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Exclusive: Thrasio’s $500M India bet; Pepperfry assembling IPO
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Thrasio, the US company that pioneered the model of acquiring private brands on Amazon and scaling them, plans to invest $500 million in India, and that’s just for starters, its CEO told us in an exclusive interview. The company has made its first acquisition here, that of consumer durables brand Lifelong.
Also in this letter:
Thrasio CEO Carlos Cashman
Thrasio, the US company that pioneered the model of acquiring private brands on Amazon and scaling them, plans to invest $500 million in India, which it sees as an important market in the long term, CEO Carlos Cashman told ET in an exclusive interview.
Thrasio has made its first acquisition in India, that of consumer durables brand Lifelong. We had in October first reported that the company was in talks to acquire Lifelong.
While the terms of the deal weren’t disclosed, Thrasio is said to have paid $150-200 million for the majority stake. A source told us the deal also includes a multi-year payout structure based on achieving certain milestones.
Lifelong cofounder Bharat Kalia, who will lead the operations for Thrasio in India, said the US-based firm is looking to acquire brands with an annual revenue of a few crores to Rs 100 crore, in categories such home & kitchen and health & fitness.
Lifelong cofounder Bharat Kalia
Cashman said this was the first time his three-year-old firm—with 200 brands under its belt already—had chosen to go with a local partner outside the US.
$500 million for starters: “This ($500 million) is frankly a baseline commitment. The Indian market is huge. It is way behind compared to the United States, Europe and elsewhere, but ecommerce is growing, marketplaces like Flipkart or Amazon are growing, and this dynamic around the world is increasing,” Cashman said. “Right now in India, the opportunity to acquire brands and put them together is not as great as in Europe and China, but it’s coming.”
Pioneer: Thrasio comes to India as companies inspired by its business model—also called ‘rollup ecommerce’—proliferate here. Two such firms, SoftBank-backed Globalbees and Falcon Edge-backed Mensa Brands, became unicorns last year.
More competition will be good for everyone, lead to more brands being acquired, and create liquidity for founders, Cashman said. “There have been 100 companies around the world who are funded to do what we are doing. I think that's a great thing. It’s great for entrepreneurs and they are getting exits.”
An idea whose time has come: The rollup ecommerce space in India saw increased traction in the second half of 2021, with several startups raising funds.
Pepperfry founder Ambareesh Murty
Pepperfry is set to file its draft red herring prospectus in the first quarter of the next fiscal for an initial public offering (IPO), its founder Ambareesh Murty told us. He said the company was looking to raise $250-300 million in the offering.
‘Committed’ to IPO: “In six months we should be ready to file our DRHP (draft red herring prospectus),” Murty said. “We are committed to go for an IPO and all the work that is required for us to get there is already happening proactively.”
“We should be able to have the pieces in place by January end,” Murty added. He said the company is also in talks for a potential pre-IPO fundraise, but nothing has been finalised yet.
He did not comment on its current valuation and what it would aim for in the IPO. Pepperfry was last valued around $500 million when it raised funds in 2020.
The online furniture retailer, which reported a 10% drop in revenue in FY21 at around Rs 220 crore owing to the pandemic, has seen a good recovery in sales and is expected to close the current financial year with a 40-45% growth in revenue. The company’s gross sales are about four times its revenue, said Murty, who is also the CEO.
Discounts on Swiggy and Zomato are now few and far between, thanks to a steep surge in demand for food deliveries across states amid curfews and other Covid-related restrictions.
“With restaurants shut or operating under severe curbs, the aggregators too rework their business models and try to maximise profitability,” said AD Singh, managing director of Olive Group, which runs marquee restaurant brands such as Olive Bar and Kitchen, SodaBottleOpenerWala and The Grammar Room.
Yes, but: The chief executive of a premium Delhi-based restaurant chain said, “As and when the situation normalises and restaurants reopen, we expect the heavy discounts by aggregators to come back.”
Swiggy and Zomato did not respond to our queries but an executive at Zomato, who did not wish to be named, said the current drop in discounts was cyclical, after heavy Christmas and New Year discounts.
Survival mode: The two companies have long been at odds with the Rs 4.2 lakh-crore restaurant industry over the discounts they offer. But now, “delivery has become the only mode of survival,” said Sagar Daryani, chief executive of Wow! Momo.
MX Player, India’s entertainment super app, was recognised as the go-to platform to watch original content crafted exclusively for the Indian audience, said an industry report.
The CII-BCG report ‘Blockbuster Script for the New Decade’ said that with over 280 million monthly active users, MX Player was at the forefront of creating regional content to best cater to the demands of its users.
