StayGlad, an on-demand beauty services provider, just closed its first institutional round of funding from Silicon Valley fund Bessemer Venture Partners and Anil Chopra, ex-CEO of Lakme. What’s interesting is that last week Bessemer led a $25-million round in Gurgaon-based UrbanClap, which is a horizontal local and home services marketplace and in some way competes with StayGlad.
Beauty is one the few vertical categories in the app-based local and home services market to have managed initial capital with players like BigStylist, Belita and The Home Salon, among others, getting early funds. However, these ventures face increasing competition from the likes of UrbanClap and Housejoy that offer beauty along with multiple other services and have been able to rake in more venture money. This horizontal-versus-vertical fight is reminiscent of what happened in the products e-commerce market a few years ago.
Founded by three IIT-Kharagpur graduates Kavish Desai, Shashank Gupta and Prateek Jain, StayGlad had raised seed funding from Tracxn Labs and Delhivery’s co-founder Sahil Barua earlier and has now scooped up around $1.5 million. “Beauty services is a large market which requires a lot of focus to create the best customer experience, I clearly see a focused vertical player winning this market,” said StayGlad’s Jain. He claims that StayGlad, with 150 beauty professionals on board, receives 300-400 requests in Bangalore, the only city it is present in. With plans to raise more capital, StayGlad is slotted to enter Delhi soon and is hopeful it will be able to cash in on the high-repeat value that beauty as a category offers.
Anand Lunia, partner at early-stage fund India Quotient, which has invested in Mumbai-based Belita, says beauty needs a brand which is not possible to create in a horizontal play. Also, the market size is big enough in beauty segment for it to stay independent. “We’ve seen that many generalized services players are becoming verticals,” he said. But Varun Khaitan, co-founder of UrbanClap, posits otherwise: “I think horizontal will win. There are lots of scale benefits in terms of customer acquisition, retention and network effects on supply side. We are the largest beauty player with 150+ bookings per day. And, as an example, horizontals have a clear win even in product e-commerce.”
According to Tracxn, which collects data on private companies, as many as 84 startups, which let consumers book manicure, facial and hair styling services at home, operate in the beauty services market – most of which were founded over the past year. While investors say a few will be able to survive, many may get bought out by the bigger horizontals.
An investor in one of the local services marketplaces, who did not want to be named, said, “Horizontal services marketplaces have the ability to drive higher repeat across services and, therefore, have likelihood of better business models. But there is definitely separate opportunity in verticals such as beauty with high frequency and complex purchase decision process to create standalone companies.”