Mumbai-based mid-market private equity firm Gaja Capital has led a Rs 85-crore ($13 million) funding round into Bangalore-based Chumbak Design Private Limited, which sells designer-led consumer products, a top company executive told VCCircle.
The PE firm had invested Rs 52 crore ($8 million) as part of the deal, Gopal Jain, managing partner at Gaja Capital, said.
“Consumer is an important area of focus for the firm. Our investment in Chumbak reflects our keen interest in backing first generation entrepreneurs building design-driven, lifestyle brands in India. We are excited about welcoming them to the Gaja portfolio,” he stated.
The round also saw participation from existing investors Matrix Partners (Rs 22 crore) and Seedfund (Rs 6 crore), besides Narayan Ramachandran, operating partner at Gaja Capital, who invested in his personal capacity. VCCircle had reported in July that Ramachandran had invested Rs 3 crore in his personal capacity in the firm in November 2016. It is not clear whether his current investment is an addition to the previous round or a fresh one.
With this deal, Gaja Capital is expected to pick up a 28.36% minority stake in return for its investment, while Matrix Partners will increase its stake to 28.62%, a person directly in the know said. A back-of-the-envelope calculation reveals the current funding round would put the company’s valuation roughly at around Rs 183.35 crore ($28.4 million). This indicates that its enterprise value has not really gone up significantly since its last funding round, where Chumbak was valued at around Rs 118 ($18.3 million) crore post-money.
Mumbai-based corporate law firm DSK Legal advised Gaja Capital on the Chumbak transaction.
The new round will take the total funding raised by the company to around $24 million (Rs 155 crore), in both equity and debt. In May this year, the company had raised Rs 8 crore in debt from Mumbai-based non-banking financial company Blacksoil Capital Pvt. Ltd.
In 2014, the company raised $4.6 million (Rs 30 crore then) in a round led by existing investors Matrix Partners India and Seedfund.
“The focus going forward will be to rapidly expand our offline footprint by opening 20-25 new stores per year, improving our online presence and entering into new product categories such as personal care,” Vivek Prabhakar, founder and chief executive of Chumbak, said in a company statement.
The development was first reported by The Economic Times.
Prabhakar told ET that the company plans to enter overseas markets such as Indonesia, Malaysia, Singapore, and Hong Kong by the second quarter of calendar year 2018.
Founded in 2009 by husband-wife duo Prabhakar and Shubhra Chadda, Chumbak started off by making souvenirs. Gradually, it diversified its offerings across 100 categories, including fashion and travel accessories, bags and wallets, and decor. In late 2015, it forayed into the apparel category.
Prior to Chumbak, Prabhakar worked as a marketing executive at Sun Microsystems, Motorola, Fabmart and Titan, while co-founder Chadda had earlier worked at Nortel Networks and NetApp across sales and marketing.
The company also plans to venture into the personal care products space, which includes bath and skin care products, perfumes, cosmetics and toiletries, according to previous filings with the Registrar of Companies. However, it is not clear if it has immediate plans to enter the segment.
A hybrid retailer, Chumbak also sells its merchandise at 18 exclusive stores across 11 cities in India, including Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kochi, and Jaipur. A media report in October 2016 said the company planned to double the number of offline stores to 30 by the end of 2017. Besides, it also has pop-up stores in prominent malls across the country.
The article has been updated to include comments from Gaja Capital, Chumbak, and DSK Legal.