Sixth Sense Ventures News
- Consumer businesses are potentially disruptive, not innovative, says founder and CEO of Sixth Sense Ventures
Bhavik Nair | The Financial Express | Aug 03, 2018
Sixth Sense Ventures, which is in the process of raising Rs 350 crore for its second fund, SSIO-II, believes consumer-centric companies will increasingly be the disruptors.
Sixth Sense Ventures, which is in the process of raising Rs 350 crore for its second fund, SSIO-II, believes consumer-centric companies will increasingly be the disruptors. SSV founder and CEO Nikhil Vora tells FE’s Bhavik Nair that newer players continue to capture a disproportionate share of the growth. Excerpts:
Many young entrepreneurs are taking on established players…
The potential to disrupt is huge because the consumer business in India has been very static for the last 50-70 years. That is why the bigger companies grew larger; not because of their brands but on the back of the distribution strength. This is now being dismantled with distribution channels opening up and you will see many new brands which now have shelf space. We see a lot of hyper competition in the consumer branded space over the next 5-10 years. It’s happening in various categories such as liquor, dips and sauces, foods, personal care. All consumer companies work on a minimum 35-40% return on net worth, a very high return. Everyone works on an operating margin of 20%-plus.
We have seen many disruptions in IT. How do you see that in the consumer-centric space?
What you see in tech businesses are not so much of a disruption, but innovations. However, consumer businesses are potentially disruptive and not innovative. A Fogg was not an innovation but they disrupted the deodrant category. A Go Cheese was not a disruption in the value-added dairy category; they got shelf space against an Amul on one side and a Nestle on the other side, which I think was a disruptive element. So, I think you will see a lot more brand disruptions happen and the challenge for leaders is that they hate to create disruptions on their own. While the leaders will continue to grow, thanks to the entire size of the market, there is also a disproportionately larger growth that is getting captured by the newer players.
You are saying: “You only require capital twice!” Does that stand true even now?
Completely true! In all my years in the consumer space, I haven’t generally seen a business in the consumer domain which requires perpetual funding. If the businesses grow, they won’t require capital again. The moment a business gets funded on its own, there are enough cashflows to support its existing businesses. There are very few consumer businesses which in their life-cycle journey will require capital. You look at any listed consumer company in this country, not a single company would have raised capital. That is true even for private companies which have scaled up.
How are you so convinced about SaffronStays in the micro-hospitality segment when there is an Airbnb out there?
There are two things when we looked at investing in SaffronStays. One is this premise that property seduces. Everyone who has excess capital possibly has a second home somewhere. While they buy the second home, it is not a yield-generating asset and it is not even being properly maintained and used. What SaffronStays does is it to take all these properties and give them a premium look and feel. We have been able to manage close to 50 bungalows and we think it will become 500 in three years. We believe that people want to travel in groups. The ability to standardise the locations and create a premium feel and at some stage soon, create a membership model is something that we are excited about.
Are valuations as high in the private space as they are in the listed consumer space?
First, we have to understand why the consumer businesses are expensive. Fundamentally, consumer businesses get funded only twice — at seed stage and at growth stage. If it requires funding a third time, it is not a consumer business. When a business’s requirement of capital is only twice in its life cycle, it becomes a seller’s market because it is not in any desperation to raise capital. Consumer companies don’t require capital after a certain level of growth. If they don’t require capital, then the only way for a potential investor to buy into a consumer company is to buy out an existing investor or put in the value at a much higher level. Therefore, the value of these businesses becomes expensive. As far as the private space is concerned, the valuation is almost similar compared to the listed space. Sometimes, a sheer scarcity premium makes the private space a bit more expensive.
- Sixth Sense expects to raise Rs. 100 Cr in next two months for its second fund
Bhavik Nair | The Financial Express | Aug 02, 2018
The fund, named SSIO-II, has a size of Rs 350 crore. The fund has already received commitments worth Rs 250 crore so far.
Sixth Sense Ventures, a consumer-centric venture fund founded by Nikhil Vora, former managing director at IDFC Securities, is expecting to raise `100 crore in the next two months for its second fund, named SSIO-II, which has a size of Rs 350 crore. The fund has already received commitments worth Rs 250 crore so far.
“We have already received commitments worth Rs 250 crore from almost 70 investors. We will hit Rs 350 crore in the next two months. We are just three months into it right now and we have done six investments. By August, we would have invested Rs 75 crore,” said Vora, founder and CEO of Sixth Sense Ventures.
The SSIO-II fund, which will have an average investment ticket in the range of Rs 15-20 crore, is looking to make investments in 14-15 different firms, of which six have already received investments. These six firms belong to a diverse set of segments like education, logistics, healthcare, oral care, packaging solutions and hospitality.
