For years, Falguni Nayar has guided the founders of Indian companies through roadshows in Europe and the United States as they made their way to their stock market debut. Today, the former investment banker is leading her own startup towards a landmark IPO.
Nykaa, his brainchild, became India’s premier beauty e-commerce site, with the endorsement of Bollywood stars and a staunch supporter among the twenty-something. The startup, officially known as FSN E-Commerce Ventures Ltd., filed preliminary documents for an initial public offering Monday evening, which Bloomberg News said could value the company at more than $ 4 billion.
One idea Nayar picked up from his work with entrepreneurs was the importance of a motivating trade mission. With Nykaa, she saw the opportunity to help Indian women take care of themselves, moving away from the country’s traditional deference to men.
“I was inspired by these die-hard founders,†Nayar said in a recent interview on Zoom from his home in Alibaug. “Our message to women has been that the spotlight of her life should be on herself. You are important in your story and shouldn’t feel guilty for being the center of the scene.
The message resonated. Founded in 2012, the Mumbai-based startup now offers more than 2,500 brands of everything from mascara and makeup remover to velvety Indian kohl eyeliner and body tattoo art called mehendi. Through its websites, apps and more than 70 physical stores, the company achieved a turnover of 24.5 billion rupees ($ 330 million) in revenue and other income during the fiscal year ended in March, according to his record. That figure has grown by more than 35% during that time, despite store closings imposed by the pandemic and delivery issues. The startup is profitable.
If the IPO goes according to plan, Nykaa will be the first female-led Indian unicorn to go public. Nayar owns about half of the business with her husband and twin children, which means their stake could be worth more than $ 2 billion if the startup meets or exceeds initial projections.
“It was a niche to be tapped and Falguni jumped into it,†said Arvind Singhal, president of Technopak Advisors Pvt, a leading consulting firm. “The young Indian population has growing aspirations and women from all walks of life are more empowered with each passing generation. “
Nayar founded the company nine years ago, believing that if she was going to start a business it had to be before she turned 50. “The point of no return,†she said.
The name she chose is derived from the ancient Sanskrit word for heroine.
Nayar had seen that in the West entire floors of high-end department stores were devoted to cosmetics and other beauty products. But millions of Indian women still had to go to neighborhood “bracelet” or “variety” stores for their beauty needs. These mom and pop shops, staffed mostly with male owners, sold cosmetics and fashion jewelry alongside craft kits and other trinkets. The choices were limited, the displays poor, and there was no chance to taste the products.
Nayar’s goal was to create a seamless, integrated shopping experience where consumers could shop online or in physical stores, depending on what they were looking for on that particular visit. They could visit one of Nykaa’s colorful specialty outlets to, for example, try out lipsticks or eye shadows. Online they could get tutorials, especially from celebrities like Janhvi Kapoor or Debasree Banerjee.
Nykaa has resisted the lower prices to attract buyers, unlike other e-commerce startups.
“We didn’t want to be a discount store,†Nayar said. “We prefer to sell the right color of lipstick at full price, rather than the wrong shade at half the price, which would make the buyer unhappy within minutes of wearing.”
From 60 daily orders at launch, sales have climbed to over 1,000 orders in just a few months. Nykaa continued its momentum by customizing products for Indian skin tones, skin types, and local weather. He launched a range of nail colors, now up to 2,700 shades. She also introduced buyers to basic makeup, such as foundation, and now offers 1,500 shades. Nykaa’s own line of lipsticks has fun Indian names such as Maharani (Maharaja’s wife) and Mishti (gentle person).
“They really have it all,†said Sakshi Jain, a 21-year-old who just graduated from college. “I can shop around, read in-depth reviews, and then buy. All my friends also shop in Nykaa.
Bangalore student Sayeree Nandi started browsing products on Nykaa at the start of the pandemic and has since become addicted to the app.
“It’s more convenient than going to several physical stores or searching Amazon,†said the 21-year-old. She reads reviews before buying – skin care products are her weakness.
The startup now offers more than 2,500 brands of everything from mascara and makeup remover to eyeliner and henna [File: Anindito Mukherjee/Bloomberg]Competition is increasing. Giants like Amazon.com Inc. and Flipkart Online Services Pvt, controlled by Walmart Inc. are thriving in the $ 15 billion beauty market, with specialty retailers like LVMH’s Sephora. Local rival Purplle has secured backing from Goldman Sachs Group Inc.
Nykaa’s strategy has been to strengthen its lead by investing in technology, marketing and product extensions. Its online services use algorithms to recommend products based on what customers have purchased before, much like Netflix Inc. recommends movies.
It is used to prune to cut exclusive ties with foreign brands. Global brands such as Estee Lauder Cos. and MAC Cosmetics Inc. began to showcase their products in India as the market grew. They’ve personalized products too – Estee Lauder has tiny 7 and 20 milliliter sizes of bestsellers for those on a budget.
Nykaa has expanded into three separate applications including, most recently, an application for men’s products.
“At social and professional meetings, very old and ultra-successful men asked me about skin and hair care, so I decided to launch Nykaa Man so that men could shop without fear,†he said. declared Nayar.
Her Columbia University graduate son Anchit runs the online beauty business, while her daughter Adwaita, who holds an MBA from Harvard Business School, manages the fashion industry. Her husband, Sanjay Nayar, is the Indian President of KKR & Co.
Ravi Mehta, managing director of London-based Steadview Capital and an early investor in Nykaa, said he believes Nayar’s company has a particularly strong business model among Indian internet companies.
“It is one of the fastest growing companies by revenue of the more than 15 startups that are lined up for IPOs,†Mehta said in a telephone conversation. India-focused Steadview tech fund has invested in local startups including Zomato Ltd., Policybazaar, and Lenskart Solutions Pvt.
India is still a small market in the beauty world and its relatively low standard of living means that those who can indulge in Nykaa products make up only a tiny fraction of the country’s 1.3 billion people. But the numbers are growing with the economy – and societal changes that empower more women. Technopak estimates that the beauty market will grow by more than 8% per year until 2025.
India has come a long way since the days when most women bought only two beauty products: a red lipstick and a kajal eyeliner. Nykaa is now working to persuade them that they can also indulge themselves and switch to hair masks and nighttime face serums.
“We still have a long way to go,†Nayar said.
