Venture capital firms pour money into India's niche e-commerce companies

By Nicel Jane Avellana

Dec 26, 2013 04:34 AM EST

A breed of e-commerce companies in India have kept the interest of investors with their less capital intensive model and profitability despite the challenges faced by the big daddies of India's ecommerce industry, The Financial Express reported. Citing data from investment research company Venture Intelligence, these breed of online niche products and services providers have lured total funding amounting to $46.55 million in 12 deals so far this year. This is nearly double the investments made in 2012, the report said.

These deals include, an automotive marketplace, which raised $15 million from Sequoia Capital India, and online eyewear retailer Lenskart which secured $10 million from IDG Ventures and Unilazer Ventures. Early in December, Zivame, a portal that sells online lingerie, was able to secure $6 million from Unilazer Ventures and its current investors IDG Ventures and Kalaari Capital Partners. Last month, online furniture store Urban Ladder secured $5 million funding from SAIF Partners and Kalaari Capital. Reports also said that Rajan Anandan, the head of Google India, had also invested an undisclosed sum in online food delivery firm TravelKhana.

Meanwhile, adult online store Kaamastra said it became profitable in October and is not even seeking for outside financing. Kaamastra was launched in February this year and has been growing at 30% per month, the report said.

Kaamastra Co-Founder Amit Batra explained the nature of their business. She told The Financial Express, "This industry has been very unorganised in India and some of the bedroom need products available in India are of substandard quality being sold at high premiums and still being available in scarce quantities. Moreover, this segment requires an intimate approach."

Urban Ladder COO & Co-Founder Rajiv Srivatsa said vertical players possess a clear value proposition, are easily recalled and have focused positioning. The report quoted him, who said, "Business economics and margins work better for vertical players and they need a smaller scale to get to profitability. Also, solutions can be specifically designed from product to digital experience to marketing for the specific target audience." 

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