Sashi Chimala, who has previously founded a string of tech startups and retail ventures, has in India under a partnership with US-based LuxeYard Inc, a members-only, flash retail site selling horizontal niche items exclusive home decor, furnishings and fashion items.
Chimala has previously founded Covansys, Indigo Technologies, Qwiky's Coffee, Knibble, Paypod, BLVD Ventures and runs Well Done Ventures, a US-based company, specialising in management consulting and strategy advice to SMEs and startups.
He has joined hands with Pooja Sengupta for the new venture. Sengupta, who founded fashion e-commerce website DroppedPin has worked with Citigroup, BMS Telecorp, Melbourne IT, Zoho Corporation, BLVD Ventures and Baroque.
Chimala told Techcircle.in the Indian edition, which will be launched in late August or early September, will use the brand name of the US partner and will also share its processes and technology.
“We are in the process of setting up the entity and awaiting advice on structure from our CPAs. The main company will most likely be incorporated in Delaware with wholly owned subsidiaries in India, one for handling wholesale and the other for operating the retail to consumer operations. Final decision will be made in about two weeks,” Chimala said.
Delaware is seen as a corporate haven for incorporating startups due to its flexible business structure and lower costs for registering a firm.
Chimala said he is looking to raise $1 million for either as seed or angel investment and is already in talks with some HNI investors to raise funds. After a few months, Chimala will go for first round of VC funding of $4-5 million and plans to exit the business by selling the business to LuxeYard Inc.
India’s foreign direct investment norms restrict foreign investment in front-end e-tailing, so it would be interesting to see how Chimala structures the new entity.
Chimala explained: “The understanding with LuxeYard, USA includes attractive multiples to the first and second round investors. We have also taken care of other contingencies that will be of importance to our investors. At LuxeYard's option, any investor putting money into the Indian entity maybe offered an opportunity to invest in US entity also at preferred terms. We feel we are offering a very attractive option with greater return potential and lesser risk to potential investors.”
LuxeYard India will have a dedicated team of 20 of its own for product acquisition, marketing and merchandising operations and managing the site.
The portal will showcase apparel, jewellery, leather goods, various beauty peripherals like spa creams, facial creams etc. It will target products priced between $15-$300 (Rs 850-1,700). Chimala said the agreement with LuxeYard involves revenue sharing for using the brand and technology.
LuxeYard India will follow a third party logistics route to deliver the products to consumers. The firm hopes to have 100,000 members in the first year and 250,000 registered users in the next.