Livspace, the home and interior platform, is in talks to raise $20-25 million from private equity giant KKR in an internal round, people aware of the developments told Moneycontrol. The company, which raised $180 million in February 2022 from KKR and others, was last valued at $1.2 billion, but may see its valuation reduce.
KKR declined to comment, but sources close to the private equity company said these talks would have been preliminary.
A down round is when a company raises money at a lower valuation compared to the previous fundraise. Livspace’s round could potentially be another example of founders coming to terms with reality. Several startups – like Letstransport, Udaan, Rupeek, and Byju's – have either raised money in a down round or are in the process of doing so.
Livspace plans to use the fresh funds for general business purposes but the round is taking longer to close. “Livspace is burning around $4 million each month so it will likely use the funds to extend its cash runway. The company however feels that the valuation being offered is pretty low because of which the deal is stuck,” one of the persons quoted above told Moneycontrol.
Livspace is likely to be valued at around $700 million during the ongoing negotiations, as per sources.
Company statement
The company has denied the talks. “This is based on mere speculation and we dismiss these assertions. Our growth has been unparalleled in the segment and are very well funded to support our growth plans. We have a strong balance sheet with over $100 million (on) it and are not looking to raise any further capital at this point as our India business has turned cash flow profitable for the last two quarters. Given our strong balance sheet, we have also considered inorganic acquisitions within our segment but have not found any assets that reflect our growth and profitability profile, we are now driving our inorganic efforts towards acquiring private labels within our customer's home journey,” a company spokesperson said in response to Moneycontrol’s queries.
Also Read: Livspace says India business becomes 'cash flow positive' on robust revenue growth
Livspace has already acquired four companies. In 2015, it went on a buying spree and acquired Dwll, YoFloor, and DezignUP. After a gap of about six years, it bought Singapore-based Qanvast in 2021. But has not bought companies since then.
The company had planned up to five acquisitions in FY24 and even earmarked $100 million, as per reports; but not a single deal has fructified. In May 2023, it held talks to acquire Peak XV-backed rival HomeLane but there has been no movement there. That was shortly after it had laid off two percent of its workforce in March 2023, as per reports.
“We have witnessed a remarkable year in FY23, achieving an astounding 85 percent increase in revenue. Furthermore, we've established a strong presence in both mass-market and premium segments. Leveraging the buoyant real estate sales cycle, we plan to extend our reach to diverse customer segments, aiming to penetrate over 100 cities across our markets. We are on track to achieve our profitability goal and are focused towards building a sustainable, efficient, and prosperous business within the burgeoning home improvement sector,” the company spokesperson added in the statement.
Also Read: Livspace revenue rises by 85 percent to nearly Rs 1,100 crore in FY23
The developments are despite Livspace co-founder Ramakant Sharma, in an interview to news agency PTI on April 6, said the company’s India business had become cash flow positive from the October-December quarter of FY24. He however did not provide the exact numbers.
The full year’s financials are also not finalised yet, he said in the same interview. India is the startup’s biggest market and is responsible for 80-85 percent of revenues. Singapore and other regions account for the remaining.
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