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Online beauty retailer Nykaa gets Rs 60 crore as the old money wakes up to eboom

Nykaa, founded by investment banker-turned-entrepreneur Falguni Nayar, has raised close to Rs 60 crore from a group of affluent Indian investors

, ET Bureau|
Updated: Oct 05, 2015, 04.47 PM IST
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Nykaa, an online beauty retailer founded by investment banker-turned-entrepreneur Falguni Nayar, has raised close to Rs 60 crore ($9.5 million) from a group of affluent Indian investors, as the country’s robust ecommerce sector draws wealthy families to bet on it.
Nykaa, an online beauty retailer founded by investment banker-turned-entrepreneur Falguni Nayar, has raised close to Rs 60 crore ($9.5 million) from a group of affluent Indian investors, as the country’s robust ecommerce sector draws wealthy families to bet on it.
Mumbai: Nykaa, an online beauty retailer founded by investment banker-turned-entrepreneur Falguni Nayar, has raised close to Rs 60 crore ($9.5 million) from a group of affluent Indian investors, as the country’s robust ecommerce sector draws wealthy families to bet on it.

The fund-raising round, led by private equity firm TVS Capital, had Marico founder Harsh Mariwala, Hexaware founder Atul Nishar, and Dalip Pathak, former India and Europe head of Warburg Pincus, participate through their family offices. Michael Carlos, former president of Swiss fragrance maker Givaudan, also invested.

Narayan Ramachandran, former country head of Morgan Stanley in India, who has deep expertise in luxury retail business, will join the Nykaa board as the TVS Capital nominee. This is the second round of funding for Mumbai-based FSN E-Commerce Ventures, which owns Nykaa, after it raised Rs 20 crore from other Indian family offices and non-resident Indians last year.

"The equity investment will accelerate growth in ecommerce, aid in launching Nykaa’s private label, scale marketing and grow the team as it intends to rapidly expand customer base across India,” said Nayar.

“We want to be a multi-brand retailer like Sephora and expect to increase our gross merchandise value (GMV) run rate to over Rs 100 crore by December.”

Sephora is a four-decade-old French cosmetics brand with about 1,900 stores in 29 countries.

Founded in 2013 by FSN E-Commerce Ventures, Nykaa is spearheaded by Falguni Nayar, a former managing director of Kotak Mahindra Capital Investment Banking, and her husband Sanjay Nayar, CEO of US buyout gant KKR & Co.

Nykaa will use money from the latest funding to expand its own line of branded products and drive its strategy of being accessible to customers across formats, including through online and regular stores. It aims to increase its GMV, or the total price of goods sold on its platform, by five-fold in the coming year, Nayar said.

Nykaa, which opened a store in Terminal 3 of Delhi International Airport, plans to open 3-4 more stores in Delhi, Mumbai and Bengaluru. It recently ventured into private-label products or its own brands with Nykaa Nail Enamel Collection, which Nayar expects will contribute to 15-20% to sales going forward.

Nykaa has sold 1.25 million products till now, with an average order ticket size of Rs 1,400 and gross margins of 25- 40%, according to the company.

Nykaa competes with Purplle, which has raised around Rs 30 crore, as well as large online retailers such as Amazon.

Globally, online beauty retail is proving to be a bankable business model, as seen from the success of companies like China’s Jumei, which is listed on NYSE.

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