Mattress maker and home solutions company, Wakefit Innovations Pvt. Ltd has posted over a 50% jump in its revenue to Rs 636 crore in the fiscal ended March 2022 and plans to cross Rs 1,000 crore in this financial year, top executives told VCCircle.
Wakefit, which raised its Series C funding of Rs 200 crore in November last year, also expects to breakeven by the next financial year ending March 2024.
"We fell short on our initial projections on our revenue because of the Delta and Omicron waves but we are glad we continued to grow without laying off any members which we are very careful about," said Ankit Garg, director and co-founder of Wakefit.
Nearly 20-22% of its revenue has come from its furniture business that was started 22 months ago. It expects the furniture business to contribute 40-45% to its revenue in the next two to four years, added Garg.
"Our losses are always in the 5-6% negative range. Our capital is not going into wasteful expenditure like random marketing or over hiring," noted Chaitanya Ramalingegowda, co-founder, Wakefit.
The current losses are due to its investment in capacity, production, people and supply chain. It, for instance, pumped in more than Rs 100 crore in capex in its furniture factory in Hosur, Bengaluru.
"In our business, investments always happen in advance because we set up our own factory and R&D. That way we are quite contrarian as opposed to people who want to go all asset light. So, we invest for the next cycle of growth and then catch up with revenue," explained Ramalingegowda.
Wakefit has also gone offline with 10 stores to begin with in locations such as Delhi, Bangalore and Lucknow. "The stores are technology enabled so customer experience is not dependent on a sales person. The display inventories at the stores are led by capabilities in our backend. So, we believe that our payback period from these offline stores will be as little as six months," said Garg.
The aim is to provide an omnichannel experience while its business initially was pre-dominantly online. The company expects to get 15-20% of its business from offline channels, 50-60% from its own website and 15-20% from other channels, added Garg.
Ramalingegowda also said that Wakefit evaluated 9-10 companies for acquisitions in the last 18 months. The three parameters it looks at while considering acquisitions are: the right brand, the distribution network and the opportunity presented to Wakefit to enter a new category.
Last month, VCCircle reported that Wakefit and another venture capital backed company HomeLane, which counts Sequoia Capital India as a common investor, are in talks for a merger to create a larger entity.
Ramalingegowda did not comment on the merger with HomeLane, but said "never say never" to a merger in general.
Wakefit also gets a significant sum of its revenue from beyond the top eight cities.
"Our focus is to serve middle class Indians and the revenue that is coming from beyond the top eight cities are nearly 45%," said Garg.
He also said that while it has plans to go international it does not have a specific timeline now nor the urgency.
On the plans for a new funding round, Ramalingegowda said that while the company doesn't need the money immediately it is always good to be in an offensive position when it knows the growth levers are in its hands.
"Whenever the right partners come around, we will move fast. It will definitely be larger than the last funding round last year," he added.
In the last funding round in November, Wakefit raised Rs 200 crore in its Series C round of funding led by SIG Global, operated by US-based quantitative trading firm Susquehanna International Group. Existing investors, Sequoia Capital India and Verlinvest also participated in the funding round. The company has raised Rs 435 crore in total so far.
