India’s Livspace raises $70M for its one-stop-shop for interior design

Livspace, an India-based startup that helps consumers manage home renovations and interior design, has pulled in a $70 million Series C deal that’s led by Goldman Sachs and TPG Growth. Existing investors Jungle Ventures, Bessemer Venture Partners, and Helion Ventures also took part in the round, which takes Livspace total funding to date to around $97 million. […]

Livspace, an India-based startup that helps consumers manage home renovations and interior design, has pulled in a $70 million Series C deal that’s led by Goldman Sachs and TPG Growth.

Existing investors Jungle Ventures, Bessemer Venture Partners, and Helion Ventures also took part in the round, which takes Livspace total funding to date to around $97 million. The deal follows Goldman’s involvement in fintech startup Jumo’s recent $52 million round, while TPG Growth recently hired former Twitter Asia head Shailesh Rao to lead its business in India and Southeast Asia.

Livspace was founded by former Googler Anuj Srivastava and Ramakant Sharma, who has spent time with Myntra and Jungle Ventures among others, in 2015. The business aims to be a one-stop-shop for home interior design — whether that be renovations or new home design. That makes it an e-commerce business that integrates multiple pieces of the interior ecosystem: consumers, designers and the supply chain.

For that reason, Livspace is an inherently local business. Interior designers need to be local to customers and supply chain partners need to have the capacity to ship to a location, too, but Livspace actually goes beyond that by mapping buildings in a city to enable virtual mockups and 3D models to be rendered to help show a consumer a compelling preview of what their home could look like. The company also operates brick and mortar ‘Design Centers’ where consumers can touch and see materials and furniture, while the centers also operate as a location for designers and consumers to meet up if needed.

The company is currently present in seven cities in India. With this money in the bank, the plan is to expand to reach 13 cities in India by the end of next year but it’s ambitions go beyond its founders’ home country.

In an interview with TechCrunch, Srivastava said that he sees an opportunity to grow the business not just in Asia but also western markets where, to date, there are no integrated solutions such as Livspace.

“The industry has suffered from chaos,” he said. “There’s little to no aggregation on supply and demand, and there is significant opportunity for tech-based platform to unite consumers, agents and the supply chain market.

“We have focused so far on doing one market really, really, well,” he added. “We wanted to make sure you can knock it out of the park first.”

So far so good. Livspace says it is on track to reach $100 million in annualized gross revenue by March 2019. Srivastava said it has outfitted 5,000-6,000 houses so far with 1,200-1,500 projects in its system at any one time.

Consumers, of course, shop around for deals and the completion rate of projects is at around one-third, Srivastava said, with an average of about $15,000 per consumer. Of that, the take rate for Livspace is around 40 percent with seven percent for the designer. The company claims to have around 25,000 designers on the platform but less than 10 percent of all applicants are approved to ensure quality and expertise.

Through Livspace, Srivastava claims designers can massively boost their income, typically by around 2X. He argues that is not only because the rates earned are higher, but also because average project time is reduced from multiple-months to just 12-14 weeks. That means designers can also operate more efficiently.

Financially, Srivastava said he believes the business model itself can scale and that there is clear “path to profitability” particularly if the company can expand internationally.

“We started monetizing in India but we have our eyes set on every single other similar market in the planet. We’ll get there in time,” he said.

What I learned from Flipkart

Two weeks ago, Walmart concluded its investments to acquire a majority stake in Flipkart. This is one of the largest transactions in e-commerce and in the internet space globally, with Walmart deploying US$16 billion to obtain an approximate 77% shareholding at closing. As part of this transaction, my company, Naspers, exited fully, selling our 11.18% stake for $2.2 billion.

Two weeks ago, Walmart concluded its investments to acquire a majority stake in Flipkart.

This is one of the largest transactions in e-commerce and in the internet space globally, with Walmart deploying US$16 billion to obtain an approximate 77 percent shareholding at closing. As part of this transaction, my company, Naspers, exited fully, selling our 11.18 percent stake for $2.2 billion.

