D2C platform Mamaearth raises $50 million, valuation jumps to $730 million

Mamaearth, a startup that offers baby and skincare products, announced today that it has raised $50 million in a funding round led by Belgian investor Sofina Ventures, valuing the company at $730 million. It has been double the $300 million valuations from nine months ago.

Existing investor Sequoia Capital joined the round, investors Fireside Ventures, Stellaris Venture Partners, Sharp Ventures, and Titan Capital sold some stakes in a secondary transaction, according to the company.

The most recent fundraising round was mostly in the form of primary capital infusion, with a share buyback from some of the company's early employees.

According to reports, the company was last valued at $200-$300 million. Mamaearth's valuation was around $100 million following a round of primary capital raising in early 2020, but that has gradually increased during secondary share sales over the past few months.

"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,” said Varun Alagh, co-founder and CEO of Mamaearth.

Even Alagh further added that the company is evaluating multiple brands in the personal care and beauty space with revenue run-rates ranging from Rs 50 to Rs 100 crore.

Aside from that, it has been assumed that direct-to-consumer (D2C) brands could be worth $100 billion in the next five to seven years, according to reports, as the pandemic encouraged consumers to shop online. D2C brands begin by selling their products online and are aided by e-commerce marketplaces such as Flipkart, Myntra, and Amazon.

Beauty and personal care, food and beverage (F&B), and fashion are the most profitable sectors for D2C brands. Due to the rapid growth of the millennial population and a shift in dietary preferences toward organic and plant-based products, F&B brands are increasingly using D2C globally.

Meanwhile, Mamaearth will use the funds raised to expand offline after establishing a sizable online presence. Consumer brands frequently begin online and then expand offline because, despite the internet's potential and growth, the vast majority of Indian retail is still conducted offline.

“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.

Mamaearth intends to become a brand house and will use the funds for acquisitions as well. The strategy is similar to the so-called Thrasio models, which have recently gained popularity in India. GlobalBees, one of them, even raised $150 million in India's largest Series A round.

“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.

Mamaearth, founded in 2016 by husband-wife duo Varun and Ghazal Alagh, has emerged as one of India's hottest new-age consumer brands, riding the so-called direct-to-consumer wave, in which brands sell directly to consumers from their website or via e-commerce platforms, rather than the traditional and expensive offline route.

It has over 80 toxin-free, natural products on the market, including bamboo-based baby wipes, face masks, lotions, and hair care products. Late last year, it also introduced a second brand, Derma Co.

Derma Co is a separate skincare brand from Honasa Consumer, Mamaearth's parent company. It has over 140 Mamaearth products and about 40 The Derma Co products. Once the expansion is completed, the offline channel's contribution to the company's total sales will increase.

Also Read:

• D2C beauty startup Pilgrim raises Series A funding from Fireside Ventures, others

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