Emami picks up minority stake in US-based beauty products start-up

Pumps in $0.57 mn for a 7.54% stake, in its third such investment

On an investment spree, Emami Ltd has picked up a 7.54 per cent stake in US based start-up, Loli Beauty Inc, pumping in $0.57 million into the company.

This marks Emami’s third such investment in a start-up in the cosmetics and beauty care space, the other two being Gurgaon-based Helios Lifestyle and Ahmedabad-based Brillare Science last fiscal. It had created a Rs one billion fund to make strategic investments in start-ups or pump money into companies that make complementary products that Emami doesn't.

As per the agreement with Loli Beauty, Emami Ltd’s wholly-owned subsidiary in Dubai, Emami International FZE, will be in charge of 1,228,261 Series Seed Prime Preferred Stocks (SSPPS) of Loli Beauty, while the funding for the same will be done by the parent company.

One of Emami's promoters has also invested $0.1 million in this start-up, picking up 217,391 SSPS for a 1.33 per cent stake.

Founded two years ago, this start-up has already raised $1 million in seed financing from strategic angels.

As per this company’s website, its products start with the purest, most potent, food-grade ingredients, hand-selected and responsibly sourced. It furthered that powerful beauty remedies began with superfood ingredients, freshly harvested and customized and it is bringing back this wisdom back.

SSPPS usually provides certain economic and control rights over the company and protections not given to the holders of a startup’s common stock. Usually the founders hold the common stock. 

Typically, the rights of SSPPS include a liquidation preference, anti-dilution protection, and conversion rights clubbed with voting rights and electing the board of directors.

As per investors, preferred stocks are mostly used when a start-up company undergoes a large financing, such as one with a venture capital fund. 

Previously, in Brillare Science too, Emami had picked up a preferential share of 26 per cent while in Helios Lifestyle, it had picked up a 30 per cent equity stake.