Urban Ladder eyes profitability by next December, IPO in 3 years

Anirban Sen
Urban Ladder co-founder and chief executive Ashish Goel. Photo: Mint

Urban Ladder co-founder and chief executive Ashish Goel. Photo: Mint

Bengaluru:Online furniture retailer Urban Ladder aims to turn profitable by December 2019 to prepare for a potential listing in three years, said its co-founder and chief executive.

The company also plans to raise funds over the next 12 months to aggressively grow its offline presence by opening more physical stores, even as the broader online furniture retail business in India struggles to attract investor interest.

“We’re looking at an IPO by the time we hit our ninth anniversary (nearly three years away, in July 2021)—which basically means that next year has to be a profitable year, but that’s the least to prepare ourselves to be a listed company,” Ashish Goel said in an interview.

Starting next quarter, Urban Ladder will start issuing financial statements to potential new investors, among others.

“From next quarter, we’ll start sending out earnings reports to a few people who are not shareholders in the company today,” said Goel. “We’ll do an earnings call with them after that, a dummy earnings call. These are people who are marque public market investors.”

Goel said Urban Ladder would also offer sales and earnings outlook, just like any other publicly-listed firm.

“We’re also starting to close the loop with who are the bankers we’ll work with, who are the lawyers we’ll work with, what are the prerequisites that need to be in place,” he said. “The primary reason (for an IPO) is that we want to run this business for many years to come. There are many ways to that, but principally one needs access to long-term capital.”

Urban Ladder aims to grow its revenue by at least 40% by the end of this financial year, said Goel.

Over the past three years, Urban Ladder has faced its share of challenges, amid a broader slump in the online furniture retail space.

During the period, the company struggled to attract new investors, while it faced a spate of top-level exits and ballooning losses. Senior executives such as Rushabh Sanghavi, Nikhil Ramprakash, Parag Shah and Sanjay Gupta resigned over a period of 12 months.

And, like other specialty e-commerce companies, Urban Ladder has been forced to cut losses and change its strategy after investors soured on consumer internet firms starting in late 2015.

Goel said Urban Ladder has faced significant challenges over the past two years as investor sentiment soured.

“I would give our team a lot of credit for weathering the storm the right way,” he said. “The challenges we faced—one part is that we over-leveraged our balance sheet. We were spending more than we should have been. For a business of our size, we were spending way too much on too many things. And that puts a lot of pressure, when your burn is high and your revenues are not keeping pace with your burn. Secondly, the cost of growing a purely online business was increasingly becoming prohibitive.”

Specialty e-commerce ventures are increasingly opening offline stores as part of a broader strategy to bring in more consumers who do not shop online, amid a battle for survival against Amazon and Flipkart.

Over the past year, Urban Ladder has also forged alliances with Flipkart and Amazon to mitigate the impact of competing against the giants.

Bengaluru-based Urban Ladder, which was started by Goel and Rajiv Srivatsa in 2012, has raised $103 million to date.

Goel said Urban Ladder has enough funds for now, but may need to raise some more over the next year. He did not elaborate.

Urban Ladder last raised funds in March from existing investors Kalaari and SAIF Partners.

In the online furniture space, Urban Ladder trails PepperFry, which is backed by Goldman Sachs, Norwest Venture Partners and Bertelsmann India.

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