Furniture eCommerce firm Urban Ladder has secured a venture debt of $3 million from Trifecta Capital. While the company hasn’t released an official press statement, filings with the RoC confirm that the amount was issued in June 2016 against non-convertible debentures and compulsorily convertible preference shares.
According to documents filed with the Registrar of Companies, the investment came in June this year. The investment is done against the issue of non-convertible debentures and compulsorily convertible preference shares.
Bangalore-based Urban Ladder was launched in 2012 by Ashish Goel and Rajeev Srivatsa. Till date the company has raised $77 million in multiple rounds from investors like SAIF Partners, Sequoia Capital, Kalaari Capital, Steadview Capital etc.
Urban Ladder offers home decor products across various furniture categories like beds, sofas, coffee tables, side tables, dining tables and chairs, among others. It currently delivers to 19 cities: Bangalore, Mumbai, Delhi/NCR, Chennai, Goa, Pune, Hyderabad, Cochin Ahmedabad, Chandigarh, Surat, Kolkata Mangalore, Jaipur & Baroda) and this number is expected. As of now, the platform claims to offer over 5000 products across 35 categories.
“Debt capital makes sense given the cost of capital is lower. Every time you raise equity, you dilute stake and you can’t recoup that ever. Debt is far cheaper. Only thing about debt is, you have to be confident of your repayment ability. It will give the company an additional runway of three to four months. Now, will that additional runway of four months help the company grow the business by an additional 30%? If that additional growth helps improve your valuation and avoid dilution of stake, that is a good enough value you have generated,”
said one person aware of the development, on the condition of anonymity.
Venture debt is becoming popular among start-ups, as venture capital firms are tightening their purses, raising questions over unproven business models of start-ups.