Furniture rental platform Rentomojo has raised ₹145 crore in debt and equity. ₹130 crore of this was raised from a clutch of large institutional players and the rest in equity from existing VCs such as Accel and Bain Capital among others.

Overall, Rentomojo has raised a total of ₹600 crore in debt and equity till now.

The company claims to have turned profitable in October and has reported an annualised revenue of over ₹100 crore.

Funds to purchase assets

Rentomojo has significantly reduced its losses in the past 1.5 years and turned PAT positive, so there is a lesser need to raise equity rounds.

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“Because we do not have any significant losses right now, the only need left is to purchase assets. This is why we chose to raise a larger debt round instead of equity,” Geetansh Bamania, Founder and CEO of Rentomojo, told BusinessLine .

Limited Covid impact

Bamania added, “When Covid hit, a lot of lending companies saw their portfolio going into NPAs. Whereas for Rentomojo, operating on a subscription-model revenue meant that we did not have to acquire customers every month. Our exposure was also very small, usually falling in the range of ₹15,000-₹20,000. In addition to this, because our revenues were predictable, we were able to reduce our cost heads drastically.”

“We introduced a lot of automation and re-engineering on the financing side and reduced the cost of financing for the existing debt that we had. So cumulatively, all of that helped us reduce costs drastically and we turned profitable in the month of October. These were also the major reasons why we were able to raise a large credit line,” he added.

Rentomojo has expanded to eight new cities — Ahmedabad, Mysore, Jaipur, Faridabad, Ghaziabad, Gandhinagar Chandigarh and Kolkata. On average, customers rent from Rentomojo for a year and about 45 per cent of purchases every month happen from existing subscribers.

High demand, supply constraints

According to Bamania, there is a huge demand for rentals in the market. In fact, Rentomojo is not able to cater to 50 per cent of demand that is coming from the existing market.

“Demand is not the problem in our business. The problem was the ability to continuously keep raising loan and debt capital from banks, NBFCs etc. It was important for us to turn profitable. Nobody will give us huge loans if we are heavily loss-making because the ability to get the capital back is not there. And that spiral backs into the company not being able to fulfil market demand. The rental industry is mostly supply constrained and that can be solved only by turning profitable. So it was an important milestone for us to turn profitable,” he added.

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While Rentomojo does plan to raise more capital in future to meet its growth projections, they would all be in tandem with debt and not solely equity round.

Rentomojo competes with players like Furlenco, RentOnGo and GrabOn Rent in the furniture rental market.