SSIO-II’s latest investment, of $2 million, is in a company named SaffronStays, which curates and manages hospitality operations, reservations, branding and marketing for private vacation homes owned by high net worth individuals (HNIs).
Sixth Sense Ventures’ first fund SSIO-I had made investments in 10 companies —two of which are in the listed space while eight are private. The firm claims that 90% of the participants in the maiden fund have also invested in the second fund.
SIDBI, which had invested close to Rs 23 crore in SSIO-I, has committed Rs 50 crore in the second fund, Vora explained.
“In the first fund, SIDBI had the first right on capital and had capped its return at 14% internal rate of return (IRR). In the second fund, SIDBI has committed `50 crore. Here they are not capping their returns. We have exited one investment — JHS Svendgaard Laboratories. This was our smallest investment. We sold it at 7x and that’s how we have returned money to SIDBI,” he told FE.
The rest of the investors in the SSIO-I fund will be receiving their money in the next six months, Vora added.
SSIO-I, which had a size of Rs 120 crore and participation from 45 investors, has been closed for investments for almost a year now. Over the next few years, the fund will be focussing on exits, of which the first is likely to come in the next three to four months.
“I think there will be at least four to five investments which will be ripe for exit in the next couple of years. I think there will be one large divestment in the next three to four months,” Vora indicated.
- Exclusive: Nikhil Vora-led Sixth Sense Ventures invests in micro- hospitality startup
Joseph Rai and Debjyoti Roy | VCCircle | Jul 17, 2018
Sixth Sense Ventures has struck a new deal in the country’s growing micro- hospitality sector, Nikhil Vora, founder of the consumer sector- focussed venture capital firm told VCCircle.
The VC firm has invested in SaffronStays, Vora said without disclosing the investment amount. However, a person close to the transaction said that the deal value was $2 million.
The company will use the funds to boost its growth, hire talent, and expand its inventory in a growing micro-hospitality industry that could be pegged at $40 billion, said Vora.
SaffronStays, which was launched by Devendra Parulekar and Tejas Parulekar in 2015, curates and manages hospitality operations, reservations, branding and marketing for private vacation homes owned by high-net-worth individuals (HNIs). The company currently operates 45 homes across six states in the country and hosts over 1,500 guests every month.
SaffronStays has expanded from five employees to 22 in two years and has also trained over 150 caretakers, supervisors, managers, and housekeeping staff members across the country, with a dedicated training centre in Ulwe, Maharashtra.
“Sixth Sense Ventures’ experience with consumer-facing businesses is something we will heavily lean on in our next growth stage,” said Tejas, co-founder, SaffronStays.
The premium homestay market in India is expected to grow as Indian travellers are on the cusp of becoming experiential and demanding by looking for unique travel experiences, said Vora.
“Weekend plans to de-stress and bond with families and friends have been largely trending in cities, and premium homestays located within 3 hours from city limits make for the most preferred short holiday destinations,” added Vora.
Homestays have become an alternative to hotels for travellers and large online hotel aggregators such as MakeMyTrip and Yatra have entered this space.
The sector has also seen challenges as last year the shutdown of homestay aggregator Stayzilla, once touted as India’s Airbnb and backed by venture capital firms Nexus and Matrix Partners, triggered discussions on the pointless pursuit of discounts-based growth over unit economics and the rat race of valuations.
Sixth Sense Ventures
The VC firm’s first fund had a corpus of Rs 125 crore with investments in 10 companies. These include gaming arcade operator Smaaash Entertainment Pvt. Ltd; Hindustan Foods Ltd, which makes PepsiCo Inc.’s Kurkure snack brand; oral care products company JHS Svendgaard Laboratories Pvt. Ltd, and hyperlocal logistics service provider Grab.
The second fund has a target corpus of Rs 350 crore ($54 million) and was aiming to mark the first close by March this year.
Sixth Sense made two investments from its second fund in March – AVG Logistics and Eupheus Learning.
Last month, the VC firm marked its foray into the healthcare sector by investing in Fullife Healthcare Pvt. Ltd, which sells sports nutrition supplements under the brand Fast & Up.
Vora also invests in his personal capacity. His most recent bet was in a Mumbai-based specialty food ingredients maker. Some of his other investments include glitter-powder maker Advance Syntex Ltd; Fogg deodorant maker Vini Cosmetics; sanitary napkins maker Soothe Healthcare; sports-focussed digital display solutions firm Technology Frontiers; and aircraft maintenance and repair company AirWorks, to name a few.
Vora was also an early investor in One97 Communications Ltd, the parent of digital wallet firm Paytm. He sold his stake in One97 to Chinese e-commerce giant Alibaba in May last year, reaping almost 75-fold gains.