The study shed light on the immense resilience that the entertainment and media industry has shown during the pandemic. According to the report, innovations and new developments in the digital space will lead to more engagement and better adoption of OTT platforms, a development that will create more demand for regional content.
India’s media and entertainment industry is expected to grow to $55-70 billion by 2030 at a 10-12% CAGR, driven mainly by strong growth in OTT, gaming, animation, and VFX. The popularity of MX Player has been rising due to the high quality of content offered by the platform.
■ The Flipkart Group said it has bought Yaantra, an electronics refurbishment platform. The cash-and-stock deal is expected to be in the range of $40-50 million, according to people aware of the matter.
■ Turnip, an online gaming community platform, has raised $12.5 million in a funding round co-led by Greenoaks and existing investor Elevation Capital.
■ Agritech startup WayCool Foods has raked in $117 million in an ongoing Series D funding round that saw participation from new and existing investors.
■ Hair care startup Traya has raised $2.2 million in a funding round led by Fireside Ventures. Existing investors Kae Capital and Whiteboard Capital also participated.
■ YantraLive, a B2B platform for heavy equipment and parts, has raised $1 million in a seed round to upgrade its technology platform and launch new product categories to deepen its presence in India.
Tesla CEO Elon Musk
Getting a foothold for Tesla in India isn’t proving easy for Elon Musk. “Still working through a lot of challenges with the government,” the billionaire wrote on Twitter on Thursday, replying to a user who wanted to know if there was any update on Tesla’s launch in the country.
Pressure tactic, says govt: Musk's tweet drew sharp criticism from the government. A source told ET, “With such tweets, Tesla is trying to put pressure on the government, and this is not the first time.” The source added that Musk was looking to get the government to reduce import duties without committing to produce Teslas in India.
“Tesla can bring in cars in CKD (completely knocked down) form with zero duty and assemble and sell them here. India has put in place a PLI scheme for the auto sector, particularly EVs, under which Tesla will get benefit if they produce here,” the source said.
The story of Tesla in India: Musk has been planning to bring Tesla to India since 2019 and the company made its first moves in 2021. But talks between Tesla and the government have come to a standstill over two main issues: high taxes and Tesla committing to set up a factory and manufacture cars in India.
In October 2020, Musk said the company would start selling imported cars in India “next year for sure”. But instead of selling cars in India, the company spent all of 2021 lobbying the government to reduce the exorbitant duties on electric vehicles. The company argued its cars would be far too costly at these rates and sales would be minuscule.
Two months after Musk’s October 2020 “promise”, union minister Nitin Gadkari said at a conference that Tesla would begin operations in India in early 2021. It officially entered India just over a week later, on January 8, 2021, when it registered a company named Tesla India Motors and Energy in Bengaluru.
Tesla’s request for tax cuts was first reported in July 2021, when sources told Reuters that the company had written to Indian ministries seeking a big reduction in import duties on electric vehicles. Soon after, Musk tweeted that Tesla was likely to set up a factory in India if successful with imported vehicles.
Meanwhile, local players such as Mahindra & Mahindra opposed Tesla’s request for slashing of duties, arguing that it would hurt investments in domestic manufacturing.
Deja vu: Incidentally, the last time Musk provided an “update” on Tesla’s India plans was in July 2021, when a Twitter user posted “@elonmusk please launch Tesla cars in India ASAP!”
Musk replied: “We want to do so, but import duties are the highest in the world by far of any large country!” Another reason for the delay, he said, was that India treats clean energy vehicles the same as diesel or petrol vehicles, “which does not seem entirely consistent” with its climate goals.
Click here for the full story of Tesla’s India foray.
Qatar Insurance Company, HNIs acquire stake in IPO-bound Oyo: The secondary transactions, in which nearly 1.43 crore equity shares as well as 2,500 preference shares changed hands at Rs 110 apiece, peg Oyo's valuation at around $9.56 billion. (read more)
Former Cognizant, Infor CEOs set up investment platform: Recognize, an investment platform that is singularly focused on the $2-trillion global technology services industry, has raised approximately $1.3 billion for its inaugural fund. (read more)
Early-stage dealmaking in India hit a crescendo in Q4 2021: India’s early-stage startups raised more capital in October-December 2021 than all of 2020, according to a CB Insights report. As many as 533 deals worth $10.3 billion were struck in the three months ended Dec. 31, 2021. (read more)
Also in this letter:
- Pepperfry will be ready to file for IPO in six months
- Discounts dry up on Swiggy, Zomato as orders surge
- Flipkart buys Yaantra, and other done deals
Thrasio to invest $500 million in India, says CEO
Thrasio, the US company that pioneered the model of acquiring private brands on Amazon and scaling them, plans to invest $500 million in India, which it sees as an important market in the long term, CEO Carlos Cashman told ET in an exclusive interview.
