SUMMARY
Top officials of Momspresso announced their decision to shutter MyMoney in April this year, while Mamaearth is also likely to shut down Momspresso’ brand marketing vertical
Mamaearth recently laid off some of the employees from the brand marketing vertical. In total, 80-100 employees from both the verticals lost their jobs
Mamaearth took the decision to shut the loss-making verticals because of its upcoming IPO as it does not want to invest more money in Momspresso, sources said
IPO-bound D2C unicorn mamaearth
will shut Momspresso MyMoney, the influencer engagement platform of Momspresso, later this month due to the latter’s mounting losses, sources told Inc42.
Mamaearth acquired the parenting platform Momspresso in 2021 for INR 152.3 Cr. Momspresso currently operates three verticals – user generated content platform (blogging platform), brand marketing, and MyMoney.
According to Inc42 sources, in a town hall meeting in the first week of April, Momspresso’s top management, including the cofounders, informed the employees about the decision to shutter MyMoney.
“MyMoney has been witnessing a drop in sales since its acquisition by Mamaearth,” said another source added.
The D2C beauty unicorn is also likely to shut Momspresso’s brand marketing business, multiple sources informed us.
The sources also said that Momspresso recently laid off over 80-100 employees from both the verticals. Employees in tech, content, customer service, marketing, and product roles were majorly impacted amid this move.
The sources said that Mamaearth took the decision to shut the loss-making verticals because of its upcoming initial public offering (IPO).
Multiple emails sent to Mamaearth and Momspresso cofounder Vishal Gupta seeking comments on the developments remained unanswered till publishing this story.
However, Momspresso’s MyMoney app is no longer available on Google PlayStore, while the iOS app is plagued with glitches.
Inc42 also learnt that Momspresso had previously conducted a restructuring exercise in December 2022 to cut costs.
The sources quoted above also said that Gupta, and Prashant Sinha, another confounder of Momspresso, have started a new marketing agency and hired about a dozen employees laid off by Momspresso. The marketing agency began its operations last week.
Momspresso: Mamaearth’s First Acquisition Turns Sour?
Momspresso, a user-generated women-focussed content platform, was the first acquisition of the beauty and personal care unicorn Mamaearth in 2021. The acquisition was meant to expand Mamaearth’s content and influencer management capabilities.
Founded in 2016 by Gupta, Sinha, and Asif Mohammed, Mamaearth focusses on providing parenting tips and pregnancy advice to mothers. Its content is largely generated by women in English, Hindi, and eight other regional languages.
Momspresso launched MyMoney in 2019. It allowed individuals to work as micro-influencers for brands on the MyMoney platform by participating in marketing campaigns and posting relevant content on their social media handles.
Meanwhile, Momspresso’s brand marketing vertical works as a third-party agency to develop content for brands in both video and article formats.
As per Mamaearth’s DRHP, the net value (assets minus liabilities) of Momspresso was INR 16.2 Cr at the time of its acquisition in December 2021. However, Mamaearth acquired a majority stake in it for INR 152.3 Cr. Mamaearth paid INR 136 Cr for “goodwill arising on acquisition,” the DRHP showed.
In FY22, Momspresso’s loss widened 42X to INR 10.9 Cr from INR 25.7 Lakh in the previous fiscal year. Its revenue increased a mere 1.1X to INR 31.2 Cr from INR 27 Cr in FY21.
Mamaearth acquired two more businesses after purchasing a majority stake in Momspresso – Dr Seth’s and BBlunt.
Startups Shelve Loss-Making Businesses To Navigate Downturn
The latest developments at Mamaearth come at a time when Indian startups, especially unicorns, are shifting focus to their core business and shutting down loss-making verticals to achieve profitability.
Last year, Bhavish Aggarwal-led Ola shut its quick commerce delivery platform Ola Dash and used car marketplace Ola Cars. Apart from this, food delivery giant Swiggy shut Handpicked, a gourmet grocery delivery vertical, in May this year. Earlier, Swiggy also sold its kitchen infra business, Access, to Kitchens@ in March and shut its private label The Bowl Company in Delhi NCR late last year.
However, it must be noted that Mamaearth turned profitable in FY22 and also posted a net profit in the first half of FY23.
It reported a consolidated operating revenue of INR 943.4 Cr in FY22, up 105% year-on-year (YoY), while its net profit stood at INR 14.4 Cr as against a loss of INR 1,332 Cr in FY21. Similarly, the company reported an operating profit of INR 732 Cr and a net profit of INR 3.6 Cr in the first six months of FY23.
