Furlenco raises $30 mn in fresh funding

Bengaluru-based online furniture rental start-up Furlenco has raised $30 million in fresh funding with an equal equity and debt component.

The $15 million in equity has been raised from Lightbox Ventures along with participation from Hong Kong-based Axis Capital. The debt component has been raised from a slew of banks such as HDFC and Kotak Mahindra, NBFC and high net worth individuals (HNIs).

While Furlenco plans to utilise the equity component to grow its business into more cities and win over more customers, the debt will be used solely to purchase inventory. The company is trying to create a new asset class for HNIs to invest in, promising high returns on any investment they make to purchase inventory.

“The $30 million is a combination of 50 per cent equity and 50 per cent debt, making us one of the largest debt funded start-ups in India. The nature of our business is such that it has unit economics, it has cash flows it has a sense of security for the debt folks to come in,” said Ajith Karimpana, founder and Chief Executive at Furlenco.

Founded in 2012, Furlenco is an end-to-end provider of furniture on a subscription model. The company designs, manufactures and rents out its own inventory, and while it initially funded the furniture from its own balance sheet, it’s looking at an asset-light model where partners own the inventory on its platform.

With a presence in Bengaluru, Mumbai and Pune, Furlenco claims it today services around 15,000 households and has a customer retention of around 18 months on average. The average earning per year from every customer is in the tune of $500 (Rs 33,000), up from $400 last year according to Karimpana.

“Furlenco makes $500 per year from every customer and there are according to our estimates 40 million urban aspirers, making it a potential $20-billion opportunity today. We are constantly trying to increase our ticket sizes from customers too,” he added.

Furlenco, which goes head to head with firms such as Rentomojo, is trying to bring a behavioural shift in getting consumers to move away from purchasing furniture. The company is targeting urban customers who are more likely to shift jobs and cities and are exposed to global trends. 

India’s furniture space is heating up with local players such as Urban Ladder and Pepperfry giving traditional offline brands a run for their money. However, with Swedish furniture giant IKEA all set to enter the Indian market, local players are doubling down and preparing to take their businesses offline.

“IKEA would be competition for sure from a design perspective because they do have some mass premium products out there. My answer to them is the business model we have,” added Karimpana.