Minimalist fails to attract investors after seeking fourfold jump in valuation

The startup sought a valuation of more than $300 million compared with about $76 million in the previous round, the people said.

“Minimalist also approached L Catterton, but the US-based private equity firm did not proceed with the discussions," one person said.

Minimalist, Verlinvest and L Catterton did not respond to Mint’s request for comments. A spokesperson for Premji Invest declined to comment on the matter.

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“While the company justifies its high valuation by being profitable every year since its inception, these investors are not willing to give in to the high ask under the current market conditions," a second person said. “However, some of them, including Premji, may reconsider some time down the line if the company reaches a more suitable number, given that it is still a profitable company."

Minimalist’s revenue grew to ₹188 crore in FY23 from ₹112 crore a year earlier. Net profit narrowed to ₹5.2 crore from ₹15.9 crore in FY22, according to data provided by Tracxn. In 2021, the company raised $15 million in its Series A funding round from investors including Peak XV Partners. Its other institutional investors include Unilever Ventures and Twenty Nine Capital Partners.

Profitability path

Many startups in the beauty and personal care segment have been in talks or have raised funds lately. Purplle raised ₹1,000 crore in a round led by an arm of the Abu Dhabi Investment Authority in July. D2C brand Wow Skin Science has been looking to raise $65-75 million in primary capital from both new and existing investors, while Sugar Cosmetics has been vying for a $100 million funding round, Mint reported exclusively.

Some companies have commanded a much higher valuation between two successive rounds. Fintech startup Dhan is in talks to raise $100 million at a valuation of $1.2-1.5 billion compared with its previous valuation of $150 million, Moneycontrol reported last month.

Also Read: Is the ice melting? Some startups defy funding slump with successive rounds

However, there have been fewer such deals as investors put in money only in companies with a sustainable path to growth and profitability and a product market fit in a large addressable market. As a result, many startups in recent times have raised capital at a lower or little changed valuation from their previous rounds.

Mint reported earlier this month that logistics startup Shiprocket is looking to raise $120 million from investors including the Koch Group and Tribe at a flat valuation of $1.1-1.2 billion. 

Founded by siblings Mohit and Rahul Yadav in 2020, Minimalist is a science-backed D2C company that offers about 50 products in categories from skin and body care, hair care and lip care to its recently launched baby care.

Also Read: Mohit Yadav of Minimalist: The science-forward skincare solutions provider

Based in Jaipur, the 572-employee-strong company’s projected revenue for 2024 is ₹350 crore. Since inception, the company’s revenue has grown significantly as self-care became a priority for people during the pandemic. Within eight months of launch, the company reported ₹21 crore in revenue in 2021. 

Minimalist has a presence overseas including in the UAE, the US, the UK, Malaysia, Nepal, Indonesia and Saudi Arabia. With affordability as a guiding pillar for a price-sensitive market like India, their products are available in the range of ₹279 to ₹1,899. The company competes with Dr. Sheth’s, The Derma Co., Dot & Key and Deconstruct.