Mamaearth, boAt, YogaBar, Kapiva, Slurrp Farm — think of some of the young brands making waves in the consumer goods space and behind them is one common investment company – Fireside Ventures. Mamaearth is racing towards a ₹1,000 crore revenue figure, while boAt is already almost there. “As a collective if we can take 25 — hopefully maybe even 50 — brands big in the next few years, we will then represent as much value as any of the large multinationals,” says Kanwaljit Singh, the unassuming founder of Fireside Ventures.
Considering that Singh is one of India’s pioneering investors — after all, during his days as co-founder of one of the country’s oldest homegrown VC venture Helion, the firm wrote cheques for meteorically rising companies like MakeMyTrip that went on to list at Nasdaq — he still has the same zeal and passion for creating value.
Singh’s face lights up as he discusses Fireside’s journey, and the significant part it has played in the D2C (direct to consumer) phenomenon playing out in the brand world today. Most of Fireside’s portfolio of 28 companies (18 from its first fund and ten from its ongoing fund) are very strong D2C companies and have literally rewritten the rules of digital engagement between brand and consumer, thereby cresting the pandemic wave pretty successfully.
We are meeting Singh virtually — since he is in the US spending time with his children — and, despite unearthly timings for him, attending team calls with his office in Bangalore.
Investing milestone
For Singh, 2021 marks his 20th year as an investor. The engineer-MBA’s career was going rather conventionally — having joined HUL (then HLL) in 1987 straight from the FMS B-school campus and roughing it out in Rajpura in Punjab during the height of terrorism (It was like the wild west, he says) before cutting his teeth in sales in the Lipton tea business, when an unexpected offer landed him in Intel.
“I was not a practising techie. But Intel had just launched its Pentium MMX. It was the first purely designed for the home consumer PC, and Intel wanted somebody from the consumer world to promote the business,” he says.
Singh spent three exciting years at Intel navigating unknown terrains. “From a very large established enterprise with strong marketing and distribution, here I was in a consumer franchise where nobody had any clue about the market. So we were experimenting as we went along.”
At Intel, Singh also had a ringside inside view to the exciting internet wave sweeping the world — getting the actual reality of what was happening during the dotcom boom. Singh wanted to also surf this wave. “To be honest, I wanted to start something of my own but I couldn’t figure out what.” That’s when he plunged into investing.
At that time, fortuitously the PE group Carlyle had set up three different VC funds across the world, wanting to play in the venture space. “They hired my seniors from Intel to run a VC kind of fund. So half of the Intel team came into Carlyle. I was brought in parallel to an investing role as they needed someone from a business background to think through strategy.”
So which was his first investment pick at Carlyle and how did that go? “It was a company called World Zen in the business process outsourcing (BPO) space. It had one Indian founder and one American, and its operations were based out of Gurgaon. Within a year it got acquired by a global outsourcing company called Keane, which in turn got acquired by NTT.”
It was an action-packed phase. In 2004, however, Carlyle decided to shift focus from venture back to private equity, so Singh decided to step out. Just as he was figuring out what to do next, he met with Sanjeev Aggarwal and Ashish Gupta and Helion happened in 2005. The Helion story has of course now gone into the annals of India’s start-up history.
As an investor, Singh, says what really changed the trajectory for him was in circa 2010-2013 when within the Helion fold he began experimenting with consumer facing companies. “I invested in Mast Kalandar, a restaurant chain, YLG, a beauty salon business and so on... Somewhere along the way, I felt that it was not going to be easy or feasible within the ambit of a large technology focussed VC fund to do these investments.”
That’s when Singh felt it was worth taking a shot on his own and quit Helion. In 2015, he began investing with his own personal money into the CPG space. Paperboat, epigamia et al were investments made from his family office. “But within no time, it became like a huge groundswell of interesting companies and that triggered the idea of a full-fledged fund,” says Singh.
He tested this out by talking to Indian families involved in consumer goods business — Premjee, Mariwala, Sanjiv Goenka et al. The reception was encouraging. Fireside Ventures got initial anchor support from large consumer goods families. “Then we got the Unilevers, ITCs, Emamis of the world too coming in as corporate investors,” he describes.
