Pep Technologies raises Rs 240 crore in funding led by Paragon Partners

Founded by IIT alumni Tarun Sharma, Vikas Lachhwani, Vaishali Gupta, Mohit Jain and Saurabh Singhal, Mcaffeine offers caffeinated personal care products for face, hair, body and lips. It started as a chain beauty salon company but pivoted to its current model in 2016. To date, Mcaffeine has raised a total of $40 million across three funding rounds.

Mcaffeine will utilise the funds to grow its offline presence to 25,000 outlets from its existing 5,000, expand its sales team, and acquire at least two beauty brands, co-founder Sharma told ET.

The company recently roped in actor Alia Bhatt as its brand ambassador. It does about 90% of business online. Sharma said its offline business, started only six months ago, will touch at least 30% in the next 2-3 years.

“This industry has always been very competitive. When he started, there were large incumbents, very few challenger brands. Now there are large incumbents and a lot of challengers…We amped up our game of differentiation from Day One. We are a personal care brand and caffeine happens to be our edge to kill the clutter,” he said.

The company annualised revenue run rate is about Rs 250 crore, Sharma said.

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Startups in the beauty and personal care space that began life online have continued to garner significant investor interest on the back of evolving customer preferences and accelerated internet penetration.

According to data shared by industry tracker Tracxn, direct-to-consumer beauty brands have received about $75 million in funding this year as of March 23.

What’s added to the interest among investors is the blockbuster Nykaa IPO last year, when it debuted on the Indian bourses at a $7.1 billion market capitalisation.

Mcaffeine also has plans to expand its global reach from the existing three countries to 12.

“We have been tracking the Indian beauty and personal care industry for the last 24 months and found that Mcaffeine clearly stands out from its peers in terms of new product development capabilities, product efficacy, revenue density, stock keeping units, customer retention, and brand recall,” said Sumeet Nindrajog, senior partner, Paragon Partners.