Looking to bolster its recent entry into the furniture space as well as the sleep solutions segment, Bengaluru-based D2C startup Wakefit has raised INR 185 Cr (around $26 Mn) in its Series B funding round from Verlinvest, along with participation from existing investor Sequoia Capital India.
With this round, Wakefit’s valuation has gone up to around INR 1,900 Cr (roughly $258 Mn) from INR 220 Cr (approx $31 Mn) when Sequoia had invested INR 65 Cr in December 2018.
The company said that the funding would go towards boost Wakefit’s brand penetration and growth in non-metro areas of India, along with providing the needed investment for machinery, manpower addition and factory setups. Given the brand’s D2C focus, technology and marketing will also see significant investments from the funds.
The company currently has factories in Pune, Delhi, Jodhpur, Hyderabad and Bengaluru, which will act as logistics hubs for consumers in Tier 2 and 3 markets. Besides this, Wakefit is foraying into retail channels as well with plans to set up experience centres in a few cities as a pilot, which it claims is in response to growing customer feedback.
Founded by Chaitanya Ramalingegowda and Ankit Garg in 2016, Wakefit is one of the earliest online-first D2C brands in India, particularly in the sleep solutions space. It offers a range of products, including mattresses, bed frames, pillows, bedsheets and more others. Recently, it also ventured into home furniture, which includes study tables, sofa, bookshelves, shoe racks among others, competing with the likes of online furniture startups Furlenco, Pepperfry, Rentomojo and others.
In its press statement, the company said that revenue in FY2020 has grown to INR 199 Cr from INR 80cr in FY 2019. In fact, Wakefit has been a rare example of profitability in the D2C space as seen in the Inc42 Plus analysis on the segment. In FY2019, the gross profit margin for the company stood at 41.2% compared to 38.5% in the previous financial year.
Cofounder and director Ramalingegowda had told Inc42 in an earlier interaction, “65-70% of our revenue comes from our native website, and remaining 30-35% from ecommerce marketplace such as Amazon, Flipkart etc.”
Besides Wakefit, a lot of digital-first D2C sleep tech startups are cashing in on the $1.4 Bn opportunity, including The White Willow, Cuddl, Mattress Box, Wink & Nod, Sunday and Sleepy Cat, which are addressing the hitherto unmet customer needs in a traditionally unorganised industry.
As part of the funding round, the company has also instituted an ESOP buyback worth INR 15 Cr for over 50 employees, out of a total of 600 employees as on March 2020. It plans to increase its workforce by 400% to 3000 employees by March 2021. It said that among its focus areas in the people operations aspect has been training programmes for machine operators, carpenters and customer experience executives as well as learning and development (L&D) modules as part of the Wakefit Academy initiative, which helps develop skilled manpower at the grassroots level.
CEO and cofounder Garg said, “Given that the company has been profitable from an early stage – a rarity in the start-up world – our focus has always been on high growth while maintaining strong business fundamentals. Our product innovation and customer centric DNA has enabled us to achieve our growth targets year on year. The latest funding round will help us touch more lives and penetrate deeper into the Indian market.”