Last week, Wipro Consumer Care Ventures, the venture capital arm of Wipro Consumer Care & Lighting, invested an undisclosed sum in Onelife Nutriscience, a healthcare firm offering immunity, wellness and nutraceutical products. Set up in 2019, the fund has also invested in male grooming brands LetsShave and Ustraa. With covid-19 having altered consumer behaviour, it is eyeing four to six digital-first brands in packaged food, healthcare, personal care segments this year, said Sumit Keshan, managing partner, Wipro Consumer Care Ventures in an interview. Edited excerpts:
Has covid-19 changed your investment theme?
What has happened is that the pandemic has actually widened our horizon of the target segment. So, while we started with certain segments and sub-segments in mind—now we're actually looking at a broader set. We were looking at personal care, which is our current domain under Wipro Consumer Care, then home care. We’re looking at specialized skin-haircare cosmetics companies that are innovative and are primarily e-commerce led. We are also looking at clean beauty companies—natural, organic, ayurveda based. And now we have broadened to look at wellness—in the nutraceutical, health supplements, immunity building segments. That area is also emerging to be of interest for us.
Also Read | How to make India’s bad bank workable
In that context, we invested in Onelife. We believe consumer demand for immunity products and focus on wellness has gone up significantly. And this will continue. Another sub-segment we could look at it, and it could be a little pandemic related, is the foods sector. We're seeing that in foods, a lot of companies have come up. At-home food consumption has really taken off for a very logical reason and very interesting companies have come to us…we’re in very early discussions.
How many investments will you look at this year?
This calendar year, we would like to do about four to six investments.
Will these be largely in online-only brands?
Our investment thesis is built a lot around the e-commerce companies. In that sense, we are looking at D2C (direct-to-consumer) as our focus area. So, if there is a company which is largely non-e-commerce or a completely offline company our interest levels are slightly lower from a VC point of view. We see that e-commerce really is an emerging sector, the size is perhaps going to hit about $100 billion in the next four to five years. The share of e-commerce in the total distribution channel business is going to go up significantly.
How do you feel about the investments you've made so far?
Our portfolio is doing quite well. One of them, post our investments, is now 2x of revenue in a short period of time. It is a challenger brand and is quite well-positioned. Male grooming is an area which has really emerged, and both LetsShave and Ustraa have really positioned themselves very strongly in the segments they are in. Ustraa has raised its next round of funding, that too augurs well for the company.
Can you apply some of the learnings from these start-ups to your traditional business, that is, Wipro Consumer Care?
Somewhere we are in the same segment (with brands such as Santoor, Yardley etc) and you are going to a similar kind of consumer.
Ultimately, the FMCG sector is a lot about understanding the consumer requirements and getting the right consumer insights. These companies are also doing similar kind of work. Today, the opportunity, which a new company has as compared to 10 years ago to go and target a smaller set of consumers, and still do a sizable business and make money out of it has really emerged in the last, I would say, five to seven years. Fifteen years ago, you would go by the traditional offline channels and that's very costly. It's a longer process, there is a lot of work involved for you to create a brand. Today, brands are getting created in a shorter span of time. There are companies hitting Rs100 crore of revenue in four years, which in this sector is not easy. And that's what has kind of driven the interest among us also. So, you know, learning is always there from these companies. And of course, they would learn from us and we learn from them.
But digital-first brands have a challenge scaling up.
So, every growth stage has its own challenges. That’s what I tell these companies that look—now that you've done ₹100 crore, from ₹100 crore to ₹300 crore is a very different phase for you. What you did for achieving success and hitting ₹100 crore will not really help you to make it to Rs3 00 crore. So, for that you have to tweak your strategy, you have to look at things very differently—whether that is channel or organization. Scale up challenges from zero to ₹100 crore, and ₹100 crore- ₹300 crore are very different. That's when we try to help the company, in terms of using our experience and giving our inputs and achieving the next stage.
So to your question: Can companies get from ₹100 to ₹300 crore through D2C or online only—the answer is yes. Can they hit ₹500 crore—there are examples of companies which are doing that already which is via majority digital or e-commerce. Can they take it to ₹2,000 crore, I think that question we have not really dealt with, yet. So, e-commerce can definitely help you create a very strong business till a certain size, and it’s after if you want to go offline as an additional strategy—I don’t see any problem in that because it is an opportunity for you to grow and scale further.
Are there enough targets in the market?
The deal pipeline is very strong for us. And this is a mix of new companies as well as slightly mature within the startup ecosystem. We don't do very early stage, we like to look at companies where there is some revenue being clocked, because that’s where I think we can add more value as compared to a completely idea stage company. The quality of startups and promoters is really interesting and has surprised us. Even if they are smaller companies—their approach, thinking, their innovation, consumer insights are extremely high. I don't see any dearth of investment opportunities for us.
