Mumbai-based beauty and skincare startup Nykaa said Tuesday it has raised INR 100 crore (USD 13 million) in fresh funding led by existing investor Steadview Capital.
This comes at a time when VC investments are expected to slow down due to the global spread of COVID-19 and investors are looking to back companies that offer essential services or products as the pandemic is likely to have an adverse effect on discretionary spending.
“We are very grateful to achieve this significant milestone. We deeply value the trust and support of our investors, customers and brand partners who have been instrumental to our success. In the midst of this unprecedented global crisis we are working to ensure all our stakeholders are well served and that Nykaa emerges as a leading retail player in the industry,” Falguni Nayar, founder and CEO of Nykaa, said in a press statement.
Founded in 2012 by Nayar, a former investment banker by profession, Nykaa is one of the few profitable startups in India. It reported a net profit of USD 303,000 in the financial year ending March 31, 2019.
The eight-year-old omnichannel company that sells beauty and skincare products through retail stores and its online platform, raised USD 14 million last year led by TPG Growth. The company has raised around USD 120 million in total as of now from a dozen investors such as Steadview Capital, TPG Growth, and Sharrp Ventures, among others. It operates over 50 physical stores across the country and claims to have products from over 1,000 brands on its online platform.
Due to the 21-day lockdown announced last week to contain the spread of novel coronavirus in India, Nykaa has temporarily suspended all operations and informed its vendors and business partners that there would be a delay in payment.
The company competes with vertical online platforms such as Purplle, MyGlamm, personal haircare brand Bare Anatomy, and Grofers’ private label Orange Something. In the horizontal e-commerce space, it competes with the likes of Amazon India and Flipkart.
Investments in beauty and personal care space could see a downward trend this year as spending on affluent products is expected to go down. Last year saw such investments double up to USD 108 million compared to USD 51 million VC funding in 2018. According to a report by RedSeer Consulting India’s online beauty and personal care market is set to cross USD 3.5 billion by 2022, up from USD 300 million in 2017.