Deal Focus: IvyCap sees upside in India's online jewels

India's jewelry industry is essentially a family heirloom market, which puts it at odds with the impulsive, impersonal world of online shopping. IvyCap Ventures, however, sees important upside in digitizing this space, having recently re-upped in the latest round of capital raising for online jeweler Bluestone.

The Mumbai-based firm participated in a $30 million Series D round for the company alongside IIFL Asset Management as well as fellow existing backers Kalaari Capital and Accel Partners. It first invested in the company last year as a show of confidence in the ability of e-commerce to service any kind of product - even unique, carefully curated keepsakes.

"Jewelry is not an easy space to crack online because people like to touch and feel, but these guys have done it by understanding consumer requirements and behaviors. That gives them an advantage and an ability to scale up this businesses substantially," says Vikram Gupta, founder and managing partner of IvyCap. "We believe this is going to become a unicorn over the next few years."

The capital will go towards the construction of a new manufacturing unit and continuing recent marketing and user-experience improvement initiatives aimed at using web-based data tracking systems to learn as much about the customer as possible. Accurate profiling of customer preferences in terms of jewelry design allows Bluestone to provide a wider spectrum of better-targeted products, offsetting the natural advantages of direct interaction enjoyed by brick-and-mortar showrooms.

Bluestone's efforts in mapping consumer tastes allow for more personalized product offerings not only online, but in person as well. One of the company's key developments since IvyCap's first investment has been an offline sales method whereby customers profiled as leaning toward certain design aesthetics are invited to physically inspect samples that match their personal taste in scheduled home visits. "That has really helped the business a lot and will be scaled up going forward," Gupta says.

The technique has helped position Bluestone with what is understood to be the largest market share in the admittedly small sphere of online jewelry shopping in India. Less than 10% of the country's estimated $42 billion-per-annum jewelry market is online, but the potential of this sub-sector was demonstrated as recently as May when one of the few other players, Caratlane, was bought by a Tata Group subsidiary.

Gupta sees potential for first-mover advantages as the general public inevitably becomes more comfortable making emotional investments on the internet.

"That barrier is slowly breaking now," Gupta says. "People have adapted to online shopping very slowly in India, but now they're coming online and buying, especially in the younger segments. Once this number starts increasing in jewelry, Bluestone will be the biggest beneficiary."

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