SUGAR Cosmetics is getting fresh money, but investors are putting a much lower price on the beauty brand than before.
The Mumbai-based direct-to-consumer (D2C) cosmetics company has raised about ₹145 crore from existing investor A91 Partners. The deal values SUGAR at around ₹550-600 crore, marking a roughly 75-80% fall from the ₹2,600-2,700 crore valuation it commanded in November 2024.
The sharp valuation cut comes at a difficult time for the company. SUGAR’s operating revenue fell nearly 20% to ₹404.4 crore in FY25, from ₹505.1 crore a year earlier. Its net loss almost doubled to ₹135 crore, while EBITDA losses more than doubled to ₹116 crore.
In other words, the company is raising money at a time when both its growth and profitability are under pressure.
The latest investment was formally recorded through the issue of around 1.12 lakh Series D7 compulsorily convertible preference shares to A91 Emerging Fund III, an entity linked to A91 Partners. The shares were issued at ₹12,871 each, taking the total fundraise to ₹144.47 crore.
For SUGAR, the funding offers some breathing room. The company has said the money will help create additional working capital, particularly to support the growth of its skincare brand Quench Botanics.
But the bigger story is the valuation.
SUGAR was once one of the more closely watched names in India’s fast-growing beauty and personal care market. Its valuation reached about ₹3,000 crore at its peak in 2022. The latest round puts the company at only a fraction of that level.
The reset reflects a broader change in how investors are looking at consumer startups.
A few years ago, D2C brands could attract large amounts of venture capital by showing fast customer growth, strong social media presence and plans for rapid expansion. Today, investors are looking more closely at revenue, margins, cash burn and whether a company can build a sustainable business.
SUGAR’s numbers show why that shift matters.
The company expanded aggressively into offline retail, adding physical stores alongside its online business. While the strategy helped put its products in front of more consumers, it also brought higher costs.
According to reports, SUGAR had to shut a significant share of stores opened during its expansion because some outlets were making losses. The pressure from offline operations has therefore become an important part of the company’s financial story.
That does not mean physical retail has lost its importance. Beauty remains a category where consumers often want to see, test and compare products before buying them. The challenge is making those stores profitable rather than simply using them to increase the brand’s footprint.
SUGAR operates through an omnichannel model, selling beauty and personal care products through its own website, ecommerce platforms and physical retail. Its portfolio includes SUGAR, POP, ENN and Quench Botanics.
The company was founded by Vineeta Singh and Kaushik Mukherjee and has raised more than $90 million from investors including A91 Partners, Elevation Capital, Anicut Capital and IndiaQuotient.
A91’s decision to put more money into the company is significant because it is already an existing investor. The latest round allows the investor to increase its exposure while giving SUGAR capital to work on its next phase of growth.
The funding also comes as competition in India’s beauty market continues to intensify.
SUGAR is competing with established companies and newer digital-first brands across makeup, skincare and personal care. Consumers now have access to a much wider range of Indian and international beauty products, while ecommerce and quick-commerce platforms have made shopping faster and more competitive.
For beauty startups, this creates a difficult balance. They need to spend on product launches, advertising and customer acquisition, but excessive spending can make it harder to reach profitability.
SUGAR’s latest financial performance shows the cost of that challenge.
Its operating revenue dropped from ₹505.1 crore in FY24 to ₹404.4 crore in FY25. At the same time, the company’s net loss rose from ₹68.4 crore to ₹135 crore. EBITDA losses increased from ₹48.5 crore to ₹116 crore.
The company has yet to report its FY26 financial results, although an Economic Times report estimates its FY26 revenue could have fallen further to around ₹300-350 crore. That figure is an estimate and has not yet been confirmed through reported financial statements.
This makes the latest ₹145-crore fundraise particularly important.
The new capital can help SUGAR strengthen its working capital position and focus on categories where it sees better growth opportunities. But the company will also need to show that additional funding can translate into stronger sales and, eventually, lower losses.
The valuation cut is a clear signal that investors are no longer willing to pay the same premium for growth alone.
For SUGAR, the next phase will be less about opening more stores or chasing scale at any cost. The bigger task will be to make its existing business more efficient, strengthen its brands and find a path towards sustainable profitability.
The Indian beauty and personal care market remains attractive, and D2C brands continue to have room to grow. But SUGAR’s latest funding round shows that the rules have changed.
Fresh capital is still available. What has become harder is getting it at the valuation startups once expected.
This ₹145-crore investment provides another opportunity to turn the business around. Whether that money can restore growth and rebuild investor confidence will determine what comes next for the once high-valued beauty startup.