The Sleep Company in talks to raise $15-20 million in round led by Premji Invest

The Sleep Company uses tech, science and ergonomics to make office chairs, pillows, mattresses and the likes.

Direct-to-consumer mattress maker The Sleep Company is in advanced discussions to raise $15-20 million in a funding round led by Premji Invest with participation from Fireside Ventures, sources told Moneycontrol. Both Premji Invest and Fireside are among the investors in the company.

The fund-raise comes at a time when the competition in the mattress space is heating up. The Sleep Company’s rival and Peak XV-backed Wakefit is also in talks and may raise a similar amount from Elevation Capital, an existing investor, to expand its range of products.

The Sleep Company would use the fresh funding to increase its offline retail footprint, enter newer geographies and grow its presence, sources said.

Investors are likely to value The Sleep Company at around $180 million, with some room for an upside, a significant premium from its previous valuation of around $120-130 million, the people cited above said.

Premji Invest (PI), an arm of the Azim Premji Foundation, invests primarily in startups in the financial services, technology, consumer, healthcare and industrials spaces.

Fireside Ventures, on the other hand, invests in early-stage consumer brands across sectors such as food and beverages, personal care, kids and education, lifestyle and home products.

Around the same time last year, The Sleep Company raised Rs 177 crore from Premji Invest and Fireside Ventures.

Negotiations are still underway and the final contours of the deal could change. The company did not reply to Moneycontrol’s queries.

“The Sleep Company has been growing very well and its cash burn is also low. The firm is, in fact, on track to break even on a net basis soon,” one of the sources told Moneycontrol.

The Mumbai-based company ended FY22 with a revenue of Rs 56 crore, a jump from Rs 11.8 crore in FY21, as per Tracxn, a private markets data provider.

While The Sleep Company generated a profit of Rs 87 lakh in FY21, it slipped in the red and incurred a loss of Rs 11.6 crore in FY22. The company’s scale grew in the previous fiscal year and it likely ended FY23 with a revenue of around Rs 150-170 crore but was still a loss-making venture. It is yet to file the FY23 results. The company's top line is likely to double to about Rs 350-370 crore in the current fiscal, another person cited above said.

Founded in 2019 by Priyanka and Harshil Salot, The Sleep Company says it uses tech, science and ergonomics to make office chairs, pillows, mattresses and the like. It competes with SleepyCat, Sundayrest and Sleepyhead. Even traditional players like Sheela Foam have been stepping up with acquisitions to compete with new-age players.