Fireside Ventures, which invests in consumer brand startups exclusively, has closed its second venture capital fund at Rs 863 crore ($120 million), more than the Rs 750 crore ($100 million) it had originally planned.
The company had raised $60 million for the first close of the fund in November 2019. A first close allows the fund to start investing while raising more money.
Investors in the fund include the Investment Corporation of Dubai, L’Oreal, Bajaj, and Premji Invest among others.
Fireside was started in 2017 by Kanwaljit Singh, who was earlier a partner with Helion Ventures, one of India’s earliest venture funds. In the last 4 years, it has invested in 22 consumer brands, including boAt earphones, personal care brand Mamaearth and grooming brand Bombay Shaving Company, among others.
“Last year has been a hard time for all of us, but we have still seen green shoots and many of our companies have emerged stronger. It is a great time to build consumer brands,” Singh said in a Zoom call.
The Bengaluru-based company raised a Rs 340 crore ($50 million) fund in 2017, which is followed up with a second fund in late 2019.
Fireside’s fundraise as well as some of its portfolio outcomes are driven by a larger shift where consumer brands are scaling fast, able to use digital marketing better, and most importantly, consumers are willing to pay for niche and quality products.
The initial months of lockdown, where even online delivery wasn’t allowed hurt many of these new-age brands, but most have bounced back much faster than expected. Some are growing even faster than they were before the pandemic. Singh said six of Fireside’s portfolio companies have an annualised revenue run rate of more than Rs 100 crore.
Direct-to-consumer (D2c) brands could be a market worth $100 billion in the next five to seven years, as online buying has shot up during the pandemic and customers get interested in more niche segments, according to a report from investment banking firm Avendus Capital.
D2C brands are defined as companies that start out by selling from their website directly and are assisted by e-commerce marketplaces such as Flipkart and Amazon. These brands usually start out online, are more nimble than offline retailers, have higher margins and when online growth is slowing down, can transition offline to run an omni-channel model.
Singh said that in the Fireside portfolio, D2C accounts for 25-30% of revenues- a significant number as it reduces their dependence on online retailers, and gives them direct access to and data on consumers who buy from them.