India's new consumer brands are taking much less time to scale and become Rs 100 crore brands than five years ago. There are many reasons underpinning this trend. Recently, Business Today chatted up with Kanwal Singh, Founder & Managing Partner at Fireside Ventures, an early-stage investment fund focussed on consumer brands.
He explained the 'J Curve' many start-ups hit - that is, if these companies get the foundation right such as the product, the market-fit, and the right channel mix, they can hit a growth curve that is far more exponential versus linear.Also Read: BT Buzz: How consumer durable brands are wooing millennials?
Reason one: Singh says that a funding of Rs 25 crore can help build a Rs 100 crore brand now. "If earlier, companies reached Rs 100 crore of revenue in five-seven years, today the time taken is three-four years. It is a faster ramp with lesser capital," he quips. One of the reason is their ability to target sharply. "Digital is opening up more targeted opportunities. There is the ability to create strong engagement on social media. There are influencers and bloggers. Each brand has its own audience they want to talk to but the ability to access them and create an engagement has improved," he explains.
Reason two: Many new brands are focussed on a new sort of consumer - the millennial. Many start-ups target the top 100 million millennial consumers. Singh's portfolio includes now well-known brands such as Boat (stylish headphones, speakers, earphones etc.), MamaEarth (toxin-free products for babies and moms), Bombay Shaving Company (for young men who shave), and Pipa + Bella (jewellery) among others. A majority of their sales come from the online channel. "Therefore, you don't need to have a very complex supply chain. You can create the first momentum of growth with the online model and then explore if you need to bring in different channels," Singh says.
Reason three: There is a power in the collective. VCs such as Fireside Ventures are aggregating companies and presenting them to ecosystem partners. On one side, there are media players such as Facebook, Youtube, and Instagram. The other side has marketplaces such as Amazon, Flipkart, and BigBasket, among others.
"Both the sides are looking to extend consumers more choice. Therefore, they want to engage with exciting brands. We bring them a filtered list. The media houses have realised that while they would continue to get the big dollars from multinationals and the larger brands, the growth will come from start-ups," Singh says. Fireside Ventures has 17 portfolio companies and collectively, their spend on the digital channel is a humungous number.