Direct-to-consumer (D2C) skincare brand Foxtale has raised $4 million in its pre-Series A funding round led by Matrix Partners India. Existing investor Kae Capital also participated in the round.
It will use the funds for expanding the product range, hiring senior vertical heads and scaling the business, the Mumbai-based startup has said.
"A big issue in the Indian skincare industry has been the low customer repeat rates. It was clear that efficacy was a big problem for skincare enthusiasts in India and we had to solve it. Our focus is on understanding our customer’s needs” founder and CEO Romita Mazumdar said.
Not even a year old, Foxtale focuses on innovations in the skincare space and creating products dictated by consumer needs.
Existing skincare brands either fall in the category of herbal or ayurvedic and are ineffective yet expensive, the company said.
“Product innovation has enabled us to establish a strong early product-market fit and drive industry-leading repeat rates and customer NPS (net promoter score),” Mazumdar said.
Foxtale claims to approach skincare from the point of view of consumers’ needs.
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“Foxtale is different from other skincare brands. Its focus on high efficacy and the vigorous testing they conduct before launching a product is unlike any other. Foxtale sources 80 percent of its ingredients from premiere labs across the globe,” said Sunitha Vishwanathan, Partner at Kae Capital.
The brand entered the market with four products— a cleanser, vitamin C serum, moisturiser, and sunscreen. These were the product categories that people used the most and needed better formulations for, the company said.
With the new investment, Foxtale is now aiming to launch more targeted solutions for other skincare issues.
“We are privileged to partner with Romita and the Foxtale team as they aim to disrupt this market through innovative products and differentiated go-to-market strategies,” said Rajat Agarwal, Managing Director at Matrix India.
The startup raised its seed round in August 2021 and launched in December. It found an early product-market fit and claims to have a repeat rate of more than 50 percent, on an undisclosed number of orders received, which led to a quick pre-Series A round.
As digital adoption picked up in the aftermath of the coronavirus outbreak, D2C sgement has grown multifold and raised significant capital.
D2C brands start by selling products online and are assisted by other ecommerce marketplaces such as Flipkart, Myntra, and Amazon.
Last year, the sector raised over $2 billion but the capital flow has slowed down this year. The D2C segment raised $153.4 million in the March quarter, up from $105 million the year-ago period. The number of deals, however, remains flat.
The online market alone may not be enough for these brands, as segments such as personal care, electronics, food and beverages, and apparel are crowded.
The digital market for the beauty and personal care segment, which includes brands such as Mamaearth, Sugar Cosmetics and MyGlamm, is expected to grow to about $4 billion by 2025, according to a report by Avendus Capital.