India-based lifestyle e-commerce company Pepperfry has attracted Rs2.1bn ($32m) from existing investors including Bertelsmann India Investments, the local corporate venturing subsidiary of media conglomerate Bertelsmann, the Economic Times reported yesterday.
Norwest Venture Partners, the venture capital firm sponsored by financial services provider Wells Fargo, also returned for the round, as did investment bank Goldman Sachs and venture capital vehicle Zodius Technology Fund.
Pepperfry runs an online store focused on items for the home, including furniture, décor and pet supplies. The company manufactures many of its products in-house and handles delivery of orders through 17 distribution centres and a fleet of more than 400 lorries.
The money will allow Pepperfry to increase its presence to 1,000 cities in the next two years and open concept stores, dubbed Pepperfry Studios, in 20 additional cities. It is considering raising a further $22m to $30m in the next four months from additional investors.
Pankaj Makkar, managing director at Bertelsmann India Investments, told Global Corporate Venturing: “Pepperfry has executed a great business and is ahead of its competitors by a margin of 200-300%. It is a winner with a possibility of a large outcome.
“We are excited to back this asset as it builds a strong high growth and profitable business. “As far as the market is concerned, we see the valuations correcting and hence that is a good sign.”
The company has now secured approximately $160m in capital altogether. Bertelsmann, Norwest and Zodius previously supported a $100m series D round led by Goldman Sachs in July 2015.
Bertelsmann and Norwest also supplied $16.1m in series C funding for Pepperfry in 2014. Norwest first invested as part of a $5m in series A round in 2011, before providing a further $8m in 2013.
Niren Shah, managing director of Norwest Venture Partners, said: “Furniture retailing also has tremendous gross margins of over 50% and the best is yet to come for this vertical as most of it is still offline.
“Pepperfry has shown significant traction and demonstrated market leadership in the online furniture market, which is not as competitive as other high margin verticals like fashion.”
– This article was amended on 26 September 2016 to include the Pankaj Makkar quote.