Thrasio has made its first acquisition in India, that of consumer durables brand Lifelong. We had in October first reported that the company was in talks to acquire Lifelong.
While the terms of the deal weren’t disclosed, Thrasio is said to have paid $150-200 million for the majority stake. A source told us the deal also includes a multi-year payout structure based on achieving certain milestones.
Lifelong cofounder Bharat Kalia, who will lead the operations for Thrasio in India, said the US-based firm is looking to acquire brands with an annual revenue of a few crores to Rs 100 crore, in categories such home & kitchen and health & fitness.
Cashman said this was the first time his three-year-old firm—with 200 brands under its belt already—had chosen to go with a local partner outside the US.
$500 million for starters: “This ($500 million) is frankly a baseline commitment. The Indian market is huge. It is way behind compared to the United States, Europe and elsewhere, but ecommerce is growing, marketplaces like Flipkart or Amazon are growing, and this dynamic around the world is increasing,” Cashman said. “Right now in India, the opportunity to acquire brands and put them together is not as great as in Europe and China, but it’s coming.”
Pioneer: Thrasio comes to India as companies inspired by its business model—also called ‘rollup ecommerce’—proliferate here. Two such firms, SoftBank-backed Globalbees and Falcon Edge-backed Mensa Brands, became unicorns last year.
More competition will be good for everyone, lead to more brands being acquired, and create liquidity for founders, Cashman said. “There have been 100 companies around the world who are funded to do what we are doing. I think that's a great thing. It’s great for entrepreneurs and they are getting exits.”
An idea whose time has come: The rollup ecommerce space in India saw increased traction in the second half of 2021, with several startups raising funds.
- In November, Mensa Brands raised $135 million to become the youngest company in India’s unicorn club of billion-dollar entities.
- In December, Globalbees too said it had become a unicorn after closing a $110 million funding round.
- In August, Upscalio raised $42.5 million in Series A funding co-led by Presight Capital.
- In August, Powerhouse91 raised an undisclosed sum from several global investors, including US-based FJ Labs.
- In June, 10Club said it had raised $40 million in one of the largest seed funding rounds in India. The round involved HeyDay, a competitor to Thrasio in the US.
Pepperfry will be ready to file for IPO in six months, says founder
Pepperfry is set to file its draft red herring prospectus in the first quarter of the next fiscal for an initial public offering (IPO), its founder Ambareesh Murty told us. He said the company was looking to raise $250-300 million in the offering.
‘Committed’ to IPO: “In six months we should be ready to file our DRHP (draft red herring prospectus),” Murty said. “We are committed to go for an IPO and all the work that is required for us to get there is already happening proactively.”
“We should be able to have the pieces in place by January end,” Murty added. He said the company is also in talks for a potential pre-IPO fundraise, but nothing has been finalised yet.
He did not comment on its current valuation and what it would aim for in the IPO. Pepperfry was last valued around $500 million when it raised funds in 2020.
The online furniture retailer, which reported a 10% drop in revenue in FY21 at around Rs 220 crore owing to the pandemic, has seen a good recovery in sales and is expected to close the current financial year with a 40-45% growth in revenue. The company’s gross sales are about four times its revenue, said Murty, who is also the CEO.
Tweet of the day
Discounts dry up on Swiggy, Zomato as orders surge
Discounts on Swiggy and Zomato are now few and far between, thanks to a steep surge in demand for food deliveries across states amid curfews and other Covid-related restrictions.
“With restaurants shut or operating under severe curbs, the aggregators too rework their business models and try to maximise profitability,” said AD Singh, managing director of Olive Group, which runs marquee restaurant brands such as Olive Bar and Kitchen, SodaBottleOpenerWala and The Grammar Room.
Yes, but: The chief executive of a premium Delhi-based restaurant chain said, “As and when the situation normalises and restaurants reopen, we expect the heavy discounts by aggregators to come back.”
Swiggy and Zomato did not respond to our queries but an executive at Zomato, who did not wish to be named, said the current drop in discounts was cyclical, after heavy Christmas and New Year discounts.
Survival mode: The two companies have long been at odds with the Rs 4.2 lakh-crore restaurant industry over the discounts they offer. But now, “delivery has become the only mode of survival,” said Sagar Daryani, chief executive of Wow! Momo.
MX Player scripting regional winners with 280 million MAUs: Report
MX Player, India’s entertainment super app, was recognised as the go-to platform to watch original content crafted exclusively for the Indian audience, said an industry report.
The CII-BCG report ‘Blockbuster Script for the New Decade’ said that with over 280 million monthly active users, MX Player was at the forefront of creating regional content to best cater to the demands of its users.
