By Madhav Chanchani & Snigdha Senguptas
Mumbai: Baby care products e-tailer FirstCry has raised about $26 million (Rs 156 crore) in a fourth round of funding led by San Francisco-based hedge fund Valiant Capital Partners.
The company's existing investors—IDG Ventures India, Vertex Venture Holdings and SAIF Partners—also participated in the round. The deal comes amid a wave of consolidation in the baby care e-tailing segment, which currently accounts for less than 5% of the estimated $10 billion baby care products market in India.
The latest round takes total venture capital raised by BrainBees Solutions, the Pune-based company that owns FirstCry, to $59 million. It last raised $15 million in January 2014 in a round led by Vertex, the early-stage investment arm of Singapore headquartered Temasek Holdings.
"The funds raised will be used to scale across channels, online, mobile and offline, and invest in growing the private label business," FirstCry co-founder and CEO Supam Maheshwari told ET, while declining details on the company's valuation in this round of funding.
Unlike its peers, the company's online platform is supported by an offline network of franchisee stores that currently number over a 100 across 85 cities.
"We decided to adopt an omni-channel strategy from the beginning to better address the complex dynamics of the baby care products market," said Maheshwari, who earlier founded and sold elearning start-up Brainvisa Technologies (acquired by Indecomm Global Services). Maheshwari and co-founderAmitava Saha founded FirstCry in 2010 and launched their first offline store in June 2011.
Following the fresh fund infusion, the company will grow its franchisee stores to 400 over the next three years. "The franchisee stores have helped build customer loyalty. Repeat business is now 75%, the highest we've seen in our e-commerce portfolio," said Manik Arora, founder and managing director of IDG Ventures India. The Bengaluru-based firm's other e-commerce investments include Flipkart-Myntra, Zivame and Lenskart.
The nod from investors for FirstCry's omni-channel strategy comes at a time when M&A-led consolidation, write-offs and distress sales plague the baby care products e-tailing segment. ET had reported in December that BabyOye, the baby care e-tailer owned by Mumbaibased Nest Childcare Services, is being acquired by Mahindra Partners, investment arm of the $17-billion Mahindra Group.
Much of the consolidation in baby care e-commerce has been driven by the aggressive expansion of large horizontal etailers such as Flipkart, Amazon and SnapDeal into the segment. FirstCry's investors though don't see these players as a big threat yet.
"The horizontals compete in categories that are crowded and commoditised, such as diapers. The FirstCry model, because it is a vertical focus, is also relatively more capital efficient," said Mukul Arora, vice-president at SAIF Partners, which was the first investor into FirstCry.