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Online Beauty Marketplace Nykaa Grabs $11.32 Mn Funding At $453 Mn Valuation

Online Beauty Marketplace Nykaa Grabs $11.32 Mn Funding At $453 Mn Valuation

After Breakeven EBITDA, Nykaa Now Aims To Achieve Profitability By FY19

With an aim to become profitable by FY19, online beauty marketplace Nykaa has secured $11.32 Mn (INR 75 Cr) in a funding round at a valuation of $453 Mn (INR 3,000 Cr).

The latest funding round is part of $25.67 Mn (INR 170 Cr) funding round, in which the investment was done through a mix of primary and secondary transactions, which brought nearly $14.34 Mn (INR 95 Cr) for some existing shareholders, ET reports.

The round was led by existing investors which include Sunil Munjal’s family office; Marico’s Mariwala family office; Dalip Pathak, a special limited partner at Warburg Pincus; along with other existing and new high net worth individuals.

In an email, Falguni Nayar, CEO of Nykaa, confirmed the fundraise to ET and said that with EBITDA breakeven, the company plans to achieve profitability by FY19.

Also, the plan is to use the funds to enhance retail distribution to boost its private label, which currently forms less than 10% of its revenue, by expanding its offline presence from 17 stores currently to about 55 stores by FY19-end.

“We first started working on distribution for our private labels last year and this year we are investing to build that out. We are selling our private labels through physical retail distribution and it is present across 800 stores,” said Nayar.

Following the funding, at least three investors in the company have sold part of their stakes in this round, including TVS Capital Funds, which invested in Nykaa in 2015, the report said.

In FY18, Nykaa recorded $86.09 Mn (INR 570 Cr) in net revenue in FY18 from $32.32 Mn (INR 214 Cr) a year earlier.

Nykaa, launched in July 2012, is an online marketplace for beauty and wellness products and has been continuously expanding its offline presence in the country. In an earlier conversation with Inc42, Nayar revealed that “the gross merchandising volume for the year ending March 2017 touched $43.3 Mn (INR 280 Cr), with an average of 10,000 orders per day across all the platforms (online and offline).”

Booming Indian Beauty And Wellness Market

In the Indian beauty and wellness market in India, beauty ecommerce websites like Nykaa, NewU, Purplle, etc. are leading the space with a focus exclusively on beauty and wellness products. Then we have majors like Amazon and Flipkart-owned Myntra now exploring the online beauty space.

Recently, reports surfaced that Amazon India is planning to launch its own label of beauty and personal care products. At present, Amazon India retails 2 Mn beauty products across 19,000 brands.

Prior to this, Myntra announced its plans to open beauty and wellness offline stores. Myntra already offers more than 100 beauty and cosmetics brands which include MAC, Clinique, Bobbi Brown and Estee Lauder. It now plans to sell these products via a chain of its wellness stores.

In a December 2016 report, FICCI estimated the Indian wellness industry to grow with a CAGR of 12% to achieve a $23.4 Bn (INR 1.5 Tn) turnover by 2019-20.

Another report claimed that the Indian beauty industry is looking towards a market value of $12.4 Bn (INR 80,000 Cr) by 2017-2018 and is expected to grow at a rate of 15% to 20%.

Confirming the line of claims, RedSeer Consulting also established a report that suggested that the domestic online beauty and personal care market is expected to cross $3.5 Bn by 2022 from about the present figure of $300 Mn.

In the growing online as well as offline space of ecommerce beauty products, Nykaa has been standing strong in its space. However, what happens in the space with the focus of majors like Amazon and Myntra on the space, will be something to watch out for.