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Springwel Mattresses to acquire D2C brand SleepyCat

Springwel Mattresses, a leading player in the sleep solutions industry, is reportedly in advanced talks to acquire SleepyCat

,   and  Datum Intelligence
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According to Moneycontrol, Springwel Mattresses, a leading player in the sleep solutions industry, is reportedly in advanced talks to acquire SleepyCat, a direct-to-consumer (D2C) mattress startup.

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“The deal between Springwel and SleepyCat is unlikely to have a cash component. The category that SleepyCat operates in is highly competitive and fundraising had become tough, so a sale to a larger player seemed like the best option,” a person with direct knowledge of the matter told Moneycontrol.

About SleepyCat

Founded in 2017 by Kabir Siddiq, the company managed to raise a little over $5 million from DSG Consumer Partners, Saama Capital, Rishabh Mariwala’s Sharrp Ventures and others in about seven years.

Revenue Growth and Widening Losses

In FY19, the company recorded a revenue of Rs 10 crore and a profit of Rs 55 lakh, marking its first institutional funding round. However, by the end of FY23, SleepyCat's revenue had surged to Rs 55 crore, indicating a five-fold increase in four years. Despite the notable revenue growth, SleepyCat has faced financial hurdles as its losses widened to Rs 16 crore during the same period.

About SpringWel Mattresses

Founded in 1996, Springwel Mattresses is a prominent mattress manufacturer and supplier in India, offering a diverse range of high-quality mattresses, pillows, and sleep accessories.

Springwel Mattresses recorded a revenue of Rs 253 crore in FY23, reflecting a 24 percent increase from the previous fiscal year, according to regulatory filings sourced via Tofler. Despite the notable revenue growth, the company's profit remained flat at Rs 2 crore for both years.

Why

  • Slow Growth. Revenue growth was very slow as compare to The Sleep Company which saw an impressive 6x growth in two years, reaching an ARR of over Rs 35o crore as of September 2023, a significant jump from Rs 60 crore in November 2021.
  • Investors betting on top performers. In the fiercely competitive direct-to-consumer (D2C) mattress market, SleepyCat contends with well-funded and larger startups such as Peak XV Partners-backed Wakefit and Premji-funded The Sleep Company. As investors increasingly focus on top-performing companies, this has led to a funding disparity, with The Sleep Company recently securing $22 million in its largest round ever.

What Next

The D2C mattress space has been witnessing rapid changes, with mergers, acquisitions, and bankruptcies reshaping the industry. As established brands and newer, digitally native players compete for market share, we can expect further consolidation in this space.

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