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4x growth in all companies! This venture fund doesn't chase unicorns

Fireside closed its second fund in January this year at Rs 863 crore, and Singh believes that its strategy of not chasing unicorns has paid off

twitter-logoAjita Shashidhar | April 9, 2021 | Updated 16:59 IST
4x growth in all companies! This venture fund doesn't chase unicorns
Kanwal Singh, V.S. Kannan Sitaram, Dipanjan Basu and Vinay Singh of Fireside Ventures

Multi-stage venture fund, Fireside Ventures, has witnessed a four-fold growth across all its portfolio companies in the last one year. The venture fund which invests only in new-age consumer brand start-ups claims that in the last one year six of its investee brands have crossed the Rs 100 crore revenue threshold. "COVID-19 made ecommerce mainstream and this helped our brands, as all of them are digital-first in their DNA," explains Kanwal Singh, Founder and Managing Partner, Fireside Ventures.     

Fireside closed its second fund in January this year at Rs 863 crore, and Singh believes that its strategy of not chasing unicorns has paid off. "We have built successful businesses without having a single unicorn in the portfolio. We have always preferred to focus on fundamentals of business such as profitability and unit economics." Some of the Fireside investee companies such as Kapiva, Yoga Bar, Mamaearth, Slurrp Farm and SARVA Yoga have a strong focus on health and wellness and have benefitted immensely through the pandemic as Indian consumers became increasingly particular about consuming wellness products.

In fact, this trend of wanting to consume 'good for you' products has not remained a metro phenomenon in the last one year. Even consumers living in towns such as Barielly in UP or Coimbatore in Tamil Nadu have been more than open to spending a premium on a Mamaearth personal care product which promises a chemical-free experience or even a Yoga Bar protein bar.    

DIGITAL ADVANTAGE

Vinay Singh, Partner, Fireside Ventures, says even though most of these brands only have a digital presence, it is easier to scale up in comparison to legacy brands. A brand like Slurrp Farm which is into kid's nutrition, is targeted at young mothers and the world of digital advertising enables the brand to target this set of audience. "Unlike legacy brands which need a deep distribution network to get into more households, the new-age consumer brands are audience driven. You can get to two million people, who will buy four times a month, and you build a $100 million brand right there which can get valued at $400-$800 million," he explains.

Being digital-first has also enabled these brands to customise as per their consumer needs. This also means that they have many more SKUs than a legacy brand normally has. "A legacy company is always grappling with the dilemma that the retail shelves are constrained and hence they can't have as many SKUs they would want to. If you are a challenger brand, you are talking to an Amazon which has an endless aisle. It enables you to put as many SKUs on Amazon. Many of our companies have 15 products and 100 SKUs. It's a big mindset change from optimising SKUs to saying we enjoy working with long-tail portfolio," explains V.S. Kannan Sitaram, Venture Partner, Fireside Ventures.       

HAND-HOLDING

Manager Partner, Singh, believes that the USP of his fund is not just to invest in brands, but also help them graduate to the next level of growth. "We help build iconic, enduring and responsible brands," he says.

The fund has partnered with leading digital agencies to get the best possible ad deals for its investee brands. "All our brands put together spend almost as much as HUL would be spending on digital media," points out Sitaram. It has also worked with marketplaces such as Amazon and Big Basket to create accelerator programmes to help promote not just its investee brands, but also other challenger brands. "Amazon wants to create a large business of Indian brands outside India. We helped them choose the brands," says Sitaram

Dipanjan Basu, Partner and CFO, claims that the market cap of the aggregated Fireside portfolio has crossed $1 billion. "Today, six of our brands are Rs 100 crore brands and that is helping drive the valuation and excitement of strategic investors and private equity investors."

Going forward the venture fund intends to double its investment in new-age consumer brands. "This is just tip of the ice-berg, going forward, the plan is to help scaling up a host of new-age consumer brands," says Managing Partner, Singh.      

Also read: Swiggy to close $800 mn funding round; valuation rises to $5 billion

Also read: Gupshup raises $100 from Tiger Global, enters unicorn club

Also read: Cred enters unicorn club; valuation touches $2.2 bn

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