1. In the risk off market, investors prefer companies that offer sustainable profitability rather than bursts of hockey stick growth
2. Shoppers have started spending on high quality products - being influenced by international trends and social media. So companies serving specific consumer needs can achieve profitability sooner
3. Traditional players will acquire more young brands to cater to small-medium niches -> more opportunities for cash exits. E.g. Caratlane's acquisition by Titan, Oziva by HUL, Yoga bar by ITC
4. For a consumer brand, being a market leader is not necessary if the market is large enough. And companies can further enlarge their addressable markets through diverse offerings e.g. Honasa has Mamaearth + 5 brands
The D2C space is evolving faster than we had imagined.I never thought coffee at Starbucks price point is going to scale in India (Blue Tokai, Third wave).
What is yet to be seen is how these bets play for the VCs given their expectation of 50-100x returns in 7-10 years,
while brands typically take much longer to achieve a large outcome.
What do you think of this pivot by VCs?
This post was originally shared by Harsh Pokharna on Linkedin.