FirstCry raises $34mn funding, consolidates business with Mahindra Retail
The $12 billion baby and kids market in India, which is largely unorganised, is going through some consolidation. Two of the leading players in the segment, FirstCry.com (BrainBees Solutions Pvt Ltd) and Mahindra Retail (BabyOye), have consolidated their business activities to create a dominant presence for themselves. The Board of Directors of the two companies have approved this strategic move. Mahindra Group acquired BabyOye in February 2015.
As a part of the deal, Mahindra Retail and FirstCry have consolidated their operations, with Mahindra Retail selling its franchise business to FirstCry and operating all company stores under a FirstCry master franchisee agreement. The merged entity will conduct its business under the brand name FirstCry.com- A FirstCry Mahindra Venture.
Additionally, FirstCry has raised $34 million in fresh equity capital from the Mahindra Group, Adveq (a Large Pvt Equity Fund) and Kris Gopalakrishnan. with participation from all existing shareholders.
Story so far
Baby and kids-focused omni-channel player FirstCry.com was founded in 2010 by serial entrepreneur Supam Maheshwari, who previously built and successfully sold Brainvisa Technologies. Brainbees (the parent company of FirstCry) has raised $70 million from IDG Ventures India, SAIF, Valiant Capital, Vertex Venture and NEA, all of whom are participating in the current round. The company claims to have over 180 FirstCry branded franchisee stores across more than 100 cities in the country, with a customer base of more than 3 million parents.
Mahindra Retail, a Mahindra Partners portfolio company, has operated Babyoye since Feb 2015, when the company acquired BabyOye and renamed the stores as Babyoye by Mahindra. Currently, there are more than 120 stores operational across the country, which are a combination of company-owned and franchised stores across over 55 cities. Mahindra Retail had in January 2016 also finalised a preferred relationship with the world renowned brand Carters, to represent their apparel products in India.
The mega consolidation
This strategic consolidation of the industry’s leading players creates India’s single most dominant presence in this category, in the combined offline retail and online environment. The merged entity will conduct its business under the brand name FirstCry.com- A FirstCry Mahindra Venture.
Anand Mahindra believes that the future belongs to click and brick businesses, and that consolidation is the way to thrive and establish industry leadership. With this deal, FirstCry.com will have a parent base of over 4 million, with a footprint of over 300 stores spread across 125 cities. Supam will continue as the CEO of the combined entity. Mahindra Retail’s team shall be actively involved in giving shape to and operationalising the consolidation, to ensure consumers and other stakeholders see tangible benefits at the earliest.
Supam said,
Our partnership with the Mahindra Group will bring in synergies that will help us scale and achieve our profitability goal much faster. Together, we will continue to scout for more opportunities for inorganic growth.
Earlier this year, Hopscotch raised $13 million in Series C funding in a round led by Facebook Co-founder Eduardo Saverin, eyeing the huge market opportunity. The consolidation sends a strong signal to the market and other players. FirstCry has further tightened its grip, but organising the unorganised $12 billion industry remains a massive task ahead.