VCs, PEs capitalize on D2C skincare, personal care brands amid quick commerce boom
PEs and VCs are capitalizing on D2C skincare and personal care brands driven by the rapid adoption of quick commerce by Indian consumers. D2C startups have received more than $1 billion of funds in FY 2024-25.
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Rapid urbanization, increase in disposable income, and growing aspiration of the 'social media' generation have led to a new wave of opportunity in the beauty, skincare, and personal care market.
Consumers are bombarded with numerous choices due to the presence of multiple touchpoints across channels.
A KPMG report mentioned that the Indian direct-to-consumer (D2C) market value was $12 billion (approx.) in 2022. It is projected to surpass the $60 billion mark by 2027, by growing at a CAGR of 40 percent.
Therefore, a slew of small entrepreneurs, and startup owners have entered into this segment and are betting on the trend of quick commerce.
Notably, several data platforms have observed that private equity (PE) and venture capitalists (VCs) are capitalizing on D2C skincare and personal care brands driven by the rapid adoption of quick commerce by Indian consumers.
According to data by Tracxn, the D2C startups have received more than $1 billion of funds in FY 2024-25.
'Capital infusion in D2C startups'
The VC ecosystem has seen an explosive shift toward D2C startups such as trailblazers like Mamaearth, Sugar Cosmetics, and Bombay Shaving Company.
According to Kallol Dasgupta, founding partner-Ancita Capital, the influx of capital is fueling rapid expansion and innovation within the sector, enabling D2C brands to scale operations and enhance their market presence. In FY 2023, a group of 177 D2C brands collectively generated an impressive Rs 34,360 crore (approximately $4 billion) in revenue, he said.
Last month, Premjiinvest, Epiq Capital, and Edelweiss Discovery Fund invested $30.33 million in Indiejewel Fashions Private Limited (Giva). The company registered a revenue of Rs 2,795 million in FY 24.
According to PrivateCircle data, Koduru Iswara Varaprasad Reddy, Viswadham Commodities LLP invested nearly Rs 6 crore in a Series C5 round in Tarun Sharma's mCaffeine personal care brand this year. On the other hand, Alteria Capital invested Rs 25.92 crore in Shantanu Deshpande's Bombay Shaving Company in 2024.
Mandar Shrikant Joshi – Angel Investor and President - M Strategy Global Investment Group told Storyboard18, "In the present Indian scenario, on the one hand, there is a never-satisfying desire of consumers for products customised to their unique personal tastes, while on the other hand, there are fast-growing distribution channels of e-commerce and quick commerce which fulfill this desire on a click of a cell phone button".
Joshi added that "A product customised to your personal taste delivered to your location in a few minutes from you clicking a button offers a unique combination of scalability and replicability to the D2C category, be it a budget FMCG brand or a luxurious personal hygiene brand.
Further, the D2C brands implement curated marketing strategies that are based on consumer location mapping and which take clues from the data analytics driven by the online behaviour of the consumer across social media to help them offer the perfect product to the exact consumers within the categories they offer".
'Funding to quick commerce'
Quick commerce firms are also raising capital to boost their operation. As per the Tracxn data, Zepto raised $340 million in August and $665 million in June 2024. As per media reports, the startup is planning to raise about $250 million by the end of November. The company's valuation stands at $5 billion at present.
Zepto's competitor Swiggy raised around Rs 5,085 crore from investors in its anchor round before the IPO while Zomato's total investment in Blinkit has increased to Rs 2,300 crore after Rs 300 crore investment in June 2024.
Apart from Zepto, Swiggy, and Blinkit, the other top companies based on total funding rounds have been, Delhi-based Scooton, Haryana-based Freshokit, Gujarat-based NED Mart, Telangana-based Opoto, Karnataka-based Bindass Basket, Uttar Pradesh-based Bagsy among others, Tracxn data mentioned.
"The unique interplay of consumer behavior, e-commerce, and VC-backed innovation in logistics and last-mile delivery has made India’s personal care and FMCG sectors a top choice for investors. In the coming years, as more Indian cities become connected through quick commerce, this funding surge is likely to continue, creating new opportunities for innovative D2C brands," Dasgupta said.
