After having witnessed an unprecedented downturn during the Covid-19 pandemic, which left the company with cash to run just for a fortnight, Accel-backed furniture and electronics rental startup Rentomojo is now gearing up to file for an initial public offering in the next 18 months, its founder and chief executive Geetansh Bamania said.
Founded in 2014 — among multiple other furniture and electronic rental startups that came up at the time — Rentomojo had its work cut out to come out on the top.
In early 2020, when profitability was in sight, the pandemic exposed several pain points and the company had to course correct to eventually become profitable. This journey was behind Rentomojo being picked by the elite jury of the ET Startup Awards as the winner in the Comeback Kid category.
Rentomojo turned profitable in FY23, and has stood out among competitors that have faced difficulties in making unit economics work in a sector — that Bamania says is akin to “trekking and not a marathon” because of the depth of the industry.
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“When Covid started in March 2020, we were anticipating turning profitable by October that year. But because of this, it got pushed. And instead of profitability, we were staring at a 15-20-day cash runway by December. At this point we underwent layoffs, before which we managed by cutting salaries for senior management and the mid layer,” he said.This period, Bamania said, instilled a mindset of growing sustainably.
ETtech“Prior to Covid, the way the ecosystem was, every time (we were crunched) we were trying to chase the next round of capital. This time when we were against the wall, we knew we had to solve the problem ourselves without depending on any external capital. That was a pivotal moment for us when we started going after all costs and overheads to cut down on excessiveness but still be able to service and grow,” he said.
Bamania had started the company with three other cofounders — Achal Mittal and Gautam Adukia, who went on to launch peer-to-peer lending startup LiquiLoans, and Ajay Nain, who founded a tech retail startup. Mittal, Adukia and Nain left Rentomojo in 2018. They still own small stakes in the firm.
Rentomojo is estimated to have closed FY24 with nearly Rs 200 crore in revenue with a profit after tax of around Rs 22 crore, Bamania said. In FY23, it registered a net profit of Rs 6.2 crore on revenue of Rs 121 crore.
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While many of Rentomojo’s rivals have, over the years, shut down, or have been acquired, Bamania said the segment has a lot to offer. In July 2023, its biggest competitor Furlenco was acquired by Sheela Foam, which owns the popular mattress brand Sleepwell.
“It’s a lucrative proposition from a consumer standpoint. From a business point of view, too, it’s a segment that is profitable…it’s just that we had some excess spends earlier for which we had to go back to the drawing board, and optimise and automate,” he said.
“In this business, with the same product, we have the opportunity to make revenue on it across multiple users. We look at our items just the way IndiGo looks at its airline seats or Awfis looks at its coworking seats — for how long an item is deployed, how much revenue is an item making,” he added.
Bamania also pointed out that the company’s growth will be linked to the country’s macroeconomic growth that results in job creation and urbanisation. “Post Covid, India has also grown at 7-8% annually, which means a lot of jobs have been created with people coming in from smaller towns to tier-I cities and metros. We’ve benefited from the urbanisation that’s happened over the last three years. Our growth is very much linked to the way India will grow,” he said.
However, Bamania did not mince words about the complexities associated with the business.
“This business is definitely tough. It’s a combination of three different infrastructures — ecommerce (to have warehousing, logistics and deliver a product), lending (we have to collect the monthly subscription fees while working on NPAs and recover products), and the soul of our business is refurbishing (which you would find in companies that resell used smartphones),” he said.
“Our business manages the same complexities of ecommerce, lending and refurbishing while keeping the balance sheet strong,” Bamania added.