Divneet Kaur and Simran Kaur—seasoned professionals in the pharmaceutical industry—noticed that India, despite having multiple direct-to-consumer (D2C) skincare brands, has a clear dearth of companies creating original products.
“While many brands work with contract manufacturers and simply put their own labels on existing products, we wanted to take a different path,” says CEO Divneet, who co-founded Dermabay Skincare along with Simran (COO) in late 2022.
With a 10-person R&D team spearheaded by Divneet as lead scientist, the Ludhiana-headquartered D2C skincare brand prioritises science over commerce. The startup creates prototypes of its product, followed by the manufacturing of the final version by a contract manufacturer, which it closely monitors.
A quality-first approach
While some of Dermabay’s 35-member team operates out of Ludhiana, most are spread across India. In the initial days, the brand had transformed its garage into a laboratory, where it does its research and development work. “It’s a small setup, but it definitely allows us to retain the IP and the know-how,” Divneet says.
Once the R&D team designs its formulation and creates the prototype, two of Dermabay’s employees take the prototypes to its contract manufacturers based in Ludhiana and Una in Himachal Pradesh.
“We have reached where we are today by bootstrapping, which didn’t allow us to hire and build a full-scale lab, but that’s changing now, as we are in the process of securing our first round. The entire energy is devoted towards building a sustainable R&D capability,” the CEO tells YourStory.
The brand has partnered with select manufacturers who comply with its regulations to meet the desired quality standards. “We hope to go beyond this model soon and want to start collaborating with more advanced R&D laboratories in the future,” she says.
To stand out from its competitors, the startup charges a subsidised rate for its high-quality products, ranging from its least expensive product, Gentle Skin Cleanser at Rs 449, to its most expensive one, Antiaging Serum, at Rs 1,195. Its signature product, Sunscreen SPF 50 PA++++, retails at Rs 699.
At present, Dermabay sells on its website as well as through ecommerce platforms like Amazon, Flipkart, 1MG, and Nykaa. It soon plans to shift away from the digital-only model to adopt a ‘phygital’ space. The startup has plans to open retail outlets in Gujarat, Uttar Pradesh, and Madhya Pradesh in the next six to eight months.
The startup acquired its first 1,000 customers in less than four months since its inception. At present, the profitable brand has 50,000 customers, boasting an 85-90% retention rate, and aims to increase its customer base to 10 lakh individuals by the end of FY27.
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Marketing challenges and plans for growth
With an abundance of D2C skincare brands in the Indian market, Dermabay faces marketing challenges, especially with the expensive advertising costs.
COO Simran says, “As we started as a digital brand, the competition is cutthroat. We are planning to start collaborating with influencers who create educational content around skincare, which should boost our presence. Finding the right influencers is key for us.”
Meanwhile, the brand is in talks with various people about exporting Dermbay’s products to different countries. Through its outreach, the co-founders aim to create a community of individuals who are aware of the science behind skincare.
“People are not aware of the ingredients and the formulations. They don’t know which formulation to use for their particular skin concerns. They know about the active ingredient, but they don’t know which one to use or which two ‘actives’ actually work well together. We are trying to bridge that gap,” Divneet explains.
To bridge this gap, Dermabay is beginning to use AI tools on its website. For instance, customers can take a quiz on the brand’s website that directs them to a single product to mitigate the skincare issue they have. The startup also plans to introduce more AI facilities within the next six months.
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Funding
According to an IMARC report, the Indian skincare industry, valued at $8.4 billion as of 2024, is expected to grow to nearly $17 billion by 2033, and Dermabay wants a piece of that pie.
“We are currently at 0.039% of the market share, and in the coming two years, we want to be at the 0.5-1% space,” says Divneet.
With an initial investment of Rs 1 crore, the startup clocked annual revenue of Rs 1.3 crore in FY24 and Rs 3.5 crore in FY25. The company aims to cross the Rs 13 crore revenue mark this year, and looks forward to raising a pre-seed round of Rs 10 crore in the coming months.
“Once we have raised our funding, we would first put it in our R&D and invest in a good lab. That is our main target. We will also work towards becoming more sustainable,” she says.
The startup competes with Dadri-based Kama Ayurveda, Delhi-based Forest Essentials, and Mumbai-based Plum.
Edited by Suman Singh
