Online beauty marketplace Purplle has raised USD 45 million from Sequoia Capital and existing investors including Belgian investment firm Verlinvest and Indian venture capital companies Blume Ventures and JSW Ventures.
This funding round saw the company’s value soar to over USD 300 million, a report by local media Economic Times said. With the fresh funds, the nine-year-old company plans to “deliver 8-10X growth” in the next four to five years, it said in a statement.
According to Manish Taneja, Purplle’s co-founder and chief executive, the company has been on a robust growth trajectory. Despite the pandemic last year, its gross merchandise value (GMV) for the last three years, rose by over 90% CAGR. GMV implies the total value of the merchandise sold on an e-commerce platform in a given period of time.
Founded in 2012 by Taneja and Rahul Dash, Purplle.com has over seven million monthly active users and sells nearly 50,000 products across 1,000 plus brands. It also has a slew of private labels like Purplle, Good Vibes, and NY Bae, among others. As per Taneja, Good Vibes has scaled up to become a USD 20 million-brand.
The Mumbai-based startup competes with omnichannel beauty retail unicorn Nykaa, while its private labels are up against a plethora of up-and-coming direct-to-consumer (D2C) beauty brands like Sugar, Mamaearth, Wow Skin Science, MyGlamm, Skinkraft, and Plum.
Taneja believes the new investment will help him shape Purplle into a multibillion-dollar, digital-first, beauty and personal care enterprise.
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Sakshi Chopra, Principal, Sequoia India believes Purplle has cracked “the beauty playbook of value retailing with three key tenets—a business built on high retention and low customer acquisition cost, a wide assortment of brands offering quality at best prices, and an attractive private label portfolio mix.”
“We are seeing a growing trend towards the gentrification of e-commerce in India. Consumers are making a clear distinction between distribution platforms and brands that are more relevant to them,” she said.
Sequoia said it expects Purplle to emerge as a dominant beauty e-retailer as the online penetration of beauty segment would grow from 10% to 25% over the next decade. According to an October 2020 report by Avendus Capital, the online beauty and personal care market would grow to become an opportunity worth USD 4.4 billion over the next five years, growing four-fold from USD 1.06 billion in FY 2020. There were 25 million online beauty shoppers in FY 2020, and Avendus estimates this number to reach 135 million by FY 2025.
This investment marks Sequoia Capital’s entry into the online beauty industry in the world’s second-most populous country. The Menlo Park, California-headquartered VC is known for backing prominent Indian startups like edtech decacorn Byju’s, hospitality giant Oyo, ride-hailing major Ola, food tech platform Zomato, and SaaS firm Freshworks.
Over the last couple of years, homegrown D2C beauty brands have gained traction from the millions of Indian millennials, making them a darling of the investor community. Currently, India has over 80 D2C brands across beauty, personal care, cosmetics, and men’s grooming segments. According to a recent report by PGA Labs and Knowledge Capital, between 2014 and 2020, investors pumped in USD 1.4 billion into D2C brands, of which 54% went into the beauty and fashion segment.
Investors have already begun to reap handsome returns on their bet in the online beauty segment. IvyCap Ventures, an early backer of Purplle, which wrote the startup a check of INR 15 crore (USD 2 million) in 2015, earned INR 330 crore (USD 45.6 million) by selling a part of its stake in the current funding round.
This means IvyCap has clocked 22x returns on the partial exit, which has helped the fund generate 1.35 times of its entire Fund 1 value of INR 240 crore (USD 33 million). IvyCap has invested in the company’s follow-on rounds as well from its INR 535 crore (USD 74 million) Fund 2, which it raised in 2018.
“We have invested in Purplle.com from our Fund 1 and Fund 2. When we first invested in Purplle in 2015, we were confident that digital would disrupt and redefine the beauty industry in India,” Vikram Gupta, founder and managing partner of IvyCap, said in a statement.
“With an initial investment of INR 15 crore from our Fund 1 growing by manifolds to INR 330 crore, our partnership has been rewarding. We continue to believe in the growth of the company and therefore we have retained our stake for Fund 2.
IvyCap isn’t alone in earning lucrative returns. During it Series C round in late 2019, two early angel investors secured a 40X return on their investment by selling their stakes to Goldman Sachs in a secondary exit deal.
“Despite Covid, Purplle delivered remarkable growth,” said Arjun Anand, executive director at Verlinvest. “Our investment this year will further enable Purplle to strengthen its position as a market leader in the beauty e-commerce segment.”