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Mumbai-based direct-to-customer (D2C) skincare startup Foxtale has raised $4 Mn in a Pre-Series A funding round. The funding round was led by Matrix Partners India, with participation from existing investor Kae Capital, along with a few angel investors.

This is Foxtale’s second-ever funding round – it had raised a seed round in August 2021, launching officially in December 2021. The early-stage startup is looking to use the incoming funds to expand its product range, hire senior vertical leadership and scale business.

Founded by Romita Mazumdar in February 2021, Foxtale launched four basic products, depicting a four-step skincare routine. Since then, the startup found a product-market fit and claims to have a repeat rate of 50%. Foxtale also claims that it only launches products after 97% of its community approves of their efficacy.

Speaking of the funding, Romita Mazumdar, founder & CEO of Foxtale, said, “Our focus on understanding our customer’s needs & product innovation has enabled us to establish a strong early product-market fit and drive industry-leading repeat rates and customer NPS scores; however, there is still a long way to go.”

Rajat Agrawal, managing director at Matrix India, said, “The beauty and personal care market in India is growing fast and is expected to reach $28 Bn by 2025. We are privileged to partner with Romita and the Foxtale team as they aim to disrupt this market through innovative products and differentiated go-to-market strategies.”

Foxtale will compete with the listed startup Nykaa, unicorn D2C beauty brand Mamaearth, along with multiple other brands in the segment such as WOW Skin Science and SUGAR Cosmetics, among others.

According to an Inc42 report, India is set to have more than 122 Mn online beauty shoppers by FY25. India’s beauty and personal care brands are looking at a total market opportunity of $37.2 Bn by 2025, spurred by strong demand. Out of that, D2C brands have a market opportunity of $5.6 Bn by 2025.

Over the last few months, the country’s D2C segment has seen a flurry of activities, both in investment and mergers and acquisitions. Just in the beauty and personal care segment, one of Foxtale’s competitors SUGAR Cosmetics, raised $50 Mn, along with the D2C unicorn Mamaearth adding two new brands to its portfolio, skincare brand Dr Sheth’s and hair colour brand BBLUNT. 

In the larger D2C segment, Thrasio-style D2C rollup unicorn GlobalBees has invested in five brands, while other unicorns such as Licious and Nykaa invested in multiple brands.

However, according to a recent report by HDFC Securities, higher interest rates and a decline in venture funding have emerged as the key near-term challenges for the Indian D2C companies. The report added that this selective funding can lead to further consolidation, giving rise to a number of new brands.