It was just 40 days ago that Ashish Goel, Chief executive officer and co-founder of online furniture curator Urban Ladder, met Ratan Tata for the first time. The meeting, which took place in Tata’s office in Mumbai, was not meant to be an investment pitch.
However, as the tete-a-tete proceeded, Tata passionately discussed design and quality, and the need to offer the two to Indian consumers. He browsed through Urban Ladder’s website and right away expressed interest to make a personal investment into the Bengaluru-based company, according to sources aware of the details of the meeting.
Urban Ladder said on Friday that it has raised an undisclosed amount of investment from Tata.
Urban Ladder, lunched in July 2012 by Goel and Rajiv Srivatsa, offers about 1,000 products across 25 categories of furniture and aims to be the biggest furniture seller in India in the next 18 months.
While e-commerce has turned into an ideal place to park funds for several institutional investors, it appears to be of great interest to the Tata Sons chairman emeritus as well. This is his third investment in the online retail space. Tata had earlier made personal investments in e-commerce major Snapdeal and online jewellery retailer Bluestone.
According to estimates, the Indian e-commerce sector is around $4 billion. Brokerage firm Motilal Oswal expects this to grow 11 times by 2020 to $45 billion. The firm believes online commerce in India will see a compounded annual growth rate of 50 per cent over the next six years.
Goel, however, says his discussion with Tata did not revolve around the online retail sector and what prospects it holds. It was, instead, focused on design and Urban Ladder’s capabilities around that. Tata’s interest in design could be attributed to the fact that he holds a degree in architecture from Cornell University.
“Tata is a design enthusiast. He went through our products and spoke passionately about design and quality,” said Goel, who was surprised to see a few pieces of furniture in Tata’s office that the man had designed himself. “His point was that Indian consumers need to become conscious about design, and that is what he asked us to keep working towards,” Goel adds.
Tata has not yet visited Urban Ladder’s office; Goel says he will try and “create something exciting enough for him to visit”.
While Urban Ladder is well funded, having raised $21 million in a Series-B funding round from Steadview Capital, SAIF Partners and Kalaari Capital in July this year, Goel says this investment is not about “quest for funds”. “I would want to have a shareholder like Tata, funds or no funds. His name being attached with us and his blessings are enough of us,” he says.
Sanat Rao, a partner at software product industry think-tank iSPIRT and a former Intel Capital executive, agrees with Goel. Rao says investments by successful business personalities validate the quality of the team and their idea. “It is very common for established businessmen in the US to invest in start-ups. Some examples are Jeff Bezos (founder and CEO of Amazon) and Mark Zuckerberg (founder of Facebook).” Rao notes.
With successful entrepreneurs such as Tata, Google India head Rajan Anandan and former Yahoo! India R&D head Sharad Sharma having taken the lead to invest in start-ups, experts believe this phenomenon will catch up. “I think we will begin to see much more deals in the angel space as several people now begin to understand how important this area is and how it works,” says Ravi Narayan, director, Microsoft Ventures India.
Urban Ladder has chosen technology as its weapon to battle the crowded e-commerce space. The company has been investing heavily into innovative technology areas such as augmented reality, drones for material handling inside warehouses, robots to control inventory, and sensors in furniture.