An initial public offering (IPO) is every entrepreneur’s dream, says Chaitanya Ramalingegowda, the co-founder of Wakefit. Ramalingegowda also said that they plan to make their stock market debut in the next 24 months. Wakefit is a direct-to-consumer focused brand which designs, manufactures and sells mattresses and other home decor products. It is backed by prominent investors including the likes of Sequoia India, SIG Venture Capital, and a few more.
The Bengaluru-based company which clocked over Rs 630 crore in revenues in FY22 is aiming to close FY23 at Rs 950 crore, he shared. In addition, the company also wants to reach Rs 1500 crore and more in revenues before hitting the stock markets.
Last year saw several start-ups making their stock market debuts including the likes of Paytm, Nykaa, and Zomato. However, a year later, they are trading well below their listing price. While Paytm is down by 73.14 per cent, Zomato and Nykaa are down by 46 per cent and 92.05 per cent respectively.
Ramalingegowda is aware that profitability is an important benchmark to consider before going for an IPO and Wakefit is yet to become profitable. “We don’t look at profitability as a monolithic number. We look at profitability category-wise.”
He says that while the mattress line is profitable, the newer categories (tables, sofas, other home essentials) are not.
Becoming a tech-enabled home solutions brand
Wakefit was launched in 2014 by Ramalingegowda and Ankit Garg. The Bengaluru-based company had a presence online only till six months ago. The co-founder shares the company had been wanting to go offline a few years ago but the pandemic played spoilsport. The pandemic, however, gave the company “unintended benefit" as it was able to expand its product line as well as its presence, he says.
It proved to be beneficial for the company in two ways. First, the demand saw a city-level change. Chaitanya says that in the pre-pandemic era, more than 60 per cent of the business came from the top eight cities (Mumbai, Delhi, Bengaluru, etc). These numbers have reversed as today majority of the revenues come from cities which are beyond the top eight ones.
The company also opened 12 stores in the last six months and plans to take this number to 30 by the end of this fiscal year. He also says that during the pandemic, since people were at home, the demand for home decor items grew. This led them to introduce categories such as sofa, recliners, study tables, couches, etc.
“Having a wide catalog has enabled us to have a very quick pay back on our stores. If customers don’t buy a mattress, they buy something else.” He says that he would earlier look at a three-year period for the stores to break even, but today he is expecting it to happen in six months.
Wakefit started out as a D2C focused brand. But today, it is gradually evolving to becoming a complete home solutions provider. Chaitanya highlights that technology is the “backbone of the company” as it is at the helm of everything from deciding the ingredients for making mattresses to order management or even for establishing communication across its 23 warehouses.
But this is just the beginning and a lot more is waiting in the wings to happen.
Going forward, the company wants to continue building an omnichannel presence, improve its service quality, and last, add more products in its portfolio including curtains, carpets, and more.