Online Beauty & Fashion Marketplace FSN EcommerceLtd., which runs Nykaa, hit the Indian stock markets on Wednesday, marking a bumper start for the Mumbai-based company. The market capitalization crossed Rs 1 lakh crore after the company’s stock started trading at over 80% premium to the issue price of Rs 1,125.

To the Founder and CEO of Nykaa Falguni Nayar, an acclaimed investment banker at Kotak Mahindra Bank who turned entrepreneur nine years ago, listing
He is included in the club of top billionaires with a net worth of around $6.5 billion., Nair sat down with ET’s Sneha Shah and Samidha Sharma and explained how they made Nykaa different from other tech startups, led by promoters and what it means for professionals in new age companies like them, Why Hi-Net Worth Capital Worked for His Company…. Edited excerpt:

many people said Nyokka IPO Pricing was very expensive. What is your reaction on the first day to the listing and the reception it has received?

The entire IPO journey where we met around 120 top investors from around the world, all of them high-quality, long-lived investors, asked us the toughest questions. Based on that experience and the way we responded… these investors liked our story and the way we built our business, it was a great support for our strategy. We knew we were building our business the right way, and its appeal would be around for a long time. What is happening today is a reflection of that, it is the desire to own the stock for a long time. IPO pricing took investors, analysts and banks into account and how they thought about valuations. When listed, there is a desire to see a strategy for holding the stock and going forward.

There was talk of how Nayaka was not leaving too much on the table…

No, we clearly have enough left on the table, and given the nature of our company, investors will want to keep it for a long time.

So, tell us what inspired you to tap the public market?

The business and the brand should have a life of its own. We didn’t create the company to sell so we have always worked in the direction that when the company is mature enough it should have a life Share Market, Even if we had to get a higher valuation in the private markets, we would always consider a public listing. We have never done this vs that, India vs international evaluation. We were clear that we wanted to be an Indian listed company. We are an Indian owned, managed, manufactured company, so we knew we would find a lot of love here.

How do you read the early years of Nayaka? Venture investors didn’t pay attention to the company because it was so different from typical tech startups and now they say it was a big omission.

I was looking for pure equity investments and it came up with more than just high-net-worth family offices and we found enough of them. I didn’t want to raise funds for the first few years because I didn’t want to show a spreadsheet and question my assumptions. Our first donation came in 2014 and before that we had met some investors. But I was clear that I wanted to do something that wasn’t being done and that people didn’t believe. If everyone believed in it, the idea would be dead, so it was hard to sell it to investors. But we found some investors and they have been with us ever since. I think high-net-worth capital is good capital, they understand the risk profile, they support you on your decisions because they have done it themselves. I really value the capital we got.

But do you think there are biases in venture capital?

I didn’t raise much so I don’t have much to say. But I prefer pure equity bets rather than conditional bets, where if things don’t work out you become more vulnerable. I think a lot of young entrepreneurs don’t understand finance and sometimes they get a term sheet which is not in their favor.

You are not usually seen as being part of the tech startup world, which is reflected in the way you build Nykaa….

Why we think about what we are not – we are what we are. We have very well leveraged the creative talent of young millennials from big cities like Mumbai and Delhi who have worked with us. They brought their own beauty and passion to the business. The high quality content that drove commerce was our strength and that was what was unique about us. Maybe, technology was not our strength in the early years – we did a lot to acquire technology slowly and steadily. There is a dearth of technical talent in Mumbai, so we have created a Gurgaon Tech team of 200 people.

You only mentioned to be clear on taking pure equity investors on board. After listing, you’ve created a lot of shareholder wealth along with a rapid increase in the family’s net worth…

Neither for my investors nor for my family, I am sitting and measuring how much wealth we have created. We are only measuring how much impact we are making on our consumers and society and that has always been our driving force. I think even in the early days, when I used to collect donations people would say, ‘Oh! You raised so little’. It was because they wanted me to raise more money so that the transaction could be taken care of. But this is not the way to build a company. We raised capital and diluted only what was needed at the time. Of course, the business needed some amount. But we built the company with all that $80 million and these are the kind of numbers that won’t even take into account the ecosystem you talk about.

Talk a little bit about how the Nykaa promoters (AAP and the Nair family) have more than 50% stake; Is it a deterrent when you bring professionals on board?

Professional talent is highly respected and played a huge role in Nykaa – how much can we do as a family? It is great for me that both Anchit (Nair) and Advaita (Nair) are excited about the business and have decided to join me. Family ownership brings a long-term orientation to any business. Not only ownership, there is participation. Many members of our professional team are equally important, and many of them are very happy to be part of a journey of more than six-seven years. We also see ourselves as professional managers where we come across with the same management skills as any other professional. We don’t see it as a division, but we are all building the company together.

What is the next milestone for Nykaa that you listed?

It is a multi-year journey and we are confident that we will continue to grow both our beauty and fashion businesses manifold over the next five years. Similarly, the house of brands will continue to grow as we become like a consumer company with multiple brands. We are also setting up our e-B2B (Business to Business) vertical – Super Store where we will sell beauty to retailers. We have always believed in the entire ecosystem that we are benefiting from what we do.

There are about 70 unicorns in India, but you are the only woman leading a company worth over $1 billion. What do you think can be done to change this apparent gender gap?

I have always said that there are no glass roofs. I don’t think men are waiting around that they won’t let women do what they want. I think women need it for themselves. And if they want it for themselves, they will have it. There is a generational change happening today. When I started, our MBA school had only nine women in a class of 150 students. When it came to their life journey, many women would give up. But today’s new generation women are not giving up. At the time (when you’re getting married, becoming a parent) it’s important to be able to balance personal life and work because I think you should continue working even if you take a break for a while. We now see a lot of women in our offices, Nykaa has 47% female employees. There are also many women now in colleges and higher educational institutions.

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