In addition to the obvious financial success — a 3.6x or $1.6 billion absolute return in six years — being part of one of the greatest success stories of the Indian and global e-commerce market led to countless insights for Naspers.

Our journey with Flipkart will help us to further shape how we partner with entrepreneurs to build leading technology companies in the future.

I was fortunate enough to have had a front-row seat at Flipkart for the past six years, leading our various investment rounds and being Naspers’ appointed board director. Here are some of the key lessons that I will remember moving forward.

Pursue big market opportunities and solve big problems

E-commerce is a global trend that manifests in every market around the world. The potential of Indian e-commerce is beyond any doubt, with a total retail market of more than $500 billion. Before Flipkart, Indian e-commerce customers were repeatedly disappointed by mediocre selection, low product quality, little flexibility in payment options and a lengthy delivery experience.

Flipkart was the first player to solve these issues at scale, opening up the marketplace to more categories (starting with media and then rapidly expanding into electronics, lifestyle, etc.), offering warehouse services, and introducing its own courier network, Ekart, that ensured customer delight and cash on delivery. Other players eventually offered similar services, but Flipkart was the pioneer.

Market leadership is key to sustainable success, even in e-commerce, which tends to have “winner takes most” as opposed to “winner takes all” characteristics. Leaders enjoy attention from sellers, buyers, as well as existing and prospective employees. They continue to innovate while laggards are trying to catch up. Throughout our six-year journey with Flipkart, the company was in a market leadership position against strong competition from global and local online players.

Given the rapid growth of the Indian e-commerce market, Flipkart had to scale its tech platforms while also scaling its business model and organization. This is hard to do, and we’ve seen many businesses fail to scale. Flipkart was not one of them.

As a market leader and pioneer in the Indian e-commerce market, Flipkart had to sail unchartered waters. Experimenting while increasing in scale carried significant risk for the organization and had consequences for the market — Flipkart made many bold decisions over the years. Many of these worked out beautifully, such as acquiring Myntra in May 2014 to obtain a strong position in the strategic fashion and apparel category, or establishing Big Billion Day as the marquee sales event of the year.

There were others that did not work out, like trialing app-only shopping, but these failures never deterred the team from taking chances and changing course if needed, while always capturing the lessons. In the end, the app-only move allowed the company to become mobile-centric and a clear innovation leader in this area.

Think globally, but act locally

Flipkart is focused on the Indian market, but the competitive battle for sellers, buyers and talent is fought globally. The team adopted global best practices like Big Billion Day, which was inspired by ideas from the U.S., China and Romania.

They also measure success based on KPIs constantly drawing comparison with global market leaders. Most importantly though, Flipkart always innovated for the local market, taking local tastes into account (as serviced by the multitude of private label brands at Flipkart and Myntra), as well as bandwidth and affordability constraints on the customer side, leading to super-light mobile sites and apps, as well as various trade-in and financing programs.

Play the long game

Despite multi-billion-dollar trading volumes, the current e-commerce market in India is still mostly driven by affluent metro city dwellers in places like Mumbai, Delhi and Bangalore. This is not dissimilar to what we’ve seen in other countries around the world at a similar development stage as e-commerce in India.

However, to really unlock the potential of Indian e-commerce, one has to reach the hundreds of millions of customers that live in tier-two or -three cities, or in the countryside.

This will require a very unique approach in terms of selection, price points and delivery and payment mechanisms. Flipkart management spends a considerable amount of time strategizing about these challenges.

The common thread in all of these lessons is that you need to have strong, inspiring leaders who come from the local market and have the vision and desire to scale their platforms responsibly and skillfully. Whether it was Binny and Sachin as co-founders of the business, or Kalyan, Ananth and Sameer in leading the respective Flipkart, Myntra and PhonePe business units, without these leaders it would have not been possible for Flipkart to grow to what it is today. I’m very grateful for my time with Flipkart and wish the team and Walmart all the best in continuing this incredible journey… a journey made in India.