The study shed light on the immense resilience that the entertainment and media industry has shown during the pandemic. According to the report, innovations and new developments in the digital space will lead to more engagement and better adoption of OTT platforms, a development that will create more demand for regional content.
India’s media and entertainment industry is expected to grow to $55-70 billion by 2030 at a 10-12% CAGR, driven mainly by strong growth in OTT, gaming, animation, and VFX. The popularity of MX Player has been rising due to the high quality of content offered by the platform.
Infographic Insight
ETtech Done Deals
■ The Flipkart Group said it has bought Yaantra, an electronics refurbishment platform. The cash-and-stock deal is expected to be in the range of $40-50 million, according to people aware of the matter.
■ Turnip, an online gaming community platform, has raised $12.5 million in a funding round co-led by Greenoaks and existing investor Elevation Capital.
■ Agritech startup WayCool Foods has raked in $117 million in an ongoing Series D funding round that saw participation from new and existing investors.
■ Hair care startup Traya has raised $2.2 million in a funding round led by Fireside Ventures. Existing investors Kae Capital and Whiteboard Capital also participated.
■ YantraLive, a B2B platform for heavy equipment and parts, has raised $1 million in a seed round to upgrade its technology platform and launch new product categories to deepen its presence in India.
Musk’s tweet on India is a pressure tactic: govt source
Getting a foothold for Tesla in India isn’t proving easy for Elon Musk. “Still working through a lot of challenges with the government,” the billionaire wrote on Twitter on Thursday, replying to a user who wanted to know if there was any update on Tesla’s launch in the country.
Pressure tactic, says govt: Musk's tweet drew sharp criticism from the government. A source told ET, “With such tweets, Tesla is trying to put pressure on the government, and this is not the first time.” The source added that Musk was looking to get the government to reduce import duties without committing to produce Teslas in India.
“Tesla can bring in cars in CKD (completely knocked down) form with zero duty and assemble and sell them here. India has put in place a PLI scheme for the auto sector, particularly EVs, under which Tesla will get benefit if they produce here,” the source said.
The story of Tesla in India: Musk has been planning to bring Tesla to India since 2019 and the company made its first moves in 2021. But talks between Tesla and the government have come to a standstill over two main issues: high taxes and Tesla committing to set up a factory and manufacture cars in India.
In October 2020, Musk said the company would start selling imported cars in India “next year for sure”. But instead of selling cars in India, the company spent all of 2021 lobbying the government to reduce the exorbitant duties on electric vehicles. The company argued its cars would be far too costly at these rates and sales would be minuscule.
Two months after Musk’s October 2020 “promise”, union minister Nitin Gadkari said at a conference that Tesla would begin operations in India in early 2021. It officially entered India just over a week later, on January 8, 2021, when it registered a company named Tesla India Motors and Energy in Bengaluru.
Tesla’s request for tax cuts was first reported in July 2021, when sources told Reuters that the company had written to Indian ministries seeking a big reduction in import duties on electric vehicles. Soon after, Musk tweeted that Tesla was likely to set up a factory in India if successful with imported vehicles.
Meanwhile, local players such as Mahindra & Mahindra opposed Tesla’s request for slashing of duties, arguing that it would hurt investments in domestic manufacturing.
Deja vu: Incidentally, the last time Musk provided an “update” on Tesla’s India plans was in July 2021, when a Twitter user posted “@elonmusk please launch Tesla cars in India ASAP!”
Musk replied: “We want to do so, but import duties are the highest in the world by far of any large country!” Another reason for the delay, he said, was that India treats clean energy vehicles the same as diesel or petrol vehicles, “which does not seem entirely consistent” with its climate goals.
Click here for the full story of Tesla’s India foray.
Other Top Stories By Our Reporters
Qatar Insurance Company, HNIs acquire stake in IPO-bound Oyo: The secondary transactions, in which nearly 1.43 crore equity shares as well as 2,500 preference shares changed hands at Rs 110 apiece, peg Oyo's valuation at around $9.56 billion. (read more)
Former Cognizant, Infor CEOs set up investment platform: Recognize, an investment platform that is singularly focused on the $2-trillion global technology services industry, has raised approximately $1.3 billion for its inaugural fund. (read more)
Early-stage dealmaking in India hit a crescendo in Q4 2021: India’s early-stage startups raised more capital in October-December 2021 than all of 2020, according to a CB Insights report. As many as 533 deals worth $10.3 billion were struck in the three months ended Dec. 31, 2021. (read more)
Global Picks We Are Reading
- Netflix's Korean playbook for new subscriber additions (Bloomberg)
- Apple’s arrogant App Store decisions exposed by Wordle (Forbes)
- How I quit Amazon Prime and survived (NYT)
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