Wipro Consumer- Ventures had earmarked ₹200 crore for investments in consumer startups in India and Southeast Asia and has committed almost half of this amount.
The fund has invested in six companies, including MyGlamm, Ustraa, OneLife, LetsShave, Soulflower and Power Gummies. It plans to invest in 4-5 companies in a year. BusinessLine spoke to Sumit Keshan, Managing Partner, Wipro Consumer Care – Ventures about the fund’s investment strategy and plans for 2022.
Out of the ₹200 cr fund, how much has been utilised, how many startups have been funded till date?
As part of Wipro Consumer – Ventures, we have earmarked ₹200 crore for innovative consumer startups in India and SE Asia. Till now, close to half of this has been committed. We have invested in half a dozen companies and are looking to do more. All are promising companies, and the portfolio performance has been strong. MyGlamm has become a unicorn, and Ustraa is growing after getting hit in the first two waves and is a leader in their category. Onelife is in the rapidly growing wellness and nutraceutical space, and LetsShave is a challenger brand in men’s and women’s shaving systems – both are well poised for continued growth. Two investments are recent which are in Soulflower and Power Gummies. Our broad plan is to invest in 4-5 companies in a year.
What is your investment approach in selecting start-ups?
Our focus is on innovative companies looking to scale and impact their specific sector. Concerning our investing approach, we have led investments as well as co-invested as part of a round, hence flexible on this front. Our approach is to consider companies in pre-Series A or later stages. For example, when we invested in MyGlamm, a small company was growing but got badly hit in the first wave. From there, it has emerged as a formidable company today in a short time, having made multiple new rounds of fundraising and more than eight acquisitions.
What is the average deal size, and has the ticket size changed post the funding rush in the ecosystem?
Our ticket size is broadly in the range of ₹10 crore- ₹20 core with a minority stake. This is where most of our current investments have been, and our focus remains the same, with some flexibility depending on a specific deal.
VC funds flow rapidly into tech and AI startups than the FMCG sector. What brings the fund to focus on the FMCG sector and D2C platforms?
The initial focus of PE/VC players more than a decade ago had been predominantly in tech. That is how the private investments grew globally as well as in India. However, over the last decade, there has been a lot of focus on sectoral initiatives, including FMCG, Healthcare etc. With internet connectivity and reduced cost of reaching consumers, brands have been built in a much shorter time sthan aearlier, with consumer companies hitting ₹100 crore revenue in 4-6 years. Investors have realized that these brands have substantial salue as well as predictability of cash flows and big potential to scale. You will find more money flowing into these sectors going forward.
The D2C market is vast and already has bigger players. What USP do you look for in the startups to have to beat the odds of the market?
The D2C segment has emerged in the last 4-5 years. Today there are 150 million D2C consumers in India which will likely to hit 350 million in the next 4-5 years. This is phenomenal in terms of sheer numbers. Parallelly we also see many startups trying to create space for themselves. Overall, what we look for in startups are founder quality and team, size of space one is operating in, quality of products and consumer orientation. As a large player in the industry, we feel that combining these strengths would finally lead to a venture’s success.
How has pandemic changed the landscape of funding in the FMCG Sector? What is the outlook for a post-pandemic world?
The funding environment continues to be strong in India. In fact, VC funding into startups in CY2021 has been 3x of what it was in the earlier three years, which is a testament to the growing maturity curve. Even the exit environment has improved in recent times, as we see. All these points to stronger flows.
The fund planned on investing in startups across Southeast Asia. Has there been any funding done outside of India yet?
We had started looking at SE Asia for startup investments but could not due to Covid. Our current plan is to invest in VCs in this region and act as LP(limited partner) to get closer visibility into the space, particularly in Singapore, Indonesia, Vietnam, and the Philippines.
What are the specific focus areas within consumer brand categories for the fund?
We have invested in categories like male grooming (Ustraa), men and women shaving systems (LetsShave), wellness and nutraceuticals (Onelife), as well as other wellness/nutraceuticals in a specific format (Power Gummies), natural personal care (Soulflower) and cosmetics and multiple categories now (MyGlamm). We continue to look for companies in personal care, skincare, home care, food, lighting, appliances, and their sub-categories. The Hindu Business Line