The first fund was around $50 million (₹340 crore) and successful. Although two companies — boAt and Mamaearth got big quickly, it was by no means one or two winners underwriting all other investments, says Singh. “All the companies — whether it was Kapiva, Yoga Bar, Design Cafe, Vahdam Teas — have done well,” he says, pointing out how a lot of the Fireside companies are profitable at the unit economical level and growth margins are healthy. Also, he says, the companies have built the company with little capital spend. “Why should you raise equity for funding inventory?” he queries, pointing out how the working capital has been used judiciously to build capability, and take the organisation higher.
Also he proudly points to the returns. “We have already returned over 70 per cent of the money we have raised in Fund One back to the investors. Within four years to give back almost the entire committed money that they have given us, I think that was an important milestone for us. And we still have a fairly large ownership and a large portfolio still to exit… so we know that we are able to deliver superior returns to our investors.”
The investment strategy from the beginning was very clear, says Singh. One, it would be exclusively consumer brands focussed. Two it would be very strong on ecosystem play, whether climbing on to developing channels like quick commerce, omnichannel or going after the Bharat stories. Third was that investment would be multi-stages. “We would write the first cheque of one million (dollars) very early and then, once the company was a little more established, pump in, say, three million. This way we can work with companies through different stages, helping shape their foundation and growth.”
The ongoing Fund Two is larger at ₹863 crore ($120 million) and the only change is a larger cheque size is being handed at the early stage ($2 mn instead of $1 mn). The idea being to get more equity at the get-go stage.
If investment is in multi stages then exit too will be multi stage, says Singh. “We use an interesting term called ‘Exitability’. What we are finding is that once a company reaches a certain size such as ₹100-150 crore, there is interest from two places. One is from strategic investors, because they also realise that taking a company from ₹100 crore to ₹1,000 crore is their strength. Interestingly, the second pool of ‘exitability’ is the large private equity players who are comfortable buying out early investors. So we have exited partially from boAt and Mamaearth and few other companies.”’
The wellness opportunity
In terms of themes, Fireside is focussed a lot on wellness. “Wellness is becoming more and more mainstream for us and captures almost every gamut of our investment, from food and beverages, personal care, beauty, home, even preventive therapeutic,” he says.
Interestingly, Singh himself is pretty conscious of what he puts into his mouth, preferring gluten-free, non-dairy, non-lactose options and alternative grains. Though cuisine-wise, he and his family are very experimental. “Asian Foods is big for us. Living in Bangalore, we are very fond of South Indian cuisine and that is naturally gluten-free in a lot of ways.”
If we were meeting him in Bangalore, he would take us out to Oota, he says, a restaurant focused on interior Karnataka-based cuisine.
With a proud smile, Singh describes how his daughter Sachi has just launched a health startup called Rootless, which brings seaweed into its products. His wife Suzanne is the trustee of Pratham Books and deeply interested in equity in education.
Ask him about the D2C story — whether it happened by accident or design with the Fireside portfolio — and Singh says it was all very contextual to the value proposition that the brands were trying to establish. “Mamaearth and boAt, which were operating within the white spaces where the demand curve was already there, it made sense to get on to a marketplace like Amazon or Flipkart. And both brands started with ecommerce.”
“On the other hand, if you take brands like Fable Street, which was focused on workwear for women and needed to start a contextual conversation with its users, it was imperative to go D2C. Fable Street realized that Indian women had different body types and standard sizes would not work, so they created an entire model where they would take measurements from customers and use that to create a line that was better suited and a better fit.”
Singh says that every company — even the D2C brands — eventually will go into a combination of all the channels. Wherever the consumer is looking for you, you need to be present there.”
Gazing into the future, Singh says that apart from the wellness opportunity, Fireside is also starting to see ideas which can be expanded into business models. For instance, Mamaearth is focusing on building a portfolio of brands.
Then, he says, there is the Bharat opportunity and going global is another interesting opportunity for its brands.
Vahdam Teas and the Ayurveda Experience have gone global almost from Day 1. Slurrp Farms has just launched in the UK. Sarva, the yoga training brand, is looking at some possibilities of offering high-quality personalised training to global consumers. Singh, who plays golf, became a Sarva yoga consumer during the pandemic and says he finds the experience cathartic.
To sum up the future journey, he says, “We see sectoral vectors opening up, we are seeing platform plays opening up which can allow you to build much larger businesses, because you’re not building one single brand over a point of time. So I would say it’s looking quite exciting, especially with this whole infrastructure play now becoming more and more conducive to growth. Everybody, whether it’s the delivery companies or whether it’s the payment companies, they all want to work with our companies.”
This is the momentum that Singh believes will propel the Fireside brands on the runway to ₹1,000 crore and more.
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