Existing investor Fireside Venture also participated in the round, along with Alteria Capital
The fresh capital will be used in four areas- brand building, expansion of omnichannel presence and international expansion, strengthening the team
The founders want to build an INR 500 Cr company in the next two to three years
D2C brand The Sleep Company has raised INR 177 Cr ($21 Mn) in its Series B funding round led by Premji Invest. The equity round also saw participation from Alteria Capital and existing investor Fireside Venture.
The startup will use the capital for brand building, omnichannel and international expansion, and strengthening its team to build a global business.
“Our company has grown exponentially in a very short time. We will continue to grow our business and our share in the digital ecosystem and subsequently invest in building our brand,” The Sleep Company cofounder Priyanka Salot told Inc42.
The Mumbai-headquartered D2C brand competes with the likes of Wakefit, Sleepyhead, Sunday, and SleepyCat in the crowded sleep solutions and mattress market of the country. It is trying to carve a niche with its patented SmartGRID mattress tech. It also sells tables, chairs and other furniture.
Building An Omnichannel Presence
In August, the startup forayed into offline retail with the opening of exclusive stores in Bengaluru and Hyderabad. While the D2C brand plans to open 25 stores within this fiscal year, it aims to take the number to 100 by March 2024.
The development came at a time when Wakefit, a major competitor of The Sleep Company, is also focusing on offline expansion. It reportedly plans to increase its store count to 90 across 25 cities in the next 3 years.
“We recently ventured into omnichannel and started opening our own experience and we would be going very aggressively expanding that and making our patented product available to more customers,” Priyanka said.
Without disclosing numbers, cofounder Harshil Salot said that the brand is seeing strong early numbers from its offline stores. “We are very confident that offline will be a large chunk of our business in the next two-three years,” he said.
International Expansion
The D2C brand recently also went global with expansion in Japan, the UAE, and the UK. It claims to be seeing “strong early numbers” in Japan, the first country it entered earlier this year as part of its international expansion plans.
“We got the patent also granted in Japan which shows the power of the technology and innovation born out of India. That has given us confidence that the product has not the potential to win in India but also globally,” Priyanka said.
Considerably, it has also applied for patents in more than 20 countries, including the UK, the UAE, the US, and some other European countries.
The Sleep Company has a two-pronged strategy for international expansion. Firstly, it is expanding through the Amazon Global Selling programme, which makes it easier for brands to enter new markets.
Besides, the startup plans to continue to leverage the digital-first ecosystem and take the brand beyond Amazon to its own D2C website to reach customers.
“The intent and the investment will always be that we ensure strong brand awareness when we enter new markets, customers know about our patented smart grid technology,” she added.
Moreover, the D2C brand will also focus on strengthening its supply chain to help service the international market.
Targeting INR 500 Cr Revenue In 3 Years
Along with its international and omnichannel expansion, the startup expects its marketing expenses to also grow. Promotional expenses are expected to touch INR 25-30 Cr by FY24. However, Priyanka said that The Sleep Company will never go ahead with its sales when it comes to marketing spends and increase the latter in line with the growth of the brand.
The Sleep Company has touched an ARR of over INR 200 Cr, with a 300% year-on-year growth, Harshil said. More than 35% of its business comes from Tier-2 cities and beyond, while the average ticket size currently stands at INR 25,000, he added.
“We have built a strong D2C channel, our own channel websites contribute to more than 50% of our business. In addition, marketplaces such as Amazon and Flipkart contribute to 40-45% of our business,” Priyanka said.
The founders want to build an INR 500 Cr company in the next two to three years and an INR 1,000 Cr company in the next four to five years.
According to a Research and Markets report, India’s overall mattress market grew at a CAGR of over 11% in the last five years to reach a market size of INR 12,000-INR 13000 Cr. The organised industry in the segment grew at 17% and currently has a 40% market share.
A larger number of D2C brands have emerged in the growing sector, heating up the competition. The Sleep Company aims to stay ahead in the game with its differentiated product and customer-centricity, Harshil said.
