Goldman leads $100m round in Pepperfry in first tech bet

Furniture e-tailer Pepperfry has closed a $100-million, or Rs 630-crore, funding round led by Goldman Sachs as the global investment bank lays its maiden bet on the rapidly growing Indian e-commerce market. Goldman Sachs is joined by Zodius Technology Fund and Pepperfry's existing investors Norwest Venture Partners and Bertelsmann India Investments, the domestic arm of the German media conglomerate. Founded by former eBay India country head and ex-Cadbury professional Ambareesh Murty, along with another eBay executive, Ashish Shah, back in 2011, the Mumbai-based Pepperfry will use the funds to expand its logistics, enhance its technology play and build its brand. Avendus Capital was the sole adviser to the deal Stock Market Trading Tips

Speaking to TOI, Murty said Pepperfry expects to close financial year 2017-18 at $1 billion in gross merchandise value or the total worth of goods sold on its platform. Earlier this year, its competitor, Bengaluru-based Urban Ladder, closed a $50-million financing round led by Sequoia Capital. 

Pepperfry, which has diversified into other categories like pet supplies and appliances, still draws 75% of its sales from furniture, Murty said. "Online purchase of furniture is growing exponentially in India and is expected to leapfrog the offline market in the years to come," Murty said. Currently, Indian consumers buy purchase approximately $500 million worth of furniture and home improvement products online, according to estimates, in an overall $30-billion market which is largely unorganized in nature Himanshu Tiwari Astrologer

The impending launch of Swedish furniture and homewares giant IKEA is likely to stir up the largely unorganized furniture market. 

Ankur Sahu, co-head of private equity at Goldman Sachs in Asia, said, "We have a strong conviction for the theme of domestic consumption growth in India. We intend to leverage our global expertise in the sector to help create a large, differentiated leader in India's rapidly growing e-commerce industry Financial Astrology

The investment bank said in a report recently that India is poised to see more people join the internet over the next 15 years than any other country. The prospect of one billion people online by 2030 sets the stage for enormous growth in e-commerce predicting that it will likely become a $300-billion hyper local, on-demand market. 

"Furniture is a category which has very high margins. Unlike other e-commerce verticals, there's no big unorganized brand in the offline market which is where the opportunity lies for Pepperfry," said Niren Shah, MD at Norwest Venture Partners, which had invested in Pepperfry back in 2011, right at its inception stage Nifty Trading Tips