India’s direct-to-consumer (D2C) segment has seen significant investor activity for the past few years as ecommerce market conditions have matured and evolved. India’s relatively robust ecommerce infrastructure ecosystem — ecommerce enablers, logistics, marketing, customer service and more — makes it easier for vertical or niche ecommerce players to launch new brands and scale up. In the first seven months, Indian D2C startups raised $783.7 Mn across 66 funding deals, as per Inc42 Plus Analysis.
The D2C segment has seen startups and brands in key ecommerce categories— fashion, home decor, consumer electronics, FMCG among others (handicraft goods, kitchenware, lifestyle accessories). Among these, there’s little doubt that fashion is the most lucrative category for D2C brands not only from the perspective of the consumer base but also funding opportunities.
Further, fashion is not a winner-takes-all market due to the various segments and the fragmented nature of the consumer base, giving room for both small, niche and large players to exist.
Fashion brands have secured the most funding ($1.1 Bn) among Indian D2C startups, with 65 unique fashion startups drawing in investments from 2014 to July 2021. Out of the total funding, $336.5 Mn was raised by D2C fashion startups in 2021 alone, till July. Lenskart was a major contributor, having raised $315 Mn across two deals in 2021.
But there’s definitely room for more players. According to the latest Inc42 Plus study — The Rise Of India’s D2C: Market Landscape And Trends Report, 2021 — the online fashion market was valued at $11 Bn in 2020, and is poised to reach $43.2 Bn by 2025.
Beyond fashion, the D2C wave is redefining the FMCG market too. With 139 deals, a total amount of $833.5 Mn has been raised since 2014 by D2C FMCG startups. Out of the total funding, $321.3 Mn was raised across 39 deals by such startups in 2021. Mamaearth and WOWSkin Science were major D2C FMCG startups raising $50 Mn each in 2021.
Late-Stage D2C Startups Gain Investments
Late-stage funding has been led by Sequoia Capital India, Kalaari Capital, Lightbox Ventures and TR Capital. Out of the total funding of $1.7 Bn raised by late-stage Indian D2C startups, over $513.6 Mn was raised in 2021 alone. FMCG startups were also dominant in late-stage funding in 2021 — six out of the total eleven late-stage deals were for FMCG startups. Despite this, the majority of the funding was raised by fashion D2C brands.
On the other hand, seed stage funding had tailed off in 2020, but has seen a revival in 2021. Out of $84.3 Mn raised at the seed stage from 2014 to July 2021, more than $18.4 Mn was raised in 2021.
Delhi NCR Emerges As The Top Hub For D2C Startups In India
Delhi NCR-based D2C startups dominated the funding landscape, raising $931 Mn across 106 funding deals from 2014 to July 2021. Lenskart, Mamaearth, Wingreens and Clovia are some of the major D2C startups based in Delhi NCR that raised funding in this period.
Correction Note | 12.35, August 21, 2021
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