He has previously worked as COO at Dabur India Ltd., Operating Partner at India Equity Partners, CEO at Innovative Foods Ltd. and VP Corporate Strategy at Unilever.
Fireside Ventures is a $50 million, early-stage venture fund focused exclusively on millennial consumer brands across sectors. Apart from traditional FMCG sectors, the fund is looking for opportunities across the entire consumer wallet: lifestyle and fashion, home and interiors, consumer durables etc.
At the moment, Fireside Ventures has 17 portfolio companies that can be divided into three overarching categories: eating better, looking better and living better.
One of the most prominent recent trends in India is the emergence of food delivery services. Our market leaders in this branch are Swiggy and Zomato, however, there are many other smaller companies. It is exciting to watch how they evolve.
Platforms where you can order food started creating their own brands, they realized that people want to order food 24/7 and started creating food options for delivery. They have set up dark kitchens and invited brands to cook their food in these kitchens.
As a result, we have kitchens in the different cities, that can be used by 25-30 brands at the same time.
This approach changed the way startups are looking at scaling options: some young brands producing ready-to-cook packaged products understood that they could scale up faster if they opened a "dark" restaurant on one of the food delivery platforms.
There are many young people who live on their own and work long hours, they don’t want to cook when they come home. This segment grows rapidly, especially when it comes to big cities. At the same time, food aggregators are offering good deals; sometimes it is cheaper to order food than buy all the ingredients.
Delivery options are much more diverse: single people usually don’t have lots of stuff in their kitchens, so if you don’t want to eat staple food, delivery service is your go-to solution. However, when people get kids, their habits change and ordering food becomes less common.
For this consumer group, convenience has to come along with healthy food options and indulgence. The first wave of organic food in India emerged 6-7 years ago. It is also important to mention, that some 20% of Indians don’t eat meat and fish, quite a few also eliminate eggs from their diet.
As alternative protein sources are an issue on our market, quite a few brands, for instance YogaBar and Epigamia, are trying to produce protein-rich vegetarian food.
Younger and more affluent customers are concerned about health and nutrition values: many about 70% of consumers prefer natural and organic products across food and personal care. They try to avoid chemicals and preservatives, emulsifiers and stabilizers, which are allowed by food laws but have a bad reputation and potential side effects in the long term. The "natural ingredients" market makes up about one-third of the personal care market in categories like toothpaste while growing 2,5 times faster than the non-natural market does.
Indulgence is also a big thing: customers are looking for better taste and experience. One of our portfolio startups Tasty Tales produces traditional food recipes that everyone knows from their childhood. Millennials and young professionals have neither skills and time nor ingredients to cook these dishes. We partnered with food experts and R&D technologists to help Tasty Tales create authentic bases that will help young people reproduce the taste of their childhood. All they need to do is add water and veggies or proteins and put it on the stove for 10-20 minutes.
We are trying to work in both directions. One of our investments is Vahdam Teas — a home-grown export Indian tea brand.
The founder of Vahdam Teas Bala Sarda is the fourth generation in his family to run a tea business. Most of the Indian tea passes through multiple middlemen and reaches consumers after a few months thus losing its freshness and flavor.
Vahdam teas are bought directly from tea estates and then shipped directly to fulfilment centres worldwide. This way they get on the store shelves in different countries much faster.
Many Indian tea businessmen traditionally export tea in bulk large to foreign brands which then sell it under their own label. Bala Sarda got inspired by the example of Sri Lankan family tea company Dilmah and decided to create an international brand to showcase finest Indian tea blends.
Last winter, Oprah Winfrey named Vahdam Teas among her favourite gift options for holiday season which gave the product a great resonance.
Ayurvedic food gains momentum as we speak. According to Ayurvedic science, the body balance is affected by the food you eat. In our investment portfolio, we have Kapiva that targets modern Indian market with traditional Ayurvedic food, made convenient to consume.
These products are not only nutritious, they also have numerous therapeutic effects: Ayurvedic juices, for instance, stabilize blood sugar and blood pressure as well as improve digestion.
Ghee is also having a comeback: obtained from cream or butter, ghee contains good fats and can be easily digested by human body. It has been used in Indian cooking for a very long time. Ghee also helps to reduce cholesterol, improves the heart's functioning and reduces joint pain.
Kapiva produces A2 ghee from the milk of the indigenous breed of Tharparkar cows which are not factory-farmed and free from cross-breeding.
