Even when FMCG giants feel the deceleration of consumption, new customer direct companies (D2C) report solid sales. Serving the cohort of custom customers that buy digitally through rapid trade channels, these companies have seen more adoption. In addition, premiumization has also helped them find makers among the rich Indians.
Firaside Ventures, a risk capital firm focused on the consumer sector (VC), launched its fund in 2017 to support such companies of the new age that are staring efficiently, and today the firm VC is true. Currently, managing ₹ 3,000 million rupees ($ 395 million) of AUM, the 59 Fireside agreements include consumption marks of the New era Mamaearth, Boat, Yoga Bar, Kapiva, The Ayurveda Experience, Baker’s Boxes, The Sleep Company and others.
In a conversation with the business line, Kannan Sitaram, co -founder and Risk Partner, Fireside, says that numerous portfolio companies are preparing for an OPI or the strategic sales route.
Extracts:
How do you see the rapid commerce impact on the income of the Niche D2C marks of the new age?
All FMCG’s big companies are talking about how consumption is not growing, but when we observe our portfolio companies, thesis companies have rapid growth. Fast trade is a key interruption, but there are some other factors. India is becoming richer. It is no longer a pyramidal structure. The age profile of consumers of D2C companies is also a factor. The ZS generation is emerging as key consumers. We focus on these three disruptive factors when we evaluate our investments.
Can D2C companies achieve the scale simply focusing on digital channels?
Digital is just a starting point. But once the brand is built, the consumer will look for it without buying. The Indian client is not just digital. The opportunity is lost if they are not disconnected. D2C start, go to Amazon or another electronic commerce site, that is days that this space is bees tasks for a fast trade and then addresses retail stores. Let’s take, for example, Café Dulce Kaaram based on Chennai: they used to sell only online, then left a brand through fast trade, and now their selected sku are also in the best retail food stores. They have made the transition in a very deliberate way.
What role does Fireside play after investment?
We have chosen to play a very active role. We guide new companies to build consumer companies and also help them make connections with digital ecosystems such as Google and Meta. More recent, as our portfolio companies approach the brand of 100 million rupees, we are also helping them in leadership coaching. The founders now find that they need to make the transition from problem solving to be good CEO that supervises everyone. You have to hire the next level of leaders, establish processes and make other people solve it. It is a failure point for new companies if the founders do not do it well. We also help our new portfolio companies to develop a brand management play book. Governance is another area in which we focus as much as members of the Board and to push them to make several audits.
We have seen many large FMCG players buy new recent D2C companies. Will we see more of those offers?
When he looks at large companies, their market fees are minor when it comes to the fast trade channel, consumers of generation Z and others are now in a trend. That is why their income has affected the leg and are in an acquisition spree. Look at their balances, they are sitting in a large amount of cash, and we see more offers such as Hul-minimalist or ITC-Yoga Bar. It depends on the founders of D2C deciding whether they choose to climb on their own or sell.
What would you say to people who say that new consumer companies are not enough enough, and Indian founders must focus beyond the thesis?
The question to be asked is to have created value for India? They have created thousands of jobs, taxes and other income for the government, and all this feeds economic growth. Today’s new D2C companies are also innovation in technology. They are large settlement dates. They are analyzing the data of the first part of the users and analyze them to acquire, retain the customer and sell relevant products to their customers and reduce the cost of marketing.
Is winter financing behind us? Will the commercial war affect the history of the Indian consumer?
We are long -term believers or the consumer history of India. We continue to invest the ‘winter’. To a large extent, investments in the consumption space are back, the valuations are not at the crazy levels of 2022 and people have also become more realistic. The geopolitical climate does not affect us as a risk capital company. The growth of the GDP of India may not be severely affected due to these commercial wars, and we are betting on Indian consumption.
Posted on April 18, 2025
