The startup has already received term sheets from new investors and expects to close the round later this month, the first of the three people cited earlier said, all of whom spoke on the condition of anonymity. The person added that the company plans to use the funds towards its expansion plans that could include various initiatives such as product innovation and talent.
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Innovist declined to comment on the fundraise.
The development comes over a year after the company raised $7 million at a valuation of $42.5 million in its series A round that was led by Amazon Smbhav Venture Fund. Other existing investors including 72 Ventures, the family office of Nykaa founder Falguni Nayar and former KKR India head Sanjay Nayar, Accel and Sauce VC also participated in the round.
Founded in 2019 by Rohit Chawla, Sifat Khurana and Vimal Bhola, Innovist was launched with the aim of formulating scientific, data-driven, effective, and customer-centric personal care products. Three years later, it rebranded to Onesto Labs. Besides Bare Anatomy, the Gurugram-based company also owns Chemist at Play, Sun Scoop and Vinci that produce products based on clean and transparent ingredients.
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Innovist is also one of the few startups in the category that has a research lab and a manufacturing facility. In FY23, it reported a revenue of ₹39.3 crore, compared to ₹12.1 crore a year earlier. Its losses widened to ₹16.6 crore from ₹10.8 crore in FY22, according to data from Tracxn. It has not filed its audited results for FY24.
Broadly, the beauty and personal care industry is seeing some consolidation as some of these players struggle to raise successive funds at the right valuations from venture capital and private equity investors. This also comes against the backdrop of existing investors looking to exit their companies as they seek interim liquidity.
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In January, Hindustan Unilever Ltd said it will acquire a 90.5% stake in D2C beauty brand Minimalist for ₹2,955 crore through secondary buyouts and primary infusion. The remaining stake is expected to be acquired from the founders over the next two years, the company said in a filing. Peak XV, which owned a 27% stake in the startup, also exited through this transaction and made around ₹810 crore. Other beauty startups such as Wow Skin Science and MCaffeine are also reportedly in talks with strategic and private investors, according to a report by The Economic Times.
Last week, the Good Glamm Group, which comprises various beauty and personal care brands, faced a severe cash crunch that forced it to consider raising fresh funds at a sharply lower valuation, triggering the exit of three of its directors, Mint reported. The three directors from Accel India, Prosus and Bessemer Venture Partners stepped down from Good Glamm’s board across November and December. The company is in talks to raise capital at a low valuation, which could overhaul its cap table, the report said.
Not all is dull
However, not all is dull in the beauty and personal care segment. Some mid-market firms have managed to buck the downturn, as they closed funding rounds over the past few months. Omnichannel beauty retailer Purplle raised over ₹1,000 crore in a funding round led by an arm of Abu Dhabi Investment Authority (ADIA), along with participation from other marquee investors, in a mix of primary and secondary transactions.
Traya, which produces a range of products to treat issues like hair loss, raised ₹75 crore from Mumbai-based private equity fund Xponentia Capital in April last year, while Foxtale closed a $30 million round led by Japanese beauty products company Kose Corp. last month.
Teenage self-care brand Sammmm also secured ₹10 crore ($1.2 million) in a seed funding round that was led by Fireside Ventures, with participation from Sauce VC and other angel investors last week.
Experts believe that the personal care segment is likely to see further growth fuelled by rising disposable incomes, increased consumer aspirations, and the influence of social media and e-commerce. India’s beauty industry is likely to reach $34 billion by 2028, according to a Redseer report.
The report highlighted that brands are also leveraging partnerships with larger incumbents to scale rapidly. For instance, Dot & Key and Dr. Sheth’s has witnessed exponential growth after being acquired by major players like Nykaa and Honasa Consumer.
“Homegrown brands that focus on product innovation, along with omnichannel strategies, are well-positioned to continue their upward trajectory,” Rohan Agarwal, partner at Redseer, said in the report. He added that premiumization patterns across metros coupled with tier 2 and 3 cities are increasingly becoming important growth centres for brands to expands their reach.