Around the same time, he exited Kangaroo Kids Education Ltd when it was acquired by EuroKids International Pvt. Ltd.
- SaffronStays raises about $2M funding from Sixth Sense Ventures
Supraja Srinivasa | ET Tech | Jul 17, 2018
SaffronStays curates and manages hospitality operations, reservations, branding and marketing for private vacation homes owned by high networth individuals
Micro-hospitality startup SaffronStays has about $2 million from consumer-centric venture capital firm Sixth Sense Ventures. The pre-series A investment marks the first institutional round into the firm and will help SaffronStays expand the number of holiday properties under its platform.
Founded in 2015 by Devendra and Tejas Parulekar, SaffronStays curates and manages hospitality operations, reservations, branding and marketing for private vacation homes owned by high networth individuals. The firm currently operates 45 homes across six states in India and claims to host over 1,500 guests every month.
“We are excited to have Sixth Sense Ventures as our partners in our entrepreneurial journey. We hope to use this money to expand our footprint, work on innovative business models, strengthen our operations and improve our technology backbone,” said Devendra Parulekar, Founder of SaffronStays. As part of this investment, Nikhil Vora, Founder & CEO of Sixth Sense Ventures will join the board of SaffronStays.
Hospitality being a high margin sector, SaffronStays claims to be cash flow positive at a unit level even as it clocks about Rs 5 crore in annual revenues.
“The Indian travel market is massive and yet underserved. We believe that SaffronStays is very well equipped to capture this market with its exclusivity and well-curated offerings and parallely create an opportunity for homeowners to monetize their most valuable and expensive asset,” said Vora on the investment.
Currently operational around Mumbai, Pune, Goa and a few locations around Uttarakhand, Rajasthan and Tamil Nadu, the firm is looking to scale to about 125 properties by the end of 2018 even as it looks to scale to over 1,000 homes over the next 5 years.
- Consumer focused VC fund Sixth Sense puts Rs 15 crore in Fullife Healthcare
Supraja Srinivasan | Economic Times | Jun 21, 2018
Marking its first investment in the nutrition and healthcare space, consumer focused venture capital fund, Sixth Sense Ventures has invested about $2 million (between Rs 10-15 crore) in Fullife Healthcare which sells sports nutrition supplements. The investment will see Sixth Sense pick up a 10% stake in the 5-year-old company which also counts veteran market investor Rakesh Jhunjhunwala as its angel investor. Jhunjhunwala had invested about Rs 25-30 crore in the firm about 3 years ago.
Founded by Satish Khanna, the former group president of healthcare firm Lupin, Fullife Healthcare sells sports nutrition supplements with a focus on innovative delivery patented formats.
The firm sells its products across 20 countries and has been scaling its growth in India in the emerging ‘active life’ segment under the brand ‘Fast & Up’. “Fullife is among the first players in the nascent category of sports nutrition i in India. While globally the market is about $45 billion, in India it is less than $400 million. The capability to be a first mover in such a market offers Fullife the opportunity to grow to an Rs 500-700-crore business over the next 3 years,” said Nikhil Vora, CEO of Sixth Sense Ventures.
Post this investment, the promoters along with Rakesh Jhunjhunwala and Sixth Sense Ventures will be the lead shareholders in the firm. Currently, non-Indian markets form the bulk of Fullife Healthcare’s revenues with products being marketed globally. However, the firm has also been building its distribution channels in India through nutrition shops and organised pharma chains to enable steady supply of its products here.
This will aid the firm to reach its target revenue of Rs 75-80 crore in FY19 having clocked about Rs 50 crore in FY18. Currently, products under Fast & Up are being used by the Indian Cricket team even as the firm has begun approaching global soccer leagues for usage of its supplements.
- Sixth Sense back sports nutrition co
TNN | Jun 21, 2018
Domestic consumer-centric venture fund Sixth Sense Ventures' Nikhil Vora has joined India's ace investor Rakesh Jhunjunwala as co-investor in former Lupin president Satish Khanna's Fullife Healthcare, a Mumbai-based nutrition company focused on the fast-growing preventive healthcare and active living segment.
After the transaction, the three lead shareholders - the Khanna family, Jhunjunwala and Sixth Sense - will be promoters in the company. Sixth Sense will own a stake of around 10% in the company. Its first fund Sixth Sense India Opportunities - I has completed 10 investments, while it has closed two investments from the second fund so far.
Sixth Sense Ventures has invested around $3 million in Fulllife.
- Sixth Sense (SSIO-II) makes its 2nd investment; takes 11% stake in AVG LOGISTICS
Keshav Sunkara | VCCircle | Mar 29, 2018
Third-party logistics services provider AVG Logistics Ltd has raised Rs 9.41 crore ($1.45 million) as anchor investment from consumer-focussed venture capital firm Sixth Sense Ventures ahead of its initial public offering.
