Eyewear retailer Lenskart is in talks with SoftBank Vision Fund to secure $350 million in fresh funding, which is likely to value the Delhi-based firm at $1.3 billion, said two people with knowledge of the matter.
That’s a huge jump from its previous valuation of $460-470 million and will make Lenskart the latest domestic startup to join the unicorn club, which has swelled significantly with multiple additions over the past year.
The deal, if it happens, will be SoftBank’s second bet on a vertical ecommerce business with a sizeable offline presence. The world’s largest tech investor had last year pumped $150 million into baby products retailer FirstCry, which also runs brick-and-mortar stores.
“Their (SoftBank and Lenskart) talks have been on for a few months and a deal is likely soon. SoftBank wanted to pump a bigger amount for Lenskart to aggressively expand outside of India but the company did not agree to it,” said one of the persons cited above, who did not want to be identified.
Lenskart recently entered Singapore and the plan is to open 50-60 stores over the next three years in the island-city, before expanding to markets such as the Philippines, Taiwan and the Middle East.
SoftBank’s discussions come on the back of Carlyle Group’s interest in Lenskart but sources said those talks fell through as the private equity firm was proposing a valuation of about $700 million, much lower than the company’s expectations.
A SoftBank spokesperson declined to comment while an email sent to Peyush Bansal, cofounder and chief executive of Lenskart, didn’t get a response.
Lenskart is among a group of specialised web retailers that have grown to adopt an omni-channel strategy. Others such as beauty e-tailer Nykaa, furniture sellers Urban Ladder and Pepperfry as well as FirstCry have followed a similar trajectory.
The eyewear company is expected to have clocked revenue of Rs 500 crore for the financial year ended March 31, with around Rs 70 crore in losses. The company hasn’t made the numbers public yet. In FY 2016-17, Lenskart had reported loss of Rs 262.87 crore, according to documents filed with the Registrar of Companies, and accessed by business intelligence platform Tofler. It reported total revenue of Rs 310.98 crore in FY18.
Lenskart’s strategy to scale up manufacturing and bring the activity under its fold has allowed the company to double its production cycle, ensure faster inventory turnarounds and offer a greater array of products through entering new product categories. It has also helped the company control pricing of products, critical in an underserved and fragmented market that’s dominated by offline players.
“Its rapid offline rollout has helped in brand building,” said an investor. “But a large part of its customer acquisition is still online, which is expensive. These costs will take time to reduce as the brand gets built through offline expansion.”