately INR 200 Cr by FY25.
After the merger, DesignCafe is expected to operate as an independent brand.
Both HomeLane and DesignCafe have faced challenges in expanding their operations, and the merger is seen as a strategic move to address these issues amid the prevailing liquidity constraints, as per the report.
Moreover, the merged entity may contemplate a public offering approximately two years down the line.
Design Cafe, founded in 2011 by Ramanan and Bhojani, offers home interior solutions and is currently operational in nine cities in the country, including Mumbai, Delhi-NCR and Hyderabad. While its premium package costs around INR 8 Lakh, the startup also offers budget-friendly solutions under the brand ‘Qarpentri’.
Design Cafe’s net loss widened to INR 70.2 Cr in FY22 from INR 52.4 Cr in FY21, while its operating revenue grew to INR 80.6 Cr from INR 56.8 Cr in the previous year.
On the other hand, HomeLane closed a bridge round of INR 75 Cr (about $9.1 Mn) in June 2023. The funding was raised via convertible notes.
Founded in 2014 by Iyer, Rama Harinath, and Vivek Parasuram, HomeLane offers personalised tech-enabled end-to-end interior services.
In FY22, HomeLane’s standalone net loss widened to INR 153.05 Cr from INR 102.38 Cr in FY21. Its operating revenue in the year grew to INR 426.13 Cr from INR 275.69 Cr in the prior fiscal year.