The VC firm’s second fund, Sixth Sense India Opportunities II, picked up 8,79,600 shares—or an 11% stake—in AVG Logistics at Rs 107 apiece, according to a stock-exchange filing.
The logistics company is listing its shares on NSE Emerge, the stock exchange’s platform for small and medium enterprises. The offer opened on Wednesday and closes on 3 April. The company has set a price band of Rs 105-107 per share.
Sanjay Gupta, managing director and CEO at AVG Logistics, said Sixth Sense Venture’s expertise, reach and deep understanding of the consumer sector will help the company scale its business.
“The business is totally consumer-sector driven, which makes it extremely sticky,” said Nikhil Vora, founder of Sixth Sense.
Founded in 2010, Delhi-based AVG Logistics offers transportation, warehousing and value-added services.
As on 30 September 2017, the company had warehouses in Modinagar, Ghaziabad, Delhi and Panipat with total space of 3,54,000 sq ft. It has 49 branches across the country.
The company made a net profit of Rs 4.43 crore on revenue from operations of Rs 194.74 crore for the year through March 2017. Clients from the fast-moving consumer goods segment accounted for 57.2% of total revenue.
This is the second investment by Sixth Sense Ventures’ second domestic fund.
The fund made its debut investment earlier this month, backing Eupheus Learning. The education company develops textbooks and their digitised versions to integrate class and home learning.
The second fund, which has a target corpus of Rs 350 crore ($54 million), was aiming to mark the first close by March-end. However, Vora had said that the fund size might increase as talks with a few foreign investors were on.
Sixth Sense had raised Rs 125 crore in its first fund. It backed 10 companies, including gaming arcade operator Smaaash Entertainment Pvt. Ltd, Hindustan Foods Ltd, JHS Svendgaard Laboratories Pvt. Ltd and hyperlocal logistics service provider Grab.
- Exclusive: Sixth Sense Ventures’ 2nd local fund closes debut deal
Debjyoti Roy | VCCircle | Mar 19, 2018
Sixth Sense Ventures’ second domestic fund has made its first investment, a top executive of the consumer-focused venture capital firm told VCCircle.
Founder and chief executive Nikhil Vora said his firm has backed Delhi- based Eupheus Learning, which develops textbooks and their digitised versions to integrate class and home learning.
Sixth Sense has picked up a significant minority stake in the company, said Vora, not disclosing the investment amount. He added that he has joined the board of Eupheus as part of the transaction.
Commenting on the investment, Vora said, “We like the edu-tech space as it offers perpetual demand. We like Eupheus because of its strong and experienced promoter backing and it being the only unique player to have seamlessly integrated class-learning and home-learning solutions.”
Eupheus, operated by Proficiency Learning Solutions Pvt. Ltd, claims to have presence in over 1,500 schools. The clientele list includes Narayana Group of Educational Institutions, GD Goenka Group, and Delhi Public School Society.
Eupheus currently offers textbooks in 10 subjects (English, maths, general knowledge, environmental science, and others) for students of classes one to eight. It offers the same textual content in digitised version. The ed-tech firm seeks to develop its offerings in terms of subjects and classes both.
The services are offered on a subscription basis, and the solutions can be bought in a bundle or as standalone units.
“We have a readiness of will for learning solutions and with Sixth Sense this shall get further sharpened for curated solutions, which shall serve the fundamental needs of Indian K-12 space (kindergarten to class 12),” said Sarveshwar Shrivastava, co-founder of Eupheus.
The company has in the recent past partnered several global institutions to bolster its presence in the K-12 learning space, such as World Book Inc., RoboGarden Inc., Sanako, Fiction Express and Primo Toys.
Around 40 people, including the founders, Shrivastava, Rohit Dhar, Ved Prakash Khatri and Amit Kapoor, moved out of global education company Encyclopaedia Britannica and invested out of their pockets to launch the venture, Eupheus, in June 2017.
Shrivastava, a graduate of University of Illinois, had worked with General Electric, Corning, Telecom Australia, NIIT, Pearson and Encyclopaedia Britannica before launching the venture.
Dhar started his career as a teacher after completing his post-graduation in 1988 and was Shrivastava’s colleague in Encyclopaedia Britannica.
Khatri has over two decades of experience as sales executive in the K-12 publishing industry space. He has been associated with publications such as Ratna Sagar and Oxford in the past.
And Kapoor, a graduate of TA Pai Management Institute, earlier held the position of director, digital sales, at Encyclopaedia Britannica South Asia.
Sixth Sense’s new fund
The second fund, which has a target corpus of Rs 350 crore ($54 million), was supposed to mark the first close by the month-end.
However, Vora said that the fund size may increase as talks with a few foreign investors were on.
