- ByStartupStory | February 12, 2024
DesignCafe, a home interior services startup, is undergoing a merger with its larger competitor HomeLane in a stock-swap agreement. “We cannot respond to speculation and rumours and this is unfortunately just that,” stated Srikanth Iyer, founder and CEO of HomeLane, in response to inquiries. The merger is anticipated to value DesignCafe at approximately Rs 500 crore, or roughly $60 million, and HomeLane at $360 million, or about Rs 3,000 crore, as per one source. Gita Ramanan, founder and CEO of DesignCafe, similarly declined to comment on “market speculation and rumours.”
While DesignCafe had encountered challenges in securing a new funding round over several months, both firms aim to achieve a combined Ebitda of about Rs 70 crore by the fiscal year ended March 2025, noted insiders. “DesignCafe is looking at the merger with long-term plans to sustain as a business,” revealed one source familiar with the development. The merged entity anticipates generating revenue of Rs 200 crore by FY25. Post-merger, Design Cafe is expected to operate as an independent brand.
Amid discussions of a potential merger with Livspace, HomeLane had reportedly initiated workforce reductions in March to streamline costs. “Both HomeLane and DesignCafe have been struggling to scale operations, and the deal would complement both entities amid the ongoing liquidity squeeze,” highlighted sources. The combined entity may explore a public offering in approximately two years, they added.
Both startups, targeting mid-to-premium segments, have also ventured into the entry-level segment recently. DesignCafe launched Qarpentri in 2022, while HomeLane introduced Doowup in 2023. In June, HomeLane secured around $9 million from existing investors through convertible notes. The impending merger between HomeLane and DesignCafe signifies a strategic move to navigate challenges and capitalize on synergies in the competitive home services industry.
