Source: Vinculum Group
2024 is seen as a landmark year with India emerging as the second largest market in the world (behind US) in funding for direct-to-consumer (D2C) segment — accreting the status of global hub, a new report found. It also is another milestone for India’s fast-growing digital economy and the increasing investor confidence in consumer-facing startups in the South Asian nation.
Massive Growth in D2C Funding
Funding activity in the Indian ecosystem spiked across sectors, more so in niche sectors like jewellery, personal care, wellness, fashion, and home decor. Indian direct-to-consumer (D2C) jewellery startups raised US$ 103 million in 2024, outperforming the United States and was home to over 40% of global funding in the space. Bengaluru topped with over 77% of this capital, followed by Chennai and Mumbai. This trend reflects broader shift in consumer behavior toward online-first brands that offer greater transparency, personalization, and convenience.
Bounce Back for the Broader Startup Ecosystem
As of 2024, cash amassed by Indian beginners had reached $14.44 billion, taking place over 1337 deals. Growth and late-stage funding only accounted for $11.2 billion over 326 deals, and early-stage, $3.23 billion attached to 810 deals. It’s a big recovery from the funding winter of 2023, but still below the $25 billion raised in 2022 and the $38 billion peak in 2021. But the return of investor enthusiasm, especially for consumer-facing sectors, is a good sign for the ecosystem.
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Many D2C brands have also led this growth story. Lenskart, an eyewear brand started by students in 2010, has raised more than $1.12 billion in funding in the past four years alone, making it one of the world’s top companies in the industry. According to the LetsVenture platform in the food and beverage and grocery segment, fresh meat and seafood delivery label Licious raised $587.1 million while in-home care The Good Glamm Group, boAt, Sugar Cosmetics, Mamaearth and HealthKart. By using direct channels, social media marketing, and other means, these brands have challenged conventional retail structures by leveraging direct channels, social media marketing, and consumer data analytics.
According to the report, 177 Indian D2C brands collectively recorded nearly $4 billion in revenue in FY23. These brands have not only captured significant market share but have also created strong brand recall and customer loyalty among young urban consumers.
The Underpinnings of the Spike
A few factors are contributing to the speedy expansion of India’s D2C sector. These factors include the growing internet penetration, affordable smartphones, increasing consumer awareness, and a shift in preference to curated, specialized products. Moreover, the proliferation of digital payment infrastructure and logistics networks has enabled startups to directly access consumers in every corner of the country including tier-II and tier-III cities.
Future Outlook Remains Strong
The Indian D2C market is projected to grow over 3x to reach $61.3 billion by FY27. According to the report, the sector is also expected to generate around 10 million direct and indirect jobs in retail and ancillary sectors. Competition will continue to heat up and future growth will be driven by innovation, hyper-personalization, strategies for customer retention, and international expansion. India’s rise to the second spot in global D2C funding is a testament to its thriving entrepreneurial spirit and the transformative impact of digital commerce on the retail industry.
