Urban Ladder has been having a rough ride as the company wasn’t able to raise substantial fund after an internal round in 2018. The capital shortage also reflected on the growth and operations of Urban Ladder. The firm had fired 40% of its workforce during January-March this year.
The problem at Sequoia and SAIF-backed company seems to have aggravated. One of its two-co-founders Rajiv Srivatsa is moving from the company, this month while Vani Kola, one of the directors, also quit its board with immediate effect.
The reasons behind Srivastava’s exit and Kola are unknown but their resignation on the same day certainly paints a bad picture for the struggling venture.
It’s no secret that the company has been mired into problems on several fronts. Besides funding crunch, its plan to turnaround business didn’t go well when veteran retail executive Ajit Joshi resigned from President and COO roles in April this year. “Movement of Srivastava from an active role reflects the gloomy prospect of Urban Ladder,” said a venture capitalist on condition of anonymity.
While the company founders had claimed to turn profitable at the EBITDA level in July, the claim appears far from being materialised. “It’s very rare when a co-founder leaves the company when it’s trying to turnaround things. It may meet the fate of ShopClues,” he said.
According to Urban Ladder’s RoC filings analysed by Entrackr, Kalaari owns about 6,357 shares in the company at the moment. Kola also confirmed that Kalaari continues to hold all stakes in the company.
“We have not sold any shares and plan to be long term shareholders. We will be appointing a different investment team member to the board to rebalance our bandwidth,” she said while responding to Entrackr queries.
Urban Ladder has been reportedly eyeing to raise a $25-30 million round. Since the last financing round, it failed to convince fresh investors to lead a new round. Existing investors appear to be shying away from pumping more capital.
The seven-year-old firm raised about $105 million in total funding from SAIF Partners, Sequoia Capital, Steadview and Kalaari.
“No further capital infusion from Sequoia and Steadview has definitely left very little chance for Urban Ladder to on-board new backers with a sizeable cheque. It must not be an easy decision for Srivatsa to move away from an active role. His resignation hints a worrisome prospect for Urban Ladder from here,” said an industry analyst tracking the online furniture segment.
According to him, the company’s volume also has fallen drastically owing to massive cut on marketing, promotion and discounts. The company had shut down several verticals after downsizing the overall team size by from its heydays.
Despite mass lay-offs and other struggles, Urban Ladder has continued to open new brick & mortar stores. Only last month, it opened a 4,000 sq ft store in Pune. At present, it has about a dozen stores operating across cities including Chennai, Bengaluru and Delhi.
It’s worth noting that Urban Ladder’s competitor Pepperfry has also not been an attractive proposition for large investors. The Mumbai-based company is also treading a path of profitability as it understood that the segment would shift in favour of IKEA in a long haul. The Swedish furniture giant is gradually expanding footprints with omnichannel (online+offline) strategy.
“Investors are convinced that IKEA would eat Urban Ladder and Pepperfry’s lunch. Hence, they won’t have an appetite to invest more. Even, it won’t be easy for Pepperfry to raise follow-on rounds,” added the VC mentioned above.