Urban Ladder was the fourth startup from Kalaari Capital’s portfolio to be sold to Reliance – the investment firm’s MD is of the belief ‘selling does not mean sellout’

Urban Ladder was the fourth startup from Kalaari Capital’s portfolio to be sold to Reliance – the investment firm’s MD is of the belief ‘selling does not mean sellout’
Vani Kola/Kalaari Capital
  • Some of Kalaari Capital’s portfolio companies – Urban Ladder, Embibe, Zivame, Haptik – have been acquired by Reliance Industries.
  • During Business Insider’s Global Trends Festival in October 2020 when the Urban Ladder and Reliance deal hadn’t happened, Vani Kola, MD of Kalaari Capital had said that they are always on the lookout for exits.
  • Kola also had another important message for entrepreneurs: selling is not a sellout.
When India’s richest man Mukesh Ambani acquired furniture retail startup Urban Ladder, it became the fourth startup that was backed by Kalaari Capital to be sold to Reliance.

Kalaari’s portfolio companies that have been sold to Reliance
CompanyKalaari investmentSold to Reliance
Urban LadderStarted with $1 million in May 2012, with follow up rounds over the yearsNovember 2020
EmbibeInvested $4 million alongwith Lightbox in May 2014December 2019
ZivameFirst investment in early 2012 Partial exit to Zodius Capital in 2018Acquired by RIL in 2020
Haptik$1m seed funding in September 2014April 2019

When Business Insider had earlier asked Kola about the possible sale of a fourth startup to Reliance Group, during the Global Trends Festival in October 2020, she had said, “We are ready to sell companies and consolidate.”

Kola's rationale is that there are few companies that break out to be platform companies and these platform companies get the network effort and can sell many, many products because there is a trust and engagement with the brand.

However, she also knows that it takes a certain scale for a startup to reach that level and its also needs access to capital. And that’s where consolidation comes in.


“Consolidation is a real part of that and it didn’t exist a decade ago. I always advise entrepreneurs that as much as I would love to see you take your company to IPO, you have to see whether you are better off building this company individually or after you have reached a certain scale whether you will get better value out of being part of a larger platform. It was that thinking which is why we were also open to selling Myntra when it was thriving,” she said.

Kola also had another important message for entrepreneurs – selling is not a sellout. “It doesn't have to be that way. Selling is a continuity of the journey. Today, I see more openness from CEOs of these large companies to consolidate and promote startups and also investors and founders being open to dialogue and discussion,” she said.

Urban Ladder – a sour deal?

Ambani’s Reliance Retail acquired Urban Ladder for ₹182 crore taking up a 96% share in the startup. In what is being termed as a distress sale, Urban Ladder had raised over ₹700 crore from marquee investors Sequoia India, Steadview Capital, ELEVATION Capital (earlier called SAIF Partners), and Kalaari Capital. And according to reports, the investors have got back just one-fifth of the investment.

Kola had earlier stepped down from Urban Ladder’s board in 2019. In 2018, Urban Ladder underwent an organizational restructuring earlier this year, and had to let go off 90 employees.

The COVID-19 crisis has triggered consolidation in the startup sector, with a lot of companies being acquired in the recent past as they struggle to survive the pandemic. Experts in the startup sector predict that there are many more consolidations and acquisitions on the anvil, as sectors see increased competition. Goldman Sachs analysts in a recent report on the Indian internet economy said, “We believe consolidation can help improve profitability for select verticals within India internet, and could be a key theme in the near-to-medium term.”

Reliance Retail acquires Urban Ladder for ₹182 crore – at a sixth of the startup’s peak valuation in 2018