The Indian home décor and furnishing market have been undergoing a major transformation over the last decade. There has been a significant shift in the market, with more players entering the Indian plane than ever before.
HomeLane is one such company that has been successful to adapt to change in consumption patterns and leverage technology to its own benefit.
This Bengaluru-based startup founded in 2014 by Rama Harinath, Srikanth Iyer, and Vivek Parasuram has revolutionized the home décor and furnishing industry with its personalized high-end offerings and time-bound deliveries.
Homelane makes designing your dream home so much easier with just 3 steps – Discover, Design, and Move-in in no time.
This online platform has worked its magic on 6000+ homes since inception and offers a “first 45-day delivery guarantee or we pay rent to the customer”.
What sets HomeLane apart from its competitors and, for that matter any interior design company is its quick turnaround time.
Plan of action for HomeLane?
HomeLane has raised $30 Mn in Series D funding. The round has been led by new investors Evolvence India Fund (EIF), Pidilite Group and FJ Labs, with participation from existing investors Sequoia Capital, Accel Partners, and JSW Ventures.
It has secured a total investment of $49.2 Mn, with this current round of funding.
The company plans to employ these funds to penetrate into the $12 Bn home renovation market and provide renovation as a service.
It further seeks to expedite its expansion into 10 new cities while promising to focus on technology to improve both experience and efficiency for consumers.
HomeLane is currently present in 7 cities, including Bengaluru, Chennai, Hyderabad, Mumbai, NCR, Kolkata, Pune and intends on catering to Tier – II and Tier – III cities.
The company will also utilize the funds to scale its proprietary design-to-manufacturing platform to more designers, vendors, and installers.
It will fuel its investment in SpaceCraft, which is HomeLane’s cutting-edge virtual 3D design platform. The team is focusing on adopting Artificial Intelligence and Machine learning to deliver a real-time experience to homeowners.
In addition, it also provides customers with a pricing engine to keep track of their expenses to ensure it is well within their budget.
What does this mean for you?
As a player in the home decor and furnishing space
HomeLane’s recent funding has created havoc in the minds of other players in the market. With the global economic slowdown affecting almost every industry in the country, real estate, especially the home décor and furnishing market seems to be comparatively stable as is seen by the heavy influx of investment into this sector.
It competes with TPG Growth and Goldman Sachs backed Livspace, Westbridge funded Design Cafe, furniture marketplace Pepperfry and online retail store UrbanLadder.
With immense competition in the market, differentiation is the key to capture a customer’s heart. And HomeLane is able to do effortlessly with its time-bound delivery and use of the virtual 3D platform SpaceCraft.
The funding, if utilized in the manner planned by HomeLane may result in tremendous growth for the company in terms of market share and revenue. On the bright side, it may also sweep out competition from small and medium-sized interior design firms.
As an Interior designer
The $30 Mn funding provides a great opportunity for the interior designers in terms of job recruitments and can give a boost to kickstart their careers.
HomeLane claims to pay 6%- 8% to interior designers per project completed and also helps to streamline the entire process of designing through its 3D tool SpaceCraft. It has helped to bring in multi-fold efficiency for designers.
With its expansion and brand strengthening strategy in place, HomeLane will require as many interior designers as possible, opening up jobs across different parts of the country. So if you are an amateur designer looking to freelance, HomeLane could be the best fit for you.
As a homeowner
Homeowners are interested in getting quality work done at a reasonable price within a predefined period of time. This may seem like an easy task, but in reality, it is a far fetched dream.
Being a homeowner, this funding will increase the scale of operations and bring in professionals to handle projects. It will also improve the quality of work and there is a high possibility of the work, actually being completed on time.
HomeLane is able to offer greater satisfaction to buyers by engaging them in interesting and appropriate questions rather than drowning them with ideas.
The customers will be able to benefit from the new renovation category that will be introduced along with the experience centers.
Expectation v/s Reality
HomeLane expects to exit FY 2020 at an annual recurring revenue of $100 Mn. And as per the statement made by one of the founders, it is on track to break-even and even become profitable by early FY 2021.
As of January 2019, the company was valued at INR 314.51 Cr, which translates to $43 Mn. The company generated a revenue of INR 100Cr ($13 Mn) in FY 2018-2019. It was valued approximately 3.3 times its ARR.
In the FY 2019- 2020, with an average ticket size of INR 6 lakh to INR 8 lakh and converting around 400-500 homes per month, its revenue stands at $60 Mn. Assuming, 3.3x the multiplier, its market valuation is $200 Mn (approx.)
With its steady growth in financial performance and the service segment of HomeLane’s business, the billion-dollar question that arises is whether the firm will be able to exceed its costs by early FY 2020 and almost double its home completion rate from 360 homes to 720 homes.
Will HomeLane sail through the challenges?
The industry’s reliance on the blue-collar workforce for the installation of the final designs at home poses a great challenge to companies, as it is hard to scale up.
It is difficult to guarantee that the carpenter will arrive on time in HomeLane’s uniform, adhere to the guidelines of the company while keeping security and quality in mind.
Monitoring and overseeing that all tasks are completed as per the client’s requirement is the most crucial as well as a difficult job.
Training of interior designers is another challenge that the company faces.
Currently, HomeLane has a team of over 750 designers on its platform with the acceptance rate of projects by clients being only 5%-7%. This number is very small compared to big giants such as Livspace whose completion rate stands at 1/3rd.
It’s not just about design, but also the ability to adjust to the software tools that HomeLane uses. The selected candidates then have to undergo a two-week full hands-on training followed by an apprenticeship period of two-three weeks where they shadow a senior designer. This lengthy process results in a longer scale-up timeline for startups.
Then there’s the fact that the addressable market is also rather small.
In a Nutshell
HomeLane has risen about 350 percent in sales over the last two years and there is no stopping now. It has become the one-stop destination for homeowners and interior designers. With its recent funding, it plans on expanding its services into new horizons while making an entry into the home renovation market.
The home décor sector is witnessing a robust growth spurred by rising levels of disposable incomes, increasing urbanization rates and rising awareness levels.
The strong performance of the online retail industry is another key factor contributing to the demand. Consumers prefer online retail platforms for buying furniture as well as designing their homes owing to the availability of a wide range of home décor products, easy accessibility at affordable prices.
The market for home interiors and renovation in India today is estimated to be between $20 Bn – $30 Bn.
With the advent of a huge number of startups burgeoning in the country, the need to design and decorate office spaces has grown enormously. The massive untapped potential in this market makes it perfect for entry and the increasing number of startups in this space stands testimony to this.
Below is a list of the top startups along with their valuation and funds raised that let you design and decorate your house easily.
|Livspace||$500 Mn||$97.6 Mn||2012|
|DesignCafe||$6.4 Mn (ARR*)||$28.5 Mn||2015|
|Bonito Designs||N/A||$6.3 Mn||2012|
ARR* – Annual Recurring Revenue
Keywords: HomeLane, India, home décor, furnishing, interior designer, homeowner.
List of cities HomeLane operates
\t\t\t\t\t\tHomeLane is currently present in India across 7 cities, including Bengaluru, Chennai, Hyderabad, Mumbai, NCR, Kolkata and Pune
HomeLane Revenue for March End 2018 (FY1)
\t\t\t\t\t\t ₹40 core in revenues along with a net loss of ₹29.33 crore losses in 2018