Kedaara Capital, others negotiate deal to invest over Rs 500 crore in The Sleep Company

Founded in 2019 by Priyanka and Harshil Salot, The Sleep Company uses tech, science and ergonomics to make office chairs, pillows, mattresses and the like.

The Sleep Company, a mattress and bedding solutions provider, is negotiating with Kedaara Capital, ChrysCap, IIFL and others to raise over Rs 500 crore (over $60 million) in a fresh round, as per sources, as consumer startups continue to remain a favourite among investors.

This is the Mumbai-based company’s second round in a span of around 18 months and comes as its rival, Wakefit, backed by Peak XV Partners (formerly Sequoia India), is preparing for an initial public offering and has appointed investment bankers for the process, Moneycontrol reported on April 10.

The Sleep Company is being valued at around $400 million, or about Rs 3,400 crore, during the ongoing negotiations, one of the sources told Moneycontrol. The company, which has likely doubled its valuation since the previous round in November 2023, is now expected to command a valuation comparable to that of Wakefit.

In 2022, The Sleep Company was valued at around $120 million which grew to $180 million in 2023. And now, it has increased considerably to around $400 million as the company continues to compound.

“The Sleep Company has interest from Kedaara Capital, ChrysCap, IIFL – all three are in the fray. While negotiations are in the advanced stages, the founders are yet to decide on which investor they will raise from and how much they finally raise,” the person added.

While The Sleep Company already has around 100 stores, it will use the funds to expand its operations and increase store count. The company has also been toying with the idea of introducing accessories like seat cushions, back cushions, neck massager pillows and the motorised recliner sofas, all of which use its Smartgrid technology, to increase revenue streams, Moneycontrol had reported earlier.

While the final round size is yet to be decided, it will be upwards of $60 million or around Rs 500 crore. The total amount may also change in the coming weeks depending on how many shares change hands and what the total primary capital plus secondaries portion turns out to be, a second person aware of the developments said.

“Fireside Ventures is selling a part of its stake in The Sleep Company as part of the ongoing round to make way for new investors, so that is also firming up right now,” the person added.

The Sleep Company, Fireside Ventures, Kedaara Capital, ChrysCap and IIFL did not reply to Moneycontrol’s queries.

Bengaluru-based The Sleep Company is raising a new round after it has scaled and shown venture capitalists the potential to provide an outsized return. In FY23, the company posted revenues of Rs 130 crore and then grew 148 percent to Rs 320 crore in FY24, as per data available on Tracxn, a private markets data provider.

During the same period, its losses widened from Rs 37 crore to Rs 59 crore.

The Sleep Company was founded in 2019 and is run by a husband-wife duo, Harshil Salot and Priyanka Goyal Salot. It has raised over $50 million from a bunch of investors and also counts Premji Invest as its backer.