Understanding Nykaa

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Editor's note: To be able to legally, legitimately do the inventory model, we stayed away from foreign money and we raised only domestic funding. We have a very differentiated business model and we truly believe in it. In beauty you need to be inventory-led." That quote, from a 2017 interview, gives a window to Falguni Nayar's entire approach to building Nykaa, the startup that dominates beauty and personal care retail online in India today. Every prominent e-commerce venture—from the grand successes to the miserable failures—bulked up on external capital, landing them in a morass of regulations around foreign investment in e-commerce. As companies with significant foreign funding, none could technically hold inventory of what they wanted to sell, from smartphones to jeans. Everyone either had to act as an online marketplace for other sellers, or contort themselves into complex corporate structures involving multiple entities, subsidiaries and affiliates to hold their own stock and sell. Nykaa, funded in its early years purely on money from Nayar herself, who was a long-time investment banker before, and her husband Sanjay, who was one of the …