The firm, which is planning to deploy money in 12-15 companies from the new fund, will maintain its consumer-focused theme.
Sixth Sense had a target corpus of Rs 125 crore for its first fund and had backed 10 companies, including gaming arcade operator Smaaash Entertainment Pvt. Ltd, Hindustan Foods Ltd, PepsiCo Inc’s Kurkure snack brand, JHS Svendgaard Laboratories Pvt. Ltd and hyperlocal logistics service provider Grab.
Nearly 50 investors, including family offices and high net-worth individuals, besides Small Industries Development Bank of India, had come in as limited partners for the first fund. Vora said that the fund has started giving returns to investors.
Vora was recently reported to be investing in his personal capacity in Gujarat-based Advance Syntex Ltd, that makes glitter powder and polyester film. He was an early investor in One97 Communications Ltd, the parent of digital wallet firm Paytm. He sold his stake in One97 to Chinese e-commerce giant Alibaba in May last year, reaping almost 75-fold gains.
Around the same time, Vora also exited his investment in Kangaroo Kids Education Ltd, when the operator of pre-schools and K-12 schools was acquired by EuroKids International Pvt. Ltd.
Vora is also an investor in Fogg-deo- maker Vini Cosmetics, which raised funds from private equity firm WestBridge Capital Partners in September 2017. He has also invested in Noida-based Soothe Healthcare Pvt. Ltd, the firm behind Paree brand of sanitary napkins.
Besides, Vora has invested in Avigo Capital-backed sports-focused digital display solutions firm Technology Frontiers and aircraft maintenance and repair company AirWorks, which is backed by private equity firms New Enterprise Associates and GTI Capital.
Deals in ed-tech space
Other ed-tech startups that have raised funds recently include Toppr, which secured $100,000 (Rs 65 lakh) last month as part of an extended Series B round from Hong Kong- based early-stage investor Axis Capital Partners.
In the beginning of this month, Buddy4Study raised $3 million (Rs 20 crore) in a Series A round from existing investor CBA Capital, which is backed by the Michael and Susan Dell Foundation.
In early February, CollegeDekho raised $2 million (Rs 13.2 crore) in its third round from London-based Man Capital LLP, Girnar Software and others.
Last month, Pune-based ed-tech startup Rubix108 Technologies secured $1 million (Rs 6.5 crore) in a pre-Series A round led by Polaris Fund.
Bengaluru-based iNurture raised Rs 28 crore in a Series C round led by Ventureast in the last week of January.
Aeon Learning Pvt. Ltd raised $3.2 million (Rs 20.43 crore) in a Series B round from MEMG Family Office LLP in the last week of January.
- Sixth Sense buys into Sachin-backed Smaaash
Avik Das | TNN | Nov 27, 2017, 05:16 IST
Domestic consumer focused venture capital fund Sixth Sense Ventures has struck possibly pre-IPO deal with Smaaash, the country's largest network of in-city family entertainment centers owned by Shripal Morakhia and cricket legend Sachin Tendulkar.
Smaaash Entertainment, co-owned by former owner of SSKI-Sharekhan Shripal Morakhia and former cricketer Sachin Tendulkar, is known for its sports simulation technology and proprietary gamification technologies such as a unique twilight bowling zone, motor racing and bike racing simulators and the go-karting tracks in Mumbai and Gurugram.
"Smaaash is uniquely positioned to fulfil the latent demand of family entertainment within city boundaries, which is almost non-existent and there is a huge first mover advantage with limited free space, increasing urbansition and higher disposable income," Sixth Sense founder and CEO Nikhil Vora said. Sixth Sense is said to have invested just under Rs 30 crore though the the investment figurewas not disclosed officilaly.
Smaaash operates 30 centers with six lakh sqft of entertainment zone across top Indian metros and had recently acquired blue0 entertainment, a bowling venture from PVR Cinemas and Major Cineplex. Smaaash is said to be consider an IPO sometime in 2018.
- Sixth Sense Ventures, India’s first consumer centric domestic venture fund, has taken a minority stake in India’s largest family entertainment centre, SMAAASH.
Sixth Sense Ventures, India’s first consumer centric domestic venture fund has announced a minority stake in SMAAASH – India’s largest family entertainment centre, marking the 10th investments from the fund. SMAAASH is promoted by Shripal Morakhia, who has built some of the most iconic Consumer and Financial services brands in India – SSKI, Sharekhan, YOBOHO, Amar Chitra Katha and iDream Productions. SMAAASH is at the epicentre of Entertainment with a Pan-India presence of 30 centres as also global footprints in USA and China and the Gulf. Within 4 years of launch, SMAAASH today symbolises a gaming and entertainment centre that marries Sports, Virtual Reality, Music, Dining in an immersive, interactive and innovative experience for family and friends. SMAAASH has done aggressive investments in R&D on Game developments with a number of patents filed for Virtual and Augmented Reality in areas of Sports including Cricket and Football.
