Exclusive | Shark Tank judge’s Sugar Cosmetics eyes $500 million valuation

Vineeta Singh and Kaushik Mukherjee.

Sugar Cosmetics, co-founded by husband-wife duo Kaushik Mukherjee and Vineeta Singh, the latter of whom was recently a ‘shark’ on the viral series Shark Tank India, is in talks to raise over $50 million at a valuation of about $500 million, a 5x jump in a year, said people familiar with the matter, requesting anonymity. The round will be led by L Catterton Asia, an investment firm partnering with Louis Vuitton Moët Hennessy (LVMH), and manages over $30 billion in assets globally, the people cited above said.

Sugar Cosmetics declined to comment while L Catterton did not respond to queries seeking comment.

Sugar currently sells lipsticks, eyeliners, face and eye brushes, and recently expanded into skincare segment, selling moisturisers and sheet masks. It currently has an annualised revenue of about Rs 320-350 crore, or about Rs 27-30 crore of net revenue a month, sources said. 

The deal and Sugar’s surging valuation represent a sharp uptick in consumption as well as funding for new-age beauty and personal care brands, which start selling online and look to leverage social media word-of-mouth, online trends and a democratised internet to grow fast and expand offline later. 

These so-called direct-to-consumer (D2C) brands raised $2 billion in funding last year, trebling year-on-year, with the COVID-19 pandemic driving online adoption.

A rise in online brands has however led to digital advertising costs, as Google and Facebook have started charging these internet companies higher rates to advertise on their platforms. Customer acquisition costs for these brands have surged 30-40 percent in the past 18 months, they said.

“Sugar has built a good range of products and has become a distinctive brand. Now they have to maintain that differentiation when lots of new brands are coming up. And since advertising online is more expensive for everyone, they have to find new ways of attracting and retaining customers,” said the founder of a personal care brand, requesting anonymity.

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Newer lipstick brands such as Renee, Belora and Gush Beauty operate at a fraction of Sugar’s scale, but pose competition going forward, according to sources.

CEO Vineeta Singh’s newfound fame as a shark/investor on the entrepreneurship show Shark Tank may also help build out Sugar’s visibility further. Singh has over 500,000 followers on Instagram and Twitter, over 80 percent of whom have followed her in the last three months, while Sugar has nearly 2 million followers on social media, predominantly on Instagram.

“Consumer brands need to find new ways of being discovered except social media ads. Her popularity definitely helps with that, although it should not prove to be a distraction, like investors sometimes fear angel investments can be. But they haven’t shown any signs of distraction so far,” another person said, requesting anonymity.

Singh’s investments from the show include Heart Up My Sleeve, Booz Scooters, momo-maker BluePine Foods, energy drink NOCD and COSiQ Cosmetic.

The deal will also mark new investor, private equity firm L Catterton’s first deal in India, after it hired Anjana Sasidharan from Sequoia Capital India to head investments in India and Southeast Asia last year.

L Catterton was created in 2016, when PE firm Catterton partnered with Louis Vuitton owner LVMH and its billionaire chairman Bernard Arnault. The Asian arm invested in dental care startup Zenyum last year, and is in talks to close two more deals in India, the sources added.