Sugar Cosmetics, a direct-to-consumer (D2C) brand known for its cruelty-free beauty products, is gearing up for a major fundraising round. The company aims to raise $100 million, potentially valuing it between $700 and $800 million, according to sources close to the development.
This fundraising initiative comes at a time when the startup ecosystem is experiencing a ‘funding winter’. The Indian venture capital sector, in particular, has seen a marked decline in both deal volume and value in 2023. GlobalData reports a 42.3% year-on-year decrease in the volume of VC funding deals and a 70.4% fall in disclosed funding value for the first three quarters of the year.
Despite these challenging conditions, Sugar Cosmetics has shown resilience and growth. As of July 2023, the company reported annualized sales nearing ₹700 crore, with expectations to achieve profitability in the fiscal year 2024. The planned funding round is set to comprise approximately 60-70% issuance of fresh equity, with the remainder coming from stake sales by existing investors.
The Mumbai startup, founded in 2012 by IIM Ahmedabad alumni Vineeta Singh and Kaushik Mukherjee, has made significant strides in the beauty market. It distributes its range of foundations, highlighters, concealers, and lipsticks through 45,000 retail outlets across 550 towns and cities in India. Sugar Cosmetics also boasts over 200 brand-owned stores nationwide.
In its previous funding round in May 2022, Sugar Cosmetics raised $50 million, led by L Catterton, and was valued at around $450-500 million. Prior to this, in 2021, the brand secured $21 million in its Series C funding round, with actor Ranveer Singh also contributing an undisclosed amount.
The upcoming fundraising round is not just a financial milestone for Sugar Cosmetics but also a testament to the strength and potential of D2C brands in India’s dynamic consumer market. It competes with other prominent beauty and personal care brands like Mamaearth, Wow Skin Sciences, Good Glam, and Nykaa, underscoring the competitive and vibrant nature of the sector.
