Fireside Ventures, the earliest institutional investor in the omnichannel retailer, cumulatively invested Rs 29.1 crore, and has raised Rs 258 crore from the initial public offering (IPO) alone. The consumer-focussed venture capital firm sold Honasa Consumer shares worth Rs 547.4 crore, and is still sitting on unsold investments worth Rs 821.49 crore.
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Following the listing, Kanwaljit Singh, founder and managing partner of Fireside Ventures, told ET, “For Fireside this is a great validation of the opportunity to build iconic and responsible new age brands and will surely inspire an entire generation of entrepreneurs. The next milestone is to see a truly global brand coming from India for the world.”
“We are seeing growing investor interest, both for direct investing in consumer brands and also in consumer-focused funds like Fireside. While the journey of Mamaearth has truly been inspiring, we are also seeing many new age brands able to scale faster and in a capital efficient manner,” he added.
Another early investor in Honasa Consumer – Stellaris Venture Partners – that cumulatively sold a stake worth Rs 437.3 crore, including Rs 355 crore through the IPO, had invested Rs 27.2 crore. Rahul Chowdhri, partner, Stellaris Venture Partners, said the IPO milestone for Mamaearth settled the noise around direct-to-consumer (D2C) brands, and provided validation that entrepreneurs could build large, profitable businesses in a short period of time.
“It showcases a playbook for D2C entrepreneurs on being contribution margin 2 positive which will help them hit an inflection point, on growth happening after a product market fit, building a house of brands strategy, and the importance of building a brand in the first place,” Chowdhri said.
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Contribution margin 2 refers to the margin a brand makes after reduction of cost of goods and other variable costs such as logistics, warehousing, payment gateway fees, among other operational spends undertaken to deliver the product.Angel winners
The Honasa Consumer IPO also turned out to be a winner for some of the company’s earliest believers. At the issue price of Rs 324 per share, angel investors including Snapdeal founders Kunal Bahl and Rohit Bansal saw a return multiple of over 100 times on the per share weighted average acquisition cost of Rs 3.21 per share.
Through the IPO, Bahl and Bansal together raised Rs 78 crore, while they continue to hold stakes worth Rs 80.5 crore in the company. The two Gurugram-based investors, who now run early-stage venture capital firm Titan Capital, have cumulatively invested Rs 2.4 crore in Honasa.
“It’s a fantastic feeling because you see the journey of the founding team’s development and the company’s culture developing, going from a few hundred customers to millions of customers. Given that we have seen the same journey as founders, we can empathise with a lot of what goes in on the inside. (Founders) Ghazal and Varun have made it look a lot easier than it actually is,” Bahl told ET.
Other significant angel investors – Marico’s Rishabh Mariwala and actor Shilpa Shetty Kundra – also sold stakes in the IPO worth Rs 185 crore and Rs 45 crore, respectively. Mariwala has cumulatively invested Rs 6 crore in the company, while Shetty Kundra invested Rs 8 crore. Following the IPO, they continue to hold stakes worth Rs 115.36 crore and Rs 7.77 crore, respectively.
Unrealised gains
In 2022, Honasa Consumer entered the unicorn club, and continued to be one of the youngest unicorns, or privately-held startups with a valuation exceeding $1 billion, until it went public.
The company raised money from Sequoia Capital (now Peak XV Partners). The venture capital firm, which did not sell its stake in the IPO, holds a stake worth Rs 2,519.76 crore as per Tuesday’s closing price. According to Tracxn data, it had cumulatively invested Rs 671.8 crore in the company, making the investor’s unrealised gains at 3.75 times the cumulative investment.
Peak XV is the single largest investor in Honasa Consumer.
Similarly, Evolvence India, which entered the company’s cap table in the Series C funding round in July 2021, has invested a cumulative Rs 96.5 crore, and is now sitting on unsold stake worth Rs 115.74 crore. The investor had earlier chalked up plans to sell a part of its stake in the Honasa Consumer IPO, but later opted out of the offer for sale.