“While the world believes that I have been a successful entrepreneur, I believe that my journey has not even been half complete. In SMAAASH, there is a feeling that we have cracked a space which has tremendous latency and yet is almost unexplored. Having a partner investor like Sixth Sense and Nikhil almost vindicates that feeling. Our journey has just started, we wish to evolve with the Consumer needs and expectations and we could not have hoped for a better choice of investor who understands consumer behaviour. SMAAASH has always been fortunate to have like-minded eco-system partners such as Star Sports and Sachin Tendulkar and I would like to welcome Sixth Sense into that fold. I believe that we have put most of the building blocks in place and now look forward for an elevated level of performance on all parameters. I find it satisfying that the games developed by your company SMAAASH finds its way to the most demanding markets of the world including USA and China”...stated Shripal Morakhia, Founder of SMAAASH Entertainment.
“Our belief is that SMAAASH is uniquely positioned to fulfil the latent demand of the new age consumer. Family Entertainment within city boundaries is almost non-existent and there is a huge first mover advantage with limited free space, increasing urbansition, higher disposable income and limited alternate entertainment avenues. SMAAASH sits in extremely well with our philosophy of investing in the ‘Consumer of Tomorrow…Today’. There are very few entrepreneurial giants in India and I believe Shripal Morakhia is one of them, who has always followed his heart, whilst building a commercially relevant venture. I believe SMAAASH will have an extremely interesting journey, which potentially will encompass; being an entertainment player with an compelling Product proposition and a futuristic global gaming play. We like the Space, we like the Sponsor and we like the Opportunity”… stated Nikhil Vora (Founder & CEO) of Sixth Sense Ventures
Nikhil Vora joins the Board of SMAAASH Entertainment.
Sixth Sense Ventures (SSIO-I) portfolio now includes
1. JHS Svendgaard – India’s largest Oral Care Contracting company and creating its own brand, “AquaWhite”.
2. Hindustan Foods – Fastest Growing Contracting player for MNCs.
3. Veeba Foods – Lead Brand in the Sauce and Condiments category.
4. LEAP India – India’s dominant play in the Consumer Supply Chain segment.
5. Soothe HealthCare – Emerging player in the Femine Hygiene and Diapers category
6. ETHOS – India’s largest player in the Luxury Watch segment
7. GRAB-a-Grub - India’s first and leading player in the last mile logistics space
8. CrossRoads India – India’s largest player in Road Side Assist
9. Weddingz.in – India’s largest Weddings company – marketplace model
10. SMAAASH Entertainment - India’s largest family entertainment centre
- Sixth Sense Ventures in talks to buy stake in Veeba Food Services
September 14, 2017
Sixth Sense Ventures, an early-stage consumer-sector-focused fund, is in talks to buy a small stake in condiments and sauce company Veeba Food Services Pvt. Ltd, in a deal valuing the company at over $100 million (about Rs650 crore), two people aware of the development said.
Incorporated in 2013, Veeba Food supplies sauces and dips to restaurants and fast-food chains including KFC, Pizza Hut, Burger King, Taco Bell, Domino’s and Starbucks. The company was started by Viraj Bahl, the former head of packaged foods firm Fun Foods, which was sold to German food maker Dr Oetker in 2008.
“Sixth Sense Ventures is in talks to acquire a small stake in Veeba, through a secondary share purchase. A couple of the early backers, angel investors, of the company are looking to sell their shares to Sixth Sense,” said one of the two people cited above, requesting anonymity as the talks are private.
The transaction, which will value the company at around Rs700-800 crore, is expected to be closed soon, he added.
Veeba Food has been tweaking its business model from a 100% business-to-business (B2B) supplier of condiments and sauces to launching several products under its own Veeba brand through modern retail and online channels, according to the second person mentioned above. “They are attracting significant investor interest given their focus on both the B2B and B2C segments,” he added.
B2C refers to business to consumer.
Veeba’s retail product range includes mayonnaise, sandwich spread, Italian sauces, salad dressing, dips and mustard sauce.
An email sent to Veeba founder Bahl on Tuesday did not elicit any response.
“Sixth Sense is a consumer-focused fund and we have invested significantly behind brands of tomorrow. We are evaluating a couple of investments in the space and will disclose the same when closed,” said Nikhil Vora, founder of Sixth Sense Ventures.
Sixth Sense is not the first investor to bet on Veeba.
In October 2016, Veeba Food raised $6 million in a Series B round of fundraising from venture firms Saama Capital and Verlinvest.
