Premji tries Myntra on for size

Myntra Designs, a Bangalore-based online fashion retailer, is the latest firm to benefit from this optimism. It raised a $50 million round of funding led by Premji Invest, an investment arm owned by Indian tycoon Azim Premji, with Tiger Global, NEA-IUV, IDG Ventures India and Accel Partners also participating.

Early investors Accel, which provided Myntra's seed round in 2007, believes the company has identified a winning formula.

"We're bullish on e-commerce, and within that, fashion and lifestyle may be the single largest sub-category," says Subrata Mitra, a partner with Accel. "We believe the opportunity size is likely to grow as much as 10-20 fold in the coming 4-6 years, and that is something Myntra is uniquely positioned to take advantage of."

As a retailer of clothes, footwear and accessories, Myntra is not only taking advantage of e-commerce growth but is also tapping the fast-expanding female consumer segment. According to a Google India report, 60 million of the country's 150 million internet users are women, and 75% are aged 15-34. Their favorite search category is apparel and accessories.

The challenge for Myntra, which has raised $75 million since its launch, is capitalizing on these trends while cultivating a dominant position in a market that is not only highly competitive but also consolidating. "Most of the capital prior to this round has been utilized to get them into a leadership position in the Indian fashion e-commerce space," explains Mitra.

Myntra has been on the acquisition trail in the last year or so, picking strategic assets. This latest of round of funding will be used to further scale up the business, improve technology infrastructure and strengthen the Myntra brand. The company is aiming to achieve $1 billion in gross merchandise value by 2016. Flipkart, which sells fashion items and other products, thinks it can cross this threshold a year earlier.

"We would like to ensure that Myntra dominates this space for the foreseeable future, by making the right investments in team expansion, our private label business, augment products with thought-through content, and by building mobile capabilities," adds Mitra.

What exit route investors will take is unclear at this stage. Last month it was reported that Flipkart approached Myntra about a potential merger, at the behest of its VC investors. Accel has a stake in both companies. Mitra dismisses this as speculation. "We're patient investors," he says, "and don't have any specific exit timeframe in mind."

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• Topics
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• South Asia
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• TMT
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• India
• Venture
• Accel Partners