D2C Consumer Brands in India Investments & Growths

These are interesting nuggets from the fireside ventures profile in ET. They have two marquee investments in Mamaearth and BOAT both founders ended up on Sharktank and both are headed for IPO

D2C in India a Consumer VC Process from fireside's perspective

1. Find a Consumer brand with 50 Lakh to 1 Crore per month Revenues and Fireside will Invest 1 Million dollars in that
2. Stage two they will invest $ 3 to $5 Million
3. Invest 30 Crores  to 45 Crores and Reach 100 Crores in revenue at 100 crore fireside thinks they can exit
4. Margins 60 to 80% in Beauty, 40 to 50% in Food, and 30% in Consumer Electronics
5. Valuation: 6 to 7x revenues
6. Vahdam Teas: 95% of exports revenue

Older Bets

ID Foods 17-year-old and 384 Crore revenue and 70 Crore loss 

Paperboat less than 400 Crore revenue and still loss-making

Mamaearth the profits are very low and the valuation is very high

BOAT also stayed away from IPO again profits are low

Mamaearth had a 14 Crore profit on a 940 Crore revenue a 1 % profit and spends 40% of its revenue on advertising continuously for the last 4 years Your ideal should be 10 to 15%  of total revenues as per traditional marketers P&G

Warnings for D2C

• Interestingly for these D2C brands apple did ATT and all the US d2c brands got hit along with Meta because the US is an Apple Country
• Google will phase out cookie targeting end of 2023 which might affect Indian d2c brands though google will be softer with a privacy sandbox because India is an Android country
• USA look at the D2C stocks 2021 was a boom year when all the IPOs happened and 2022 was the bust year
• Look at Peloton the darling of the D2C boom in the pandemic but bust later
• 
  

Interesting to watch will need to come back and check these numbers since 1000 Crore plus revenue for both BOAT and Mamaearth makes it very interesting also considering my past with the sector.

When Nykaa and Paytm can be successful IPOs and thereafter can fall so can this too depending on how crazy the market is otherwise there are always VCs who will bite just like BOAT

I am inclined that founders will make their money and go out leaving it to be somebody else's problem for D2C

Reference

https://economictimes.indiatimes.com/prime/consumer/with-mamaearth-and-boat-have-fireside-ventures-and-kanwaljit-singh-cracked-the-consumer-code/primearticleshow/96919618.cms