Mumbai-based direct to customer (D2C) beauty product company Sugar Cosmetics has closed its USD 21 million Series C round led by Elevation Capital. Existing backers A91 Partners and India Quotient also participated in the round. The Mumbai-based consumer brand had begun the round with USD 2 million from venture debt fund Stride Ventures in October.
“We will invest the amount in bolstering our R&D, focus on content creation and expand our distribution abilities,” Vineeta Singh, co-founder and CEO, Sugar Cosmetics told local media Economic Times (ET).
After the deal, which valued the company at USD 100 million, the founders will own around one-third of the company, while the rest is owned by investors, Mukherjee said.
Founded in 2015 by husband and wife, Singh and Kaushik Mukherjee, alumni of India’s esteemed management college IIM Ahmedabad, Sugar Cosmetics has been growing rapidly for the last couple of years. Before starting Sugar Cosmetics, the duo was running Fab Bag, a startup which offered monthly customized beauty bags on a subscription basis. Seeing the growing number of women shopping online based on the digital content they consumed, Singh and Mukherjee realized that the timing was right to build a new-age beauty company for young India.
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Sugar Cosmetics first raised USD 2.5 million from India Quotient and RB Investments Pte. Ltd in 2017. Two years later, they bagged another USD 11.6 million from A91 Partners in March 2019.
The startup initially established its presence online before making its products available at brick and mortar retail stores. In fact, the company has been bullish on offline retail as much as it is for online sales. Currently, it is reportedly present in over 2,500 retail outlets in over 130 cities. Sugar also sells in overseas market and have manufacturing facilities across Germany, Italy, USA, and Korea, besides India.
During the COVID-19 pandemic and subsequent lockdowns, the company saw almost 70-80% of sales coming from online channel. However, it reportedly opened up six exclusive stores since the pandemic hit last March.
“We feel that over the next five years, 80-85% of the market will continue to shop offline and hence want to expand our retail presence in the country,” she told ET.
In another recent interview, Singh said, “according to our research, almost 60% of Sugar’s customers prefer to shop in brick-and-mortar outlets as they still crave that in-person interaction with a beauty advisor and the touch & feel experience that a store can provide.”
“Keeping these factors in mind ..we don’t plan to stop our on-ground expansion,” she added.
The company is looking to double its current INR 200-crore (USD 27.4 million) revenue run rate over the next 12 months, the ET report said.
According to Ishpreet Singh Gandhi, founder and managing partner, at Stride Ventures, one of Sugar’s existing backers, the consumer brands that are trying to disrupt the way traditional players work in the cosmetic industry, the likes of Sugar Cosmetics, are coming in and forming niches of their own, and people are willing to experiment these new, online products.
“Every segment is seeing disruption in the form of new players with niche positioning coming in,” Gandhi told KrASIA.
Indian consulting firm RedSeer Consulting projects the Indian beauty and personal care market to grow at a CAGR of 9% from USD 14-15 billion in 2017 to USD 22-23 billion in 2022.