October 7, 2022


Skillful Business Crafters

Beauty start-up turns career banker into India’s newest billionaire

Contemporary entrepreneurship is typically driven by the young: tech-savvy disrupters with grand visions, unshakeable self-belief and less to lose if their ideas do not pan out.

So veteran investment banker Falguni Nayar was somewhat anxious back in 2012, when, at age 49, she resigned from a senior job at one of India’s most successful private banks to start her own online beauty retailer Nykaa.

“Entrepreneurship at a young age is OK — there is no downside if it doesn’t succeed,” Nayar told the Financial Times. “I was constantly thinking: how much I am giving up to start this — what if it doesn’t work?”

She need not have worried: this month, Nykaa’s corporate parent, FSN E-Commerce Ventures, raised $722m in an initial public offering valuing the company at about $7.4bn. On its first day of trading on the Bombay Stock Exchange, the share price almost doubled, sending the valuation to almost $13bn.

Nayar, whose family together owns a 52 per cent stake in Nykaa, was propelled to a new status as India’s wealthiest self-made female entrepreneur — proof, if it were needed, that maturity, and a thick contact book of some of India’s wealthiest individuals, are valuable assets to any start-up business.

“The experience I had in my previous career helped me steward the ship very well,” she said.

Born Falguni Mehta in 1963, Nayar’s impulse towards action goes back to her Mumbai childhood, when her father ran his own bearings factory, and made few distinctions between his daughter and his son.

“My father treated me as an equal,” she said. “He did not allow me to have a mindset that ‘girls cannot do this’. It was the way I was raised that made me who I am. I do not accept that girls need to deal with their lives differently.”

Nykaa has 85 stores in 40 Indian cities, where customers can see and try cosmetic and beauty products before they buy © Anindito Mukherjee/Bloomberg

She attended the Indian Institute of Management, Ahmedabad — the country’s top business school — where she was one of just nine women in a class of 150 students. She later married an IIM contemporary, Sanjay, who went on to work for Citigroup in London, New York and finally as its chief executive for India and South Asia operations, before joining private equity group KKR in Mumbai in 2009.

Though Nayar admits to entrepreneurial inclinations even as a young graduate, she opted for the security of a job, initially as a management consultant, as she sought to balance her career ambitions with her role as a wife, and then as the mother of twins.

“Juggle is a very important word for women,” she said. “I don’t try to have a balanced life all the time. There are times when I lean in more towards work, and there are times when I will lean more towards family responsibilities.”

After eight years in consulting, Nayar joined financial services group Kotak Mahindra in 1993, setting up its overseas subsidiaries in London and then New York as she followed her husband’s postings. On the family’s return to India in 2001, she led Kotak’s institutional equities businesses, involved in many of India’s early IPOs.

“What I saw was that somehow entrepreneurs had total conviction in what they were doing,” she said. “They saw an opportunity that no one else saw.”

By 2008, Nayar had sensed her own potential opportunity — in India’s highly fragmented cosmetics and beauty products retail market, which was dominated by tiny mom-and-pop shops, sometimes called “variety stores’”, that also sold items such as safety pins and hair bands.

Nykaa products
Nayar wants to consolidate Nykaa’s position as the beauty retailer of choice to younger generations

After her children left for college abroad, that yearning to “start something from scratch” grew stronger, though it still took more than three years to make a move from Kotak.

“It’s very hard to quit a very good job, but I finally managed to get the courage and quit in 2012,” she said, adding that she started working on the company, from her father’s old office, the very next day.

Initial funding for Nykaa, which was launched in October 2012, came from the family’s personal savings from years in banking and finance, and Nayar did not take money from other investors until 2014.

She was clear that her company should be a retail business with a stock of products, not just an ecommerce platform where buyers and sellers can transact, as Amazon and Walmart-owned Flipkart have had to structure themselves in India.

Beside a slick website and app, Nykaa also has 85 stores in 40 Indian cities, where customers can see and try cosmetic and beauty products before they buy.

Because India restricts foreign investment in multi-brand retail, Nayar has always had to be careful in fundraising. At a time when SoftBank and other foreign investors were pouring money into Indian start-ups, Nayak’s first investors were wealthy Indians both inside India and overseas, though Henry Kravis, the co-founder of private equity group KKR, also owns 1.1 per cent.

After the blockbuster IPO, India’s newest billionaire has no plans to rest on her laurels. Nayar and her twins, Anchit and Adwaita, who are 31 and both have top roles at the company, are working to consolidate its position as the beauty retailer of choice to younger generations.

“The investors have put their trust in us and are expecting us to grow at a very fast pace,” Nayar said.

She also hopes the success of Nykaa, a name derived from a Sanskrit word that means actress or heroine, will encourage other women.

For all her own doubts, she admits she was always propelled forward by her lack of fear.

“I’m an adventure seeker at heart and I don’t see the risk,” she said. “I’ll be the weakest swimmer in my family and the first to jump in the water.”