The funding round was led by Paragon Partners, with participation from Singularity Growth Opportunities Fund, Sharrp Ventures, Amicus Capital and RPSG Capital Ventures
mCaffeine to use the funding to ramp up R&D, expand distribution channels and to accelerate acquisitions
Founded in 2016, mCaffeine is a personal care startup that offers caffeine-infused skin and hair care products
Single-ingredient D2C personal care startup, mCaffeine has raised more than $31 Mn (INR 240 Cr) as part of its Series C funding round led by Paragon Partners.
The funding round also saw participation from VC firms Singularity Growth Opportunities Fund, Sharrp Ventures, along with existing investors such as Amicus Capital Partners and RPSG Capital Ventures.
mCaffeine is a personal care brand that offers a range of products based on a single ingredient – Caffeine.
The D2C startup plans to use the funding mainly to ramp up its research and development (R&D) and to expand its distribution channel. In addition, mCaffeine also plans to splurge on brand building and to acquire smaller brands in the near future.
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Founded in 2016 by Tarun Sharma, Vikas Lachhwani, Vaishali Gupta, Mohit Jain and Saurabh Singhal, mCaffeine offers caffeine-infused skin and hair care products.
Reminiscing about how the D2C startup came to be founded, CEO Tarun Sharma shared an anecdote with Inc42. He said, “Back in 2015, one day, my eye was really swollen up and, in India, everyone likes to give advice and act like a doctor. My flatmate advised me to put a tea bag on my eyes and I did it anyway. In 10 minutes, my eyes got better.”
It is from here that he started building the band with other cofounders which led him to creating mCaffeine as a D2C player involved in the single-ingredient personal care market.
Building on its performance, mCaffeine had last raised INR 42 Cr in Series B funding round led by Amicus Capital in September of 2020.
Prior to that, it had also raised $2 Mn in Series A round led by RPSG Ventures in June, 2019. In total, the D2C startup has raised $40 Mn across three funding rounds.
The D2C startup claims to have sold more than 10 Mn products since its inception and is available at 18,000 pin codes across the country. The D2C brand claims to have 55 SKUs which include soaps, shampoos, scrubs, oils, among others. In addition, it also claims to have more than 2.5 Mn so called ‘loyal customers’ with repeat purchases,
The startup took the omnichannel route barely six month back. It launched offline stores across the country to cater to the brick and mortar consumers, after being a digital-only brand for the past five years.
Speaking to Inc42, Sharma said that 90% of mCaffeine’s sales come from digital marketplaces and its website, with offline stores contributing the rest.
Sharma added that the D2C brand is primarily focused on ‘millennials’ in the age-group of 18-25 years and derives most of its sales from the age group. Giving a breakdown of the data, Sharma also added that ‘women contributed 70% of the sales while men made up the rest 30%.’
Expansion On the Cards
The startup plans to ramp up R&D to create more caffeine-infused products. It also plans to use the investment to strengthen its product line and strengthen its offline distribution in key markets.
A big chunk of the cash infusion will be used to expand the startup’s presence in 12 new countries across three continents. Sharma told Inc42 that mCaffine will unveil its products in the GCC Region with a focus on Saudi Arabia and UAE, as well in the US and parts of Europe.
mCaffeine also plans to go big on brand building and had recently roped in actress Alia Bhatt, as its brand ambassador.
Speaking to Inc42, its CEO said that the startup does face considerable challenges from private challenger startups and incumbent brands. Notably, while the challenge in India is much smaller, it does have competitors in the form of Mamaearth which competes with it in some categories. Other smaller players including Plutus, HAEAL and Orgello also compete with the startup in a few segments.
But, essentially, the challenge to the startup comes from big D2C personal care brands which have deep pockets. If any new-age D2C brand tries to just deploy the concept, they could easily have a big bearing on mCaffeine’s current market.
Even though the D2C startup claims to have five patents in its kitty, it does have a lot of Intellectual Property to safeguard in case a big player tries to wrangle its way into the market.
Interestingly, an Inc42 report found that mCaffeine had the most favourable customer perception among consumers in India.
On the other hand, mCaffeine is also over-dependent on online marketplaces and any snag on the platform could cost it a fortune and majority of sales. However, it is pertinent to note that mCaffeine has ramped up efforts to strengthen its offline channel. But, there is no clarity yet on how long will the brand take to successfully penetrate into the offline market.
A recent Inc42 report found that the number of online beauty shoppers in the country could soar to more than 122 Mn by FY2025. In addition, the addressable market for D2C brands in the beauty and personal care space could also grow to $5.6 Bn by 2025.
This change has mostly been brought about by a boom in online shopping among masses as well as better and affordable choices for customers online.
According to a Redseer report, the demand has also been fueled by rising disposable income, demand for enhanced products and an increasing desire to look good.
This also builds on the strong performance by Indian startups in the space. Earlier this month, D2C beauty brand, Plum, raised $35 Mn in Series C funding round led by A91 Partners. This was preceded by 1908 E-ventures acquiring personal care brand, Coccoon for an undisclosed amount this month itself.
Barely days ago, D2C ayurvedic beauty and personal care brand, The Ayurveda Co., also raised $3 Mn from Wipro Consumer Care Ventures and other investors.
This year also saw beauty brand, Mamaearth, become the first brand of the year to enter the coveted unicorn club after raising $38 Mn from Sequoia India.