Nykaa IPO: How the online marketplace changed the beauty landscape and diversified into new categories

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Touted as India’s Sephora, Nykaa was launched in 2012 as a cosmetic marketplace. Almost nine years later, the Mumbai-based startup has diversified into multiple categories - a fashion division, a home décor unit, and more.
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Online cosmetic marketplace Nykaa on Monday filed papers with market regulator SEBI to raise funds via an initial public offering (IPO). The Nykaa IPO will comprise fresh issue of shares of up to Rs 525 crore and an offer for sale of up to 4.3 crore shares by existing shareholders.

India is currently witnessing an IPO rush, with at least 28 companies already concluding their IPOs and raising more than Rs 42,000 crore over the last seven months. New-age tech-based companies, including PhonePe, MobiKwik, Grofers, PolicyBazaar, Flipkart Internet, and Delhivery are at the forefront and have plans to go public this year after foodtech unicorn Zomato’s successful listing.

Interestingly, Nykaa, run by FSN E-Commerce Ventures Pvt. Ltd., is the first profitable startup to file its documents. 

Nykaa's shopping app, which has now added many new categories and brands

Founded in 2012 by 50-year-old investment banker-turned-entrepreneur Falguni Nayar, Nykaa entered the ecommerce market when Amazon and Flipkart were already leading the charge. But instead of selling everything from books to mobile phones, Nykaa, with local makeup sellers, brought international cosmetic brands to India - similar to French cosmetic giant Sephora.

Just before the pandemic hit India, Nykaa claimed profitability for FY19 in December 2019. Amid the lockdown, it started delivering essentials to over 14,000 pin codes across the country. It attained unicorn status after raising funding of Rs 66.64 crore from existing investor Steadview Capital at a valuation of $1.2 billion.

Nykaa focused on increasing its retail presence and increasing its categories. It acquired D2C jewellery brand Pipa Bella in April 2021 and continued expansion in the offline segment.  

It also launched NykaaNetwork, an interactive beauty forum where subscribers could chat with each other, and NykaaDesignStudio for apparel in designer and premium brands like Ritu Kumar and Masaba in 2018.

The beauty startup soon launched NykaaMan, an ecommerce platform for men’s personal care products in hair care, skincare, wellness, and sports nutrition, among others.

The Mumbai-based firm opened its first-ever kiosk in Thiruvananthapuram, Kerala, in 2020 – this made sense in a pandemic scenario as it is cheaper than opening a full-sized store, and helped in brand building. 

Today, Nykaa competes with online marketplaces like Myntra, Purplle, Flipkart, and Amazon. It follows an inventory-led model, and has its own private label in cosmetics and personal care segment.

Here’s Nykaa’s timeline to IPO:

  • 2012: Falguni Nayar launches Nykaa as an online marketplace for beauty and wellness products
  • July 2014: Opens first physical store at Indira Gandhi International Airport, Delhi; raises Rs 20 crore in seed funding from Indra Banga, Narotam Sekhsaria and others 
  • October 2015: Scoops up $9.5 million led by Atul Nishar in Series B round
  • September 2015: Billionaire Harsh Mariwala leads a Rs 100 crore Series C round into the beauty marketplace
  • 2018: Raises Rs 750 crore and Rs 165 crore from a bunch of investors in Series D round, followed by Rs 113 crore raised from Lighthouse Funds and TVS Capital
  • 2019: Massive year for the beauty startup as it attains profitability. Raises more capital from Singapore-based TGP Growth and Steadview Capital. Acquires fashion styling platform 20Dresses
  • 2020: Nykaa raises Rs 100 crore from Steadview Capital, and Rs 67 crore in a Series F round, and enters the coveted Unicorn Club. Actresses Alia Bhatt and Katrina Kaif invest undisclosed amounts in the firm; Katrina creates a new makeup range with Nykaa 
  • December 2020: Expands further in retail by setting up its first kiosk in Thiruvananthapuram, Kerala; Nykaa Fashion opens its first retail store in Delhi
  • January 2021: Allots ESOPs worth Rs 60.6 crore
  • April 2021: Enters athleisure category through its brand Nykd; acquires D2C jewellery brand Pipa Bella to strengthen presence in the category
  • May 2021: Appoints Flipkart’s consumer, marketing, and digital head Vikas Gupta to lead Nykaa’s B2B division
  • June 2021: Adds home decor in Nykaa Fashion
  • July 2021: Becomes the first profitable startup to be heading for an IPO; seeks a valuation of over $4 billion as it heads for its IPO  
Edited by Teja Lele Desai