Pepperfry set to raise $20 million in Series F round

Online furniture and home products marketplace Pepperfry, which aims to turn profitable in the next financial year, is looking at one more round of funding ahead of its proposed initial public offering (IPO).

“We don’t need much money as we are earning about Rs 200 crore a month. Ideally, we need to earn Rs 1,000 crore every month. We will raise about $20 million in our Series F round ahead of the IPO. It could be our last round of funding before we go public,” said co-founder and CEO Ambareesh Murty (in picture). The seven-year-old furniture brand has raised a little over $200 million (Rs 1,300 crore). It expects to achieve a business size of $1 billion (over Rs 7,100 crore) and turn profitable by FY’21. It also aims to hit the capital markets with its maiden IPO the year after.

“Our CFO conducted IPO Day for on September 18. Our investors and top management team sat together to understand various issues pertaining to IPO. It is too early for us to decide on the exact amount of money to be raised. We will work out that at a later stage,” Murthy told DH.

He said the purpose of the IPO is not only to provide exit route to some investors but also to attract new investors and provide liquidity to employees ESOPs,” he said.

Pepperfry’s existing equity investors include Norwest Partners, Bertelsmann India Investments, Zodius Capital and Goldman Sachs.

Four focus areas

The online furniture brand commands 53% of traffic in online furniture business which is pegged at Rs 9,000 crore, aims to focus on four key areas. Currently, Pepperfry has over 200 regional and national furniture brands, and 10,000 merchants that includes 250 exclusive furniture merchants across various sourcing hubs. It offers the largest catalogue with over 1 lakh products.

In order to enhance the quality and efficiency of delivery, Pepperfry built India’s largest big-box supply chain network. Their big-box logistics infrastructure makes products accessible to consumers across 500+ cities with the capability of delivering 1 lakh large items per month.

It aims to expand its studios, build more private labels, expand supply chain network and leverage technology. The company opened 23 studios in April this year and aims to add 50 more in one month before April next. It plans to increase reach a network of 116 studios by June next year. Currently, half of its total business comes from its private labels and it wants to launch more such labels.

The company currently operates three large warehouses in the country -- Gurugram, Mumbai and Hoskote near Bengaluru. It aims to open two more in the country, of which next will be in Kolkata. It also plans to expand its Gurugram warehouse, Murthy said.

Currently, Pepperfry delivers in 22 states and plans to reach other states very soon.

Leveraging technology

Pepperfry plans to invest heavily in new technologies. After using augmented reality (AR), Pepperfry now wants to build solutions around virtual reality (VR). Its 100-member strong R&D team in Mumbai is building solutions and it aims to launch the product in the next year. Simultaneously, it is looking at the acquisition of companies with capabilities in VR.

“In the coming years, customers will buy using VR. They will go to our studios, put on VR glasses, pick products and put them in the layout and select products for their homes. We are converting our catalogues into 3D models, which can be turned, rotated before selecting them,” Murthy said.

He said Pepperfry will be the first company in the world to use VR in a big way for helping customers to choose their products.