Lumio eyes Series A round after $4 million seed funding

New Delhi: Emerging home entertainment company Lumio started by former Xiaomi and Flipkart employees is looking to raise a series A round after raising a seed round of $4 million as it looks to expand its portfolio into more premium categories in India, co-founder Raghu Reddy told ET.


“I think eventually we have to (raise funds), with a series A maybe on the horizon,” Reddy said.



The hardware startup has raised around $4.55 million from Stellaris Venture Partners, 3one4 Capital, and Sattva Ventures as well as angel investors in multiple rounds. It competes with high-end TV makers including LG and Sony as well as Chinese players such as Xiaomi in the mid-premium segment.


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Reddy said they only want to target a growing niche of mid-premium and premium segments in the TV space, at a time when the segment has been mostly stagnant or even shrinking.


“While the broader TV market is stagnating, and the 32-inch segment shrinking, the 55-inch market is growing at 20-25% year-on-year, and the 65-inch and 75-inch segments are growing even faster,” Reddy said.


Reddy said the company is currently well-capitalised with a business model that differs significantly from the typical venture-backed software startups. As a hardware maker, Lumio’s business model is highly working-capital intensive, and requires stocking inventory and physically building products, the executive said.


“Because of this, our margins are much lower than the 70-80% margins typically seen in the Saas (software as a service) business. But we secure investor confidence by framing the business as a long-term bet,” Reddy said, adding that a successful hardware venture can achieve significantly higher scale than many software companies if executed well.


Reddy, however, said the current supply chain constraints with steep price increases in memory and storage has been challenging, with the company anticipating eventual price hikes on existing products to maintain margins.


“Securing parts is a pervasive issue affecting everyone in the market from the startups to the big guys. Specifically, memory is currently one of the highest coveted components, making it very difficult to manage on the supply side. Prices have surged 100-200%,” Reddy said.


The Bengaluru-based startup launched last year with a portfolio of high-end televisions and projectors, with the aim to solve the widespread issue of smart TVs becoming slow and laggy over time. They expanded the portfolio with a larger 65-inch TV, following strong reception of its premium 55-inch model.


Reddy said in the first year of business, Lumio acquired over 20,000 customers especially during the festive season sales on Amazon. The company now has also inked a deal with Flipkart to sell its products.


Offline sales remain a distant plan for the company, however, adding that the plan is to remain lean in their operations while offline sales will require heavy investments in distributors and retailer margins.