HomeLane, a rising name in home interior services, has acquired competitor DesignCafe in a share-swap deal that values the merged entity at ₹3,000 crore. This merger, pending regulatory approval, is expected to drive revenue to ₹1,000 crore in fiscal 2025, a 31.4% increase from ₹761 crore in FY23, as stated by co-founder Srikanth Iyer.
The combined entity is set to generate an annual recurring revenue of ₹900 crore and remains cash-flow positive. Both brands will operate independently, targeting different market segments, with a total of 82 stores and around 2,750 employees nationwide. Co-founder Tanuj Choudhry emphasized the need for solid capitalization in light of potential market fluctuations as they consider an IPO in the near term, especially amidst a robust real estate market.
This acquisition comes at a time when the home services sector is facing declining business volumes and funding challenges. Founded in 2014, HomeLane also operates brands like Doowup, Cubico, and Wrapzap, serving approximately 45,000 customers across 30 cities through over 60 experience centers.
Before this deal, HomeLane raised a total of $133 million, while DesignCafe secured $79.1 million, including $5 million from WestBridge Capital in March 2023. HomeLane also raised $9 million through convertible notes in June 2023.
Iyer noted that the fresh capital will focus on growth and technology, with an emphasis on profitability and building trust in the middle and lower-middle market segments.
In 2022, DesignCafe launched Qarpentri, while HomeLane introduced Doowup in 2023. Livspace, backed by Ikea, is also eyeing an IPO by 2026 and had previously considered acquiring HomeLane.
Shezaan Bhojani, co-founder of DesignCafe, remarked that this merger combines HomeLane’s tech platform with DesignCafe’s design expertise, enhancing their journey toward a public offering. Munjal expressed confidence in the partnership’s potential for innovation and growth.