By Peerzada Abrar
BANGALORE: Online baby care portal First-Cry.com has received funding of Rs 92 crore in what is the largest investment in an ecommerce company selling just one category of products. The equity investment was led by Vertex Venture Management, a subsidiary of Singapore's staterun investment company Temasek Holdings.
Existing investors in the company IDG Ventures India and Saif Partners also participated in this third round of funding. FirstCry, which is owned by Brainbees Solutions and based in Pune, will use the money to double its network of brickand-mortar stores and hire more people for its online retail and mobile commerce services.
"Vertex came as a surprise," said Supam Maheshwari, 40, chief executive of Brainbees. "They visited one of our offline stores in Bangalore and liked our thesis of online-offline hybrid model."
Maheshwari, who has raised $33 million (Rs 203 crore) so far, declined to reveal the valuation of the firm after this investment. Vertex has backed a similar hybrid model earlier in India, when it invested in Gurgaon-based GreenDust which retails refurbished electronic goods both online and in stores on the ground.
In China, Vertex has invested in Meilele which sells furniture. "We will leverage our expertise in hybrid online-offline business models and grow FirstCry," said Joo Hock Chua, managing director of Vertex.
Maheshwari and co-founder Amitava Saha set up FirstCry in December 2010. Maheshwari, an IIM-Ahmedabad graduate, sold his e-learning company Brainvisa Technologies to Indecomm Global Services for about $25 million in 2007. Saha, from IIM-Lucknow, led sales and business operations at Brainvisa.
FirstCry's main rival is BabyOye. com, backed by Accel Partners and Tiger Global. Last April, Baby Oye acquired Bangalore-based Hoopos. Another firm, Hushbabies that started in 2009, closed down last year.
FirstCry, which has tied up with 500 brands, offers over 70,000 products including diapers, toys, toiletries, strollers, apparel and footwear as well as books and toys for children up to the age of 15 years. It also has 50 branded franchisee stores across 45 cities and expects to grow this network to 100 stores. It gets 20% of its revenue from mobile-based transactions.
Maheshwari estimated babycare, kids and maternity care as a Rs 50,000 crore market. "India has a very young population. We believe it is a huge opportunity," said Chua of Vertex.
Like Vertex, IDG too is betting big on online retailers selling just one category of products.
Besides FirstCry, it has invested in fashion apparel firm Myntra, online lingerie retailer Zivame and Valyoo Technologies which runs separate online retail sites to sell eye wear, watches, bags and jewels.
Manik Arora, managing director of IDG Ventures India Advisors, said, for customers, vertical e-commerce provides wider product selection and a more customised user experience. "For investors, this is the next wave of ecommerce.
These companies have higher margins, higher capital efficiency and upside options of offline expansion and private label expansion," said Arora. "Also, such companies have more exit options."
Experts said this model enables portals to carry a broader range of merchandise, build private labels and own in-store brands. "Vertically (or single category) focused players tend to build greater differentiation by going deeper into the category in a number of ways," said Aashish Bhinde, executive director at investment bank Avendus.