Snack market is on the rise around in the US and Europe as well as in India. Everyone wants to have a tasty and healthy snack that can be consumed on the go – a protein-rich snack bar or breakfast muesli that would be healthier than those from many other well-known brands. And many big brands cannot meet this demand – even though their products are cheaper, they are full of industrial sugar and preservatives and are nutrient-poor.
We have invested in Yoga Bar which makes snack and protein bars with only good-for-you ingredients and no preservatives. They have just launched their muesli and are getting a great response.
Low-income households are the category that is shrinking the most. The broadest category is middle and upper-middle income, that is where big companies focus their marketing activities. By 2030, the share of high- and middle-income households will reach 51% and the top 40 cities alone will have a $1,5 trillion consumption opportunity.
It is the most profitable for big companies to target those consumers and offer products with longer shelf life. You see, the Indian market is very special – we have millions of retail outlets and complex distribution systems. To make sure the products get to all the stores and don’t expire on the shelves, it is crucial to use preservatives.
At the same time, mass market leaves the premium segment out. The percentage of the premium segment is comparatively slow, but they consume a lot and keep growing. Many brands in our investment portfolio focus specifically on this segment. They can experiment with their products and make minimal profits for 4-5 years. For big brands it is unacceptable: they need to return their investment as soon as possible, it is not in their DNA to act like venture capitalists.
As a result, on a global scale, $17 billion in sales have shifted from larger players to smaller and more flexible CPG brands since 2013.
By that time, we should have a strong consumer franchise in place. We expect to see our brands hit $15-20-million revenue in 4-5 years from our investment. It is a good number for India. Once they have established a strong consumer franchise and built a good organisation, they should be competitive.
This is true, the cost of data in India is one of the lowest in the world which leads to extensive use of smartphones. Indians are browsing many websites and do a lot of shopping on mobile. E-commerce is growing rapidly, however customers still prefer paying cash upon delivery to credit card payments.
Now, when it comes to food, people rarely order it online. Indians are used to do convenience shopping for home daily, there are grocery stores everywhere. It is also connected with local culture: Europeans make their plans in advance, while Indians are very spontaneous. They don’t stock up and prefer to buy fresh produce every day on their way home.
Experiments are underway — so far rather at the local scale — with apartment buildings having vending machines with all the basic daily necessities — bread, eggs, milk. You can wake up in the morning and just go downstairs to grab all you need.
So, in this case, why would I wait one-two days to get my groceries delivered? Players like local grocery retailer Big Basket understand this issue and try to cut down delivery time and offer a same-day delivery within a selected 2-hour slot. Amazon also acquired a chain of supermarkets and is now delivering within 2 hours. This is a good option for people who are hard-pressed with work and have no time to go shopping.
First of all, we support startups with their go-to-market strategy. We have facilitated close interaction between Amazon and our portfolio companies to help them resolve issues and learn how to use the marketing tools that Amazon provides. We also worked with Big Basket to create an accelerate program with them, as their shopper is our typical millennial.
We are speaking to prominent brick and mortar retailers to understand how we can create a win-win relationship for them with our companies.
Many of our entrepreneurs come with good product ideas. Our partner consultants and agencies work closely with Fireside Ventures to help our portfolio companies convert their great products into powerful brand strategies, involve influencers and celebrities for their marketing activities, create high-quality packaging and websites.
In the area of corporate governance, we have two of the big four audit firms audit all our companies, help them establish the processes, explore matters of taxation, develop best practice templates for key policies. While many of our companies use equity to fund working capital, we introduce alternative financing sources such as venture debt and bank finance.
We also invite mentors to share their stories and experience with the startup founders. For example, we invited the founder of FMCG company Marico Harsh Mariwala. He started his company from zero in the 1980s and made it worth several billion dollars.
Another speaker is Aditya Gosh, ex-President of Indigo Airlines, India’s largest passenger airline. It was amazing to learn how they built from scratch such a large profitable airline, known for its punctuality and good reputation.
We look for ideas in emerging spaces which could become very large. For example, we find Kapiva very interesting because there is a strong return-to-roots movement in India which has great potential.
Our potential portfolio company has a strong founding team, is committed to building a large business brand based on strong consumer insights and is open to the kind of partnership that Fireside Ventures uniquely provides.
The NX-Food visual branding and website are developed by dombek—bolay and Naasner Office, in close collaboration with the NX-Food team.