Moneycontrol PRO

Mamaearth raises $50 million led by Sofina, valued at $730 million

Mamearth, one of India's hottest new-age consumer brands, was valued at $730 million in its latest funding round, more than double from less than a year ago.

Mumbai / July 26, 2021 / 07:21 AM IST

Baby and skincare products startup Mamaearth said on July 26 that it had raised $50 million in a funding round led by Belgian investor Sofina Ventures, valuing it at $730 million.

This is more than double the $300 million it was valued at nine months ago, which Moneycontrol first wrote about.

Mamaearth’s early investors Fireside Ventures, Stellaris Venture Partners, Sharp Ventures and Titan Capital also sold a portion of their stake in the round.

Founded in 2016 by husband-wife duo Varun and Ghazal Alagh, Mamaearth has emerged as one of the hottest new-age consumer brands in India, riding the so called direct-to-consumer wave, where brands sell to consumers directly from their website or via ecommerce platforms, rather than going the traditional and expensive offline route.

It offers more than 80 toxin-free, natural products, including bamboo-based baby wipes, face masks, lotions, and hair care products. It also launched a second brand, Derma Co, late last year.

"This round will help amplify the process and strengthen the D2C and offline expansion of Mamaearth, along with further accelerating the growth of The Derma Co., which is already showing early signs of success since its launch in 2020,” said Varun Alagh, co-founder and CEO of Mamaearth

According to reports, direct-to-consumer (D2C) brands could be worth $100 billion in the next five to seven years as the pandemic gave way for consumers to buy online. D2C brands directly start by selling their products online and are assisted by other e-commerce marketplaces such as Flipkart, Myntra, and Amazon. Sectors most lucrative for D2C brands include beauty and personal care, food and beverage (F&B) and fashion. A high growth in the millennial population and a shift in dietary preferences towards organic and plant-based products have led to F&B brands using D2C globally.

"Mamaearth has an audacious goal of disrupting the $25B personal care industry by using technology across the three key pillars of FMCG – product, marketing, and distribution. They have established themselves as a clear market leader in the digital-first brands' space by providing consumers a refreshing bouquet of toxin-free products,” said Ishaan Mittal, Principal at Sequoia India.

While having built a sizable online presence, Mamaearth will also use the money raised to expand offline. Consumer brands often start out online and then expand offline because despite the internet’s potential and growth, the overwhelming majority of Indian retail is still offline.

Mamaearth did not disclose its exact revenue but said it has a revenue run rate of over Rs 500 crore- or about Rs 42 crore a month

Mamaearth plans to become a house of brands and will use the money for acquisitions as well. The strategy is similar to so-called Thrasio models, which have been increasingly popular in India recently. One of them, GlobalBees, even raised India’s largest ever Series A round of $150 million. Mamaearth will likely build brands all in the beauty and personal care space while some other startups want to stretch across many more categories.

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Payaswini Ranganath
first published: Jul 26, 2021 07:15 am