Luck running dry for some, whereas it’s raining money on some. Like it’s the case with kids & baby products online portal FirstCry.
According to few industry sources, the etailer is in talks with investors for fresh round of funding and is expecting to raise up to $75 million.
“They want to dominate the space and hence they are looking to raise a large cheque to help them build on their leadership position in the market. The round will have both a primary and secondary share sale component. Depending on how much stake some of the existing investors decide to sell in the round, the size of the round could vary between $50 million and $75 million,” revealed one source.
Firm close to achieve profitability
FirstCry’s low cash burn rate and strong & steady growth are the two main reasons why investors are keen to put their money into the company.
“The company is close to achieving profitability and their burn is quite low. They should reach profitability in the next eight to 10 months,” shared one person familiar with the matter.
Since its inception, the etailer has raised $91 million ($14M in 2012, $15M in 2014, $36M in 2015 and $26M in 2016) from six investors including IDG Ventures India, Vertex Ventures, Valiant Capital, NEA and SAIF Partners.
The company plans to invest $75 million to expand its offline stores network, private label business, mobile platform and of course online store.
Niche players winning ecommerce, from investors’ POV?
The cash burn rate is very high in case of big ecommerce players like Flipkart, Amazon and Snapdeal. This is why investors are a little less generous these days.
But niche etailers follow a more investor-friendly model by focusing on quality over quantity and not over-spending on promotional activities. Small players are not only disrupting ecommerce biggies’ business but also gradually gaining market share.
No wonder, investors are pouring funds into niche etailers like Zivame, Bluestone, Caratlane, and Urban Ladder; on the other hand, marking down and pulling out from ecommerce biggies like Flipkart, and Snapdeal.