Nykaa raises Rs 100 Cr from Steadview; paused operations due to lockdown

Omnichannel lifestyle retailer Nykaa has raised  Rs 100 crore from its existing investor Steadview Capital as a primary investment.

Avendus was financial advisor to the transaction.

One of the rare profitable consumer-facing startups in last fiscal, Nykaa had last raised Rs 100 crore from Singapore-based investment firm TPG Growth at a valuation of $724 million in March 2019.

While the fresh funding was raised on March 24, the company has suspended its operations temporarily due to COVID-19 lockdown. The company has informed vendors and partners to expect a delay in payments as the business has been disrupted during the lockdown.

"We deeply value the trust and support of our investors, customers and brand
partners who have been instrumental to our success.  In the midst of this unprecedented global crisis we are working to ensure all our stakeholders are well served and that Nykaa emerges as a leading retail player in the industry," said Falguni Nayar, founder and CEO of Nykaa.

Citing low cash flow and income while expenses remain constant, the Mumbai-based company has sent a letter to its vendors.

Nykaa has been planning for larger funding round from SoftBank at over $1.2 billion valuation and eyeing an initial public offering (IPO) in the next few years. However, it looks like the talks with SoftBank didn't progress.

In the financial year ending on March 31, 2019, Nykaa reported a profit of Rs 2.31 crore and registered a 108% growth in operating revenue to Rs 1,159.32 crore. The startup also reported a significant growth in expenses to Rs 1,157.85 crore in FY19 from Rs 579.39 crore in FY18.

On the competition front, Nykaa competes directly with Purplle and other horizontal majors such as Amazon and Flipkart.

COVID-19 crisis has a major impact on vertical e-commerce business like Nykaa. In the last few weeks, these players have been struggling to do business as the government don't consider them in essential services.