Swiggy IPO, Rare Rabbit's pricing insight & Purplle's ₹1,000 Cr fundraise 💸
Key insights if you are building for Indian consumer.
We are back with our new newsletter edition, which covers the three important business topics in one go. Today, we discuss what Swiggy’s IPO means for the ecosystem, Rare Rabbit’s ₹2,000 crore opportunity, and Purplle’s ₹1,000 crore fundraising.
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What does Swiggy IPO “really” mean? 💰
First, quick context.
Zomato made more 200% returns for many public investors after it's 2021 listing. And there’s lot of euphoria for Swiggy’s ₹11,300 Crore IPO — the Zomato rival that owns 43% of the market. But, we’d talk about the ripple effects for the Indian business ecostyem.
The Indian story.
This IPO is a key milestone for consumer-tech on the Sensex, with two companies from the same sector now public. With each of these IPOs, India's pitch becomes stronger because there will be:
healthy quarterly performance pressure on startups
more data for foreign investors to evaluate
high transparency & trust in ecosystem
less difficult for startups to fundraise
& with each profitability update, the narrative of “burning money” has changed. Even public investors, now, understand that significant costs are needed to go scale fast and more.
The era of marketplaces.
What began with Flipkart in 2007 has grown into one of the world’s fastest-growing marketplace ecosystem. With internet penetration up from 4% to 50% and smartphones in 40% of hands, this is only going to disrupte from here. This means we’d see not only see more horizontal marketplaces for broader needs like Tata Cliq, Myntra etc. but also niche-vertical marketplaces that only cater to one need (like Nykaa, FirstCry, Purplle, Urban Ladder).
Wealth generation.
The IPO is going to generate few millionaires who’ve been part of the company for long. This money will flow into tax-effective assets like luxury homes or plots, generating a ripple effect in real estate space. The biggest returns would come for early backers like Accel who’d make a 33X return on the offer for sale (OFS). Here’s Rahul Mathur, Investor at DeVC & GrowthX Member Since 2023, explains why this could be a better exit than Flipkart for Accel.
Rare Rabbit's premiumization insight 💡
Premium clothing attacks aspiration.
And Rare Rabbit has understood the power of making the brand aspirational. Sure, it has done "Peter England" playbook but a notch better. It has done few things right.
Going men-first instead of women.
Allows you to focus on few styles & go really niche in business + casual clothing options. Add uniqueness of colours and fabric and you have a solid differentiated offering. Rare Rabbit did go after women, Rareism. But if you ask me, a long time Rare Rabbit customer, the men’s collection is 100X better.
Rare Rabbit’s pricing game.
In a country where Zara males ₹2,000 Crore annually, Rare Rabbit is premium over a similar Zara shirt. Now how many scaled brands you can think of that can do that and keep growing?
If I do a pricing Vs positioing ladder now in sequence of utility to luxury here’s an interesting set of brands that come up the vertical ladder for mens fashion - Zudio, H&M, Zara, Rare Rabbit & then you have the likes of Lacoste.
So before you try to compete on price, think, can you be more preimium and still keep growing as a brand by charging for that premium.
Behind Purplle's ₹1,000 Cr fundraise 💸
3 things help growth stage companies raise large capital. A solid consumer demand, proven business model that has been valued in the public markets & strong trend of vertical marketplace (like Purplle) eating share of a horizontal marketplace like (like Amazon)
Gibberish? Let me simplify.
A solid consumer demand.
The Beauty & personal care market in India is expected to reach $34 billion by 2028. Here, Purplle has a solid revenue line of ₹680 Crores.
Proven business model at scale.
Nyakaa, a public stage company, is refereance point for Purplle investors - especially for a market like India where a large part of the market is about “fair skin” specifically inside “beauty” category.
Eating share of beuaty category on Amazon.
Interestingly Amazon India sells more than 250,000 units of beauty products per day. That’s growing at a 30% year over year. And a large growth coming from Tier 2/3 cities in India. Purpulle is positionied well to eat a share of that.
And this is just the beginning.
We will see a lot more vertical marketplaces in beauty & personal care popping up, nailing first few hundred crore revnues and being able to go public in next few years.
I hope this newsletter issue helped you gain a better perspective on growth. If you want to read one more article, I would definitely urge you to check out this one I wrote about, “Getting into Bengaluru as an outsider.” - here’s the full story.
Cheers :)