Mamaearth valued at $730 million as Sofina leads $50 million funding


Mamaearth has closed a $50 million funding round led by Belgian investment fund Sofina, valuing the direct-to-consumer (D2C) personal care brand at $730 million, one of the most valued new-age D2C brands in the country.

Existing investor Sequoia Capital also participated in the round, while early investors Fireside Ventures, Stellaris Venture Partners, Sharp Ventures and Titan Capital sold some stakes in a secondary transaction, the company said.

In a secondary share sale, the money does not flow into the company directly but goes to investors selling their stakes.

The latest fundraising round was mostly in the form of primary capital infusion, while there was also a share buyback from some of its early employees.

ET was the
first to report on May 13 that Sofina was looking to lead Mamaearth’s new funding round. Sofina had picked up a small stake in Mamaearth through a secondary share sale, ET reported, but it was not announced formally.

Sources said the company was last valued at $200-$300 million. After a round of primary capital raising in early 2020, Mamaearth’s valuation was pegged at around $100 million but that increased gradually during secondary share sales over the past few months. Mamaearth cofounder and chief executive Varun Alagh declined to share details of the secondary share sales.

Mamaearth will use the fresh capital to double down on its brand’s growth through deeper offline expansion and also explore acquisitions in the beauty and personal care space, Alagh told ET.

Founded by Alagh and his wife Ghazal Alagh in 2016, the company’s toxin-free products clocked total sales of around Rs 500 crore in the previous financial year. “The plan is to double the sales by 100% this year. Because of Covid-19’s second wave, offline expansion was halted, but now we plan to deepen our offline presence,” Alagh said.

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The company had clocked sales of around Rs 109 crore in FY20, the equity research unit of investment bank Jefferies said in a report

“The Mamaearth team is constantly pushing the boundaries in the personal care space through their disruptive innovations, rapid execution pace and focus on delighting customers,” said Yana Kachurina, investment manager, Sofina Ventures SA.

Rise of D2C

Alagh said Mamaearth’s own online platform is its single largest channel of total sales, without giving specific numbers.

According to Jefferies, Mamaearth’s D2C platform generates 35% of total sales while offline channels account for 20%. The rest is from third-party ecommerce platforms like Amazon India, Flipkart, Nykaa and BigBasket, among others. It has a presence in about 12,000 stores across the country.

“This round will help amplify the process and strengthen the D2C and offline expansion of Mamaearth, along with further accelerating the growth of The Derma Co which is already showing early signs of success, since its launch in 2020,” he said.

Derma Co is a separate skincare brand from Mamaearth parent Honasa Consumer. It has over 140 products under the Mamaearth brand and around 40 products under The Derma Co. The offline channel’s contribution to the company’s total sales would go up once the expansion is completed.

Alagh said the company is evaluating multiple brands in the personal care and beauty space that have a revenue run-rate in the range of Rs 50-Rs 100 crore.

D2C brands have been gaining traction over the last year or so with multiple new-age brands like boAt in electronics, Sugar Cosmetics for makeup, and Bombay Shaving Company (BSC) in men’s grooming.

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Though born online, brands like boAt, BSC and Mamaearth are expanding into the offline retail network. The growth in D2C brands has largely come on the back of multiple factors like increased consumer awareness and willingness to try out new brands – even at a premium price point. The increased reach of online shopping has further accelerated the adoption of these new brands.

Currently, there are also multiple new startups building Thrasio-style ventures in India that seek to acquire early-stage online-first brands and scale them up.

US-based Thrasio is the world’s largest acquirer of third-party private label businesses on Amazon.

These new ventures in India, which include Goat Brand Labs, Mensa Brands, 10Club and GlobalBees, are also raising risk capital at breakneck pace.

They plan to acquire a set of new brands and scale them both online and offline.

Mensa and GlobalBees have raised
$50 million and
$150 million, respectively, through a mix of equity and debt, while 10Club has raised one of the largest seed rounds —
$40 million – and Goat Brand is finalising a $20 million investment from Tiger Global, Flipkart’s venture arm and US-based Mayfield.

Avendus Capital, a Mumbai-based investment bank, said in a report last year that D2C brands could become a $100 billion market by 2025.



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