Investors are shedding their reluctance to write large cheques for young online consumer brands as several of them have either reached or are racing toward a major milestone that legacy brands typically take decades to cross
May 10, 2021
8 Min Read
Vahdam Teas was started in 2015 and quickly earned a name as a premium online brand with global ambitions. But it wasn’t until its sixth year that the company was able to breach an important milestone: Rs 100 crore ($13.5 million) in annual revenue. Vahdam, whose specialty teas are now available in about a thousand stores in the US, has its sights on its next big milestone: Rs 500 crore ($67.8 million) in three years.
That’s a pace and ambition a lot more online-first consumer brands such as Wow Skin Sciences, Sugar Cosmetics and Licious are increasingly comfortable with as they make their mark amid more established brands.
The Rs 500 crore milestone is significant. For one, it breaks the glass ceiling for direct-to-consumer brands. And two, it signals their potential to grow exponentially to investors and buyers.
“If you can believe that a Rs 100 crore brand will become a Rs 500 crore brand in the next five years, then you’re willing to pay a little bit of forward multiples rather than just evaluate them based on their past,” said Kanwaljit Singh, founder of Fireside Ventures. The dedicated direct-to-consumer brands fund has Boat, Mamaearth, Kapiva, and Vahdam Teas in its portfolio.
Direct-to-consumer brands mostly sell online and for many consumers in India, they are still a novelty. But with a focus on data and a willingness to experiment, these brands have been able to win over shoppers in the past couple of years, especially young adults ready to give new mass-premium products a try.