Baby Products Startup FirstCry Raises $150 mn from SoftBank

Pune-based baby products startup FirstCry has raised nearly $150 million in the first tranche of larger funding from Japanese conglomerate SoftBank, regulatory filings revealed. The startup is set to raise over $396 million in two tranches, filings further stated. The entire funding round may reportedly value FirstCry between $975 million and $1.09 billion, potentially turning it into a unicorn.

Pune-based Brainbees Solutions Pvt. Ltd, which operates online-first baby products retailer FirstCry, has raised $149.36 million (Rs 1,096.94 crore) as part of the first tranche of a new funding round from Japanese tech conglomerate SoftBank, filings with the Registrar of Companies show.

The investment is part of a larger round in which FirstCry is raising around Rs 2,825 crore ($396.34 million) from SoftBank’s $93-billion Vision Fund in two tranches, the filings stated.

The company secured the current tranche by issuing shares at a higher subscription price and the remaining Rs 1,759.29 crore ($246.82 million) will likely be raised by issuing shares at a lower subscription price, according to a preliminary inference made from the filings.

As per TechCircle estimates, the company raised the first $150-million tranche at a valuation of $850 million (Rs 6,057.58 crore).

The entire round is likely to value FirstCry between $975 million and $1.09 billion (Rs 6,950 crore and Rs 7,816. 87 crores), potentially making it the latest entrant to the hallowed unicorn club—a private company valued at more than $1 billion.

The filings stated that the round set the company’s pre-money valuation at around $450 million and its post-money valuation will increase by more than two times.

FirstCry has been in talks to raise capital since September 2017 from multiple investors, including Singapore state investment firm Temasek Holdings.

In October 2018, multiple media reports stated that the firm was in discussions to raise $150-200 million in fresh capital from SoftBank.

Last week, The Economic Times had reported that SoftBank could likely pick up a 42% stake for $400 million in the firm. The report added that the investment could value FirstCry at nearly $600-700 million.

Email queries sent to FirstCry’s co-founders Supam Maheshwari and Amitava Saha did not elicit a response at the time of filing this report. The latest round of funding, once it is formally completed, will take the total capital raised by the company till date to nearly $500 million.

FirstCry’s last known funding round was in October 2016, when it raised $34 million (Rs 226 crore then) from a clutch of investors including the Mahindra Group. As part of the transaction, it had also acquired Mahindra & Mahindra’s baby care business BabyOye in a cash-and-stock deal worth Rs 362.1 crore ($54.3 million). 

The resolution for the same was passed on January 18, regulatory documents show. After this investment, the company is estimated to be valued at around $850 million according to initial calculations by business intelligence platform Paper.vc.

It is to be noted that, as of now there is no official confirmation about fundraising from either Softbank or Firstcry.

If this funding materializes, FirstCry would then have raised a total of $268.4 million in funding over 7 rounds from multiple investors including Chiratae Ventures (formerly known as IDG Ventures India), SAIF Partners and Vertex Ventures are some of the existing investors. For SoftBank, the investment comes at a time when it is seeking Competition Commission of India (CCI) approval for an investment in logistics player Delhivery. Last year, it invested $1 billion in Gurugram-based hotel brand Oyo.

In October, it was reported that Firstcry was in talks to raise $100-150 million from China’s Alibaba and Softbank. Prior to this, in September last year, it was reported that the startup was raising equity financing of about $100 million from multiple investors including Temasek Holdings but eventually this too did not materialize.

According to Times of India, a company official privy to the development said that FirstCry plans to use the new capital to expand its online and offline presence as well as to strengthen its technology platform. At the end of 2018, FirstCry had 330-350 offline stores. The company, one of the largest in its space, sells just about everything a child and a new mother needs – apparel, footwear, toys, books, feeding & nursing products, soaps, oils, powders, baby monitors, strollers and baby bedding.

In 2016, it bought Mahindra group’s baby care business BabyOye for over Rs 360 crore in a mixed cash-and-equity transaction. Hopscotch, The Moms Co and TinyStep are some of the other companies operating in the space. Started in 2010, the company is said to have one of the largest parent communities in the country. “They are looking to leverage that community in a big way this year. There will be a lot of content that will be created to target this base of parents,” a person aware of the plans said.

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