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Nykaa, the beauty ecommerce portal founded by investment-banker-turned entrepreneur Falguni Nayar, is in talks with investors to raise Series C funding worth $10 million.
The proposed funding will be used for expanding offline stores as well launching its private labels.
Promoted by FSN E-Commerce Ventures Pvt Ltd, Nykaa.com had raised Rs 20 crore ($3.4 million) in funding from private investors, including HNIs (high net-worth individuals) and non-resident Indians (NRIs) last year. It is learnt that about 10-13 per cent stake will be diluted in the proposed fundraising.
The start-up was founded in 2012 by Falguni Nayar, the former managing director at Kotak Mahindra Capital Company and her husband Sanjay Nayar, chief executive officer, KKR India. The Nayars had invested $2 million in the company and controlled 95 per cent stake in it, while employees held the remaining stake. After a Series B funding, the family's stake came down to 78 per cent.
"We have started early discussions to raise the next round of funds and are hopeful to complete the process by June-July," Nayar said. Nayar, who was fascinated by the operation of Sephora, the well-known French brand and chain of cosmetics stores, launched Nykaa in line with Sephora.
Sephora, founded in 1970 in Paris, was acquired by French conglomerate Louis Vuitton and Moet Hennessy in 1997.
Nykaa sells branded products across categories of bath & body, fragrances, hair care, makeup, skincare and luxury products for men and women.
"We want to launch our private labels this year. As we have noticed, leading global players such as Sephora are making a majority of the revenue from private labels today. We want to be India's Sephora," Falguni said. According to her, another offline store will be opened in Mumbai in 2016.
Last year, it opened first offline store at Terminal 3, New Delhi airport. Nykaa.com claims to offer 200 brands and more than 10,000 products under various categories. The major competitor for Nykaa.com is Purplle.com, also backed by a clutch of VC/seed investors.
Last month, Purplle has raised over $5 million in its Series A round from IvyCap Ventures. Launched in 2011 by IIT, IIM graduates, Purplle.com had secured angel investments by a consortium of Blume Ventures, Mumbai Angels and Chennai Angels.
According to a recent study by Forrester Research & Google India, online shopper base will grow three times by 2016 to 100 million from 35 million in 2014. About 31 per cent of online buyers are into skincare & cosmetics and 26 per cent into baby care, the report said.
About 50 per cent of women online shoppers buy skincare, beauty & cosmetics, report said.