Earlier in 2015, the company raised $6 million from DSG Consumer Partners and Saama Capital.
Other investors too have bet on this space.
In June 2016, Cremica Food Industries Ltd, a Ludhiana-based food products firm, raised $15 million from Rabo Equity Advisors Pvt. Ltd, which manages the India Agri Business Fund II.
Cremica, known for its sauce, condiments and snacks, is looking to achieve sales of Rs1,000 crore by 2020, the company said in a statement announcing the investment.
- Sixth Sense Ventures buys stake in Sauce and Condiments company, Veeba Food Services Private Ltd.
Veeba Food is the lead player in the S&C categories and offers its consumers the freshest and the most authentic flavours, through a pan-India distribution network. It serves some of the largest B2B players in the QSR network like KFC, Pizza Hut, Domino’s, Starbucks, Burger King, Taco Bell etc. Veeba ensures that its procurement are the finest and most authentic ingredients from across the globe and manufactured in global scale manufacturing facilities. Veeba’s retail product range includes mayonnaise, sandwich spread, Italian sauces, salad dressing, dips and mustard sauce. Veeba is led by the former founder of Fun Foods (which was later sold to German Foods major Dr Oetker), Viraj Bahl.
Stated Viraj Bahl, Founder & CEO of Veeba Foods, “We are elated to have Sixth Sense and Nikhil Vora to be part of our growth journey and part of our ecosystem. We do believe that Sixth Sense has an interesting consumer experience and expertise which we would surely leverage on. I feel the pressure and the pleasure to now deliver optimally to some of the best consumer investors in the country which includes Sixth Sense, DSG Consumer & Verlinvest. We believe that we are at a nascence stage of growth and feel secure of the path ahead”.
“Sixth Sense is a consumer-focused fund and we have invested significantly behind brands of tomorrow. Our investing thesis in Veeba was extremely simple. We like the space, we like the sponsor and we like the opportunity” stated Nikhil Vora, Founder & CEO of Sixth Sense Ventures. “In categories that Veeba operates in, its critical to get the taste buds attuned to Indian palates. The QSR networks have ensured that this is done and it’s only natural that from here on the B2C model will become large, attractive and sustainable” added Vora. Sixth Sense has invested in a mix of Primary and Secondary transaction in the present capitalisation round.
Sixth Sense Ventures portfolio now includes
1. JHS Svendgaard – India’s largest Oral Care Contracting company and creating its own brand
2. Hindustan Foods – Fastest Growing Contracting player.
3. Veeba Foods – Lead Brand in the Sauce and Condiments category.
4. LEAP India – India’s dominant play in the Consumer Supply Chain segment.
5. Soothe HealthCare – Emerging player in the Femine Hygiene and Diapers category
6. ETHOS – India’s largest player in the Luxury Watch segment
7. GRAB-a-Grub - India’s first and leading player in the last mile logistics space
8. CrossRoads India – India’s largest player in Road Side Assist
9. Weddingz.in – India’s largest Weddings company – marketplace model
- Sixth Sense expects global consumer firms apart from institutional investors and other existing HNIs and family offices to invest for its Rs250 crore second fund
Venture capital firm Sixth Sense Ventures is planning to launch a second fund of Rs250 crore by next month, founder Nikhil Vora said.
Vora, a former managing director at IDFC Securities and its co-head of research, launched Sixth Sense in 2013 to make early-stage investments in consumer-focused companies.
Sixth Sense raised Rs125 crore for its first, seven-year rupee fund. Its initial investment was in Ethos watches, a retail chain for luxury watches in 2014, followed by food delivery service Grab; oral care products maker JHS; weddingz.in; Soothe healthcare and road side assistance company Cross roads. Its average investment size is Rs5-10 crore.
With its second and larger fund, Vora plans to now also tap overseas investors.
“We expect some global consumer companies apart from institutional investors and other existing high net worth individuals (HNIs) and family offices to invest for our second fund,” said Vora.
Sixth Sense is also setting up India’s first third party distribution network to help upcoming consumer companies reach their products to consumers efficiently. It is expected to be operational by December end, said Vora. Nimisha Nagarsekar, head of commercial and investor relations at Colgate Palmolive India Ltd has been hired to head the platform, he added.
“We understand and realize that the biggest bane for consumer entrepreneur is that the cost to get the shelf is very expensive. The established companies actually realize that the distribution is not yielding them the benefit they ought to get. On the other hand, we have these new companies which are coming up, and they don’t have distribution.
“Through our platform, we can fundamentally marry the two and be the platform of choice for these new brands which are evolving and can get them on board with the existing distribution structures of established companies,” said Vora.
“In the existing distribution networks, every company has hundreds of people reaching out to same stores, selling to the same chain, which is a fairly inefficient model because someone who is selling a single product line is still having hundreds of feet on street to sell to the same stores,” added Vora.
