Aavrani’s current round has a valuation cap of $24 million. It is reportedly driving revenue to $5 million in 2021, which will be tremendous progress from 2020’s revenue of $964,164. And its 2020 revenue growth drastically exceeded that of the entire previous year. The company’s valuation has also seen marginal growth since the last round of fundraising, likely due to increased revenues, growing user base, and product development progress. The company’s revenue multiple as of 2020 is average compared to the cosmetic and skin care industry averages. The 10% discount further sweetens the deal for investors. Overall, Aavrani’s valuation is a fair deal.

Aavrani operates in the broad-ranging US skin care market. In 2021, $18.1 billion was spent on skin care products in the US alone. The market is expected to grow at an annual rate of 5.5% until 2026, which is on the slow side. Aavrani, however, has the potential to grow into the South Asian skin care market, which could improve sales and help it achieve more of a global customer base. In 2021, 74% of sales in the skin care segment are attributed to non-luxury skin care goods. Money spent on non-luxury skin care items will likely increase given industry trends. If convenient and still relatively affordable, it is likely that US consumers will try to make more skin care purchases with natural ingredients and proven effectiveness. 

Overall, Aavrani’s addressable market is large, and the company has a variety of opportunities to further differentiate itself. It appears Aavrani is starting to explore the reparative and age- prevention skin care markets. While this is not a winner-take-all market, Aavrani could dominate the natural and clean skin care markets through its carefully developed, community-oriented, and simple skin care products in the future.

Aavrani’s CEO and co-founder, Rooshy Roy, started the company in 2018. As a first-generation Indian-American, she learned about the power of ancient Indian skin care rituals from her mother. She is well-versed in finance and business development through her education at Indiana University’s Kelley School of Business and University of Pennsylvania’s Wharton School of Business. Roy’s career in investment banking and private equity finance at established firms give her a strong management foundation as a first-time founder. 

Aavrani’s COO and co-founder, Justin Silver, comprises the rest of the Aavrani executive team. Silver studied management and finance at New York University’s Stern School of Business before attending University of Pennsylvania’s Wharton School of Business. Silver also began his career in investment banking before exploring private equity opportunities. Silver served as a guest lecturer on entrepreneurship and a venture advisor for entrepreneurship before co-founding Aavrani. He was also an investor in the established skin care brand Tatcha. Silver’s early investment indicates that he has likely had his finger on the pulse of the US skin care market since well before developing Aavrani.  

The Aavrani team boasts complementary skill sets and diverse backgrounds despite being small in size. Diversity is often a sign of the positive culture that a company needs for growth. The company also recently brought on team members and interns to focus on marketing, sales, product development, and community development. These additional team members should help Aavrani develop, test, and grow its brand more rapidly.

The market for skin care treatments and products is crowded, and it can be difficult to determine qualities that distinguish one product or brand from another. Competitors include Drunk Elephant, OSEA, 100% Pure, Burt’s Bees, and Origins, to name a few. These competitors vary in price but offer similar products to Aavrani. Aavrani might struggle to differentiate and defend itself among the fierce competition. Its technology can’t be patented and entry barriers are relatively low in the skincare market. 

Aavrani seeks to distinguish itself by delivering simple, all-natural skin care inspired by India’s ancient beauty rituals. Aavrani’s current four products create a simple and straightforward skin care routine to meet the needs of everyone. Given the company’s tilt, it likely has the power it needs to expand into South Asian markets and gain traction. Aavrani’s price point is also very reasonable, making its products more appealing than other high-end skin care options. Compared to similar products, Aavrani appears to offer higher-quality, clean, and effective products at a lower price point.

Aavrani’s reported revenue grew by 388% from 2019 to 2020 — from $197,410 to $964,164. This drastic revenue growth is a positive indicator for Aavrani’s future in the skin care sector. If Aavrani reaches its projected $5 million in revenue this year, its revenue growth will be even more significant. Aavrani’s gross margins on product sales are extremely high at more than 84%. Margins this high are extremely uncommon in the consumer products and goods space. Aavrani’s monthly burn rate is relatively low, which is a direct result of running a lean team. Aavrani is able to move quickly, test, and expand its product offerings more rapidly than many other companies in this space given its low burn rate and lean executive team. 

Aavrani’s products have received more than 800 five-star reviews. And the company boasts a 30% repeat customer rate, which is twice the industry standard. Committed to embracing the breadth of all-natural products, Aavrani plans to eventually develop hair care and body care products and beauty accessories. Aavrani appears to be focused on direct-to-consumer sales with purchasing channels on its website, Amazon, and other third-party sellers. Aavrani has also been featured by major fashion magazines and publications such as Vogue, Glamour, InStyle, The New York Times, and Beauty Independent.

Aavrani’s overall risk level is low. It has a market risk due to the competitive beauty industry. While Aavrani might offer a superior product to its competitors, it can be difficult to stand out among established and trusted brands. The company was founded in 2018, but it has only recently gained financial traction. Being in the consumer goods and product space, this raises questions about future financial growth. Aavrani will need to address its limited plans for scaling and distribution to ensure future profitability and financial growth for investors.

Since its last round, Aavrani has grown quickly and proven to investors that it is a strong investment opportunity. The company’s revenue, team, customer, product, and valuation growth is noteworthy. Aavrani is reportedly driving revenue to $5 million this year, which is tremendous progress from 2020’s revenue of $964,164. Its executive team remains strong, and the company has hired directors and interns to focus on growth efforts. Aavrani’s customers are loyal and contribute via Instagram to the growing Aavrani community. As its product lines expand, assuming its quality remains the same, Aavrani will likely continue to attract new customers.

Aavrani’s biggest concern is competition. It operates in a very crowded market, where legacy brands dominate. Name recognition is vital for product adoption and ensuring brand loyalty. As a new company, it could struggle to convert customers. The market is also growing rather slowly, which could limit its share among so many similar competitors. This is why it will be key for Aavrani to convert users in the South Asian markets. Although it was founded in 2018, Aavrani’s traction has only recently picked up speed. Until the company can demonstrate continued growth, investors may be concerned about the company’s future profitability.

Aavrani is gaining financial traction, attracting loyal customers, and diversifying its offerings. The company’s revenue has grown significantly since 2019. The competition in the skin care market is fierce, but it is not a winner-take-all industry. Additionally, the all-natural skin care market has many niches for Aavrani to expand into with its growing customer base. The company’s price range makes it more competitive and appealing to new customers looking for effective yet luxurious skin care options. And Aavrani’s simple and all-natural skin care products have received more than 800 five-star reviews from customers. With a strong executive leadership team, noteworthy advisors, and significant financial traction, Aavrani could become a leader in the all-natural skin care market.

Aavrani creates all-natural skin care products rooted in ancient Indian beauty rituals. Aavrani saw tremendous revenue growth between 2019 and 2020, and the company has a growing customer base. It has goals to expand its product offerings and the community of Aavrani users. Its CEO has extensive business experience and a deep understanding of holistic skin care. Aavrani’s growing customer base, experienced team, and favorable price range within the all-natural skin care market is encouraging for investors. All things considered, the current raise’s valuation is a fair deal for investors. 

Although Aavrani has strong product offerings, it still has defensibility concerns because it offers similar products to current competitors. Operating within such a crowded, slowly growing market where established brands lead makes Aavrani particularly vulnerable. If its expansion into South Asian markets proves unsuccessful, Aavrani could lose the momentum it gained fairly recently. Therefore, Aavrani has been rated a Neutral Deal by the KingsCrowd investment team. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Carolyn Price, November 29, 2021.