By Peerzada Abrar
Zivame, an online lingerie retailer, has persuaded two funds to invest up to $10 million (Rs 50 crore) in a venture that seeks to profit from Indian women’s growing penchant for branded innerwear.
IDG Ventures and IndoUS Venture Partners have already invested around $5 million in Zivame, said a person with direct knowledge of the matter. The company is counting on women in small towns and rural India to drive demand for brands such as Amante, Jockey, Triumph, Enamor and Hollywood Fashion Secrets.
IDG expects to invest another $5 million in the next couple of months said a person with direct knowledge of the deal. For IDG Ventures, the investment in Zivame is its fifth investment in a single product online retailer.
TC Meenakshisundaram, the managing director of IDG Ventures India Advisors, said affordable access to internet is driving the digital behaviour of consumers and increasing the attractiveness of e- commerce firms.
“E-commerce is hot right now,” he remarked. “If you get even that 1% of the market, it’s humongous business.”
Avendus Capital estimates the online commerce in the country to more than double in size to $24 billion by 2015. Since January, investors have closed 10 e-commerce deals valued at $194 million, according to data from research firm Venture Intelligence.
In all of 2011, there were 39 ecommerce deals worth $345 million.
IDG, which invests from a $150 million fund in India, is leading the wave of risk capital funding for specialist ecommerce firms that sell a single category of products. Last month, it bet $14 million on baby-care retailer First Cry.
“We liked Zivame’s strategy. Brands have shared all their new product lines with Zivame on the same day it was launched in physical stores,” said Meenakshisundaram, whose team evaluated eight online lingerie firms before narrowing down on Zivame. Richa Kar, the chief executive of Zivame, said the company will use the money to scale up technology, hire and tie up with more international brands.
“Almost 30% of our orders come from small towns such as Dimapur in Nagaland, Bari Brahmana in J&K and Jharsuguda in Orissa,” said Kar who co-founded the business last year with Kapil Karekar. She realised the potential for an online business selling lingerie when she learnt that American lingerie brand Victoria’s Secret earned a quarter of its revenues through online sales.