Sixth Sense will not create its own network, but will leverage existing networks.
“We are not creating our own feet on street. There is already a huge distribution network there with every company. We will ensure that they marry to the companies which come to us and connect these two, which will improve the economics,” said Vora.
The platform will be entirely funded by the venture firm.
Even as it plans to raise a new fund, it continues to aggressively chase investment opportunities for its current fund.
On 14 September, Mint reported that Sixth Sense Ventures is in talks to buy a small stake in condiments and sauce company Veeba Food Services Pvt. Ltd, in a deal valuing the company at over $100 million.
- Sixth Sense Ventures hires Colgate India exec as CFO, COO
Sixth Sense Ventures has hired a senior executive of Colgate India as chief financial officer and chief operating officer, the venture capital firm’s founder told VCCircle.
Nimisha Nagarsekar, who was head of commercial and investor relations at Colgate India, has joined the VC firm, said Nikhil Vora.
“We see our role morphing from being a capital investor to also providing significant operational capabilities. Nimisha fills in that gap materially,” said Vora.
Nagarsekar is a chartered accountant with almost two decades of experience in the consumer sector. She has expertise in financial accounting and planning, brand commercials, supply chain and strategy. She has also played a key role in areas such as business valuations, brand sell-off, market entry and due diligence.
Nagarsekar said she would provide operational experience to companies within the Sixth Sense umbrella.
Sixth Sense, which focuses on consumer-centric companies, made the final close of its debut fund last year, after resizing the target corpus.
Its portfolio firms include Weddingz.in, an online marketplace for wedding venues and vendors; JHS Svendgaard Laboratories Pvt Ltd, an oral care products firm; and Grab, a Mumbai-based hyperlocal logistics service provider.
Vora has also invested in his personal capacity in several firms, including One97 Communications Ltd, the parent of mobile wallet and e-commerce firm Paytm; Kangaroo Kids Education Ltd, which runs Kangaroo Kids Preschool and Billabong High International School; and Vini Cosmetics, a consumer goods company which raised funding from Sequoia Capital.
Other firms in which Vora has invested include sports-focussed digital display solutions firm Technology Frontiers, which is backed by Avigo Capital, and aviation maintenance and repair services provider AirWorks, which is backed by VC firm New Enterprise Associates and GTI Capital.
Earlier this year, Vora sold his stake in Paytm to Chinese e-commerce giant Alibaba, reaping gains of almost 75 times.
Bloomberg Quint Interview – Nikhil Vora (26th April, 2018)
CNBC Interview – Nikhil Vora (17th November, 2016)
Nikhil Vora on CNBC
- Pain indeed in near term due to demonetisation, says Nikhil Vora
November 17, 2016
The former MD and Head of Research at IDFC Securities Nikhil Vora has evolved a strategic roadmap for companies like HUL, Aditya Birla Group, Marico, Godrej etc, and he is one who has been voted as Asia's Best Analyst by the Wall Street Journal. In an interview to CNBC-TV18, Nikhil Vora, Founder & CEO of Sixth Sense Ventures spoke about various stocks and sectors and also shared his readings and outlook on demonetisation. He further added that there will certainly be pain in near-term due to demonetisation. He said that a 'surprise' move was needed for this kind of measure.
Below is the verbatim transcript of Nikhil Vora’s interview to Latha Venkatesh, Sonia Shenoy & Anuj Singhal.
Latha: This is obviously an unprecedented event. You cannot even call it a once in a century kind of thing because such a complex economy with largest population, so much of currency usage. This has never been attempted. How would you trace the impact on demonetisation on the economy - one-quarter pain, two-quarter pain, one-year pain?
A: It is important and you guys have done enough and more in the last few days. In any changeover that one is looking at, that changeover has to be drastic and dramatic for it to be impactful. It requires no saying that there is pain for almost everyone. While it supposedly brings about a level playing field for the common guy, the fact is that the common guy was actually benefitting the most because of this black economy or the so-called unaccounted economy in the market. So there will be pain in the next couple of quarters or more. However, we also have this entire thing about – you did not develop the electric bulb by making candles better. You could not have done that. So, you have to create a level playing field. And as economies grow, it has to become cashless. It is an irony that in India context, we have lived with this over the last few decades and no one has really batted an eyelid because frankly, everyone has been participating in it. You, me, everyone has some form of unaccounted money, not necessarily illegal money. So there is pain, there is this transitionary impact which happens, but we have seen that in the Indian context, transitionary impacts are also something which Indian consumers are very adapt to change. It has happened before, not to the magnitude as what we are at today. So, look at how demat took off and the transition was frankly very smooth. Look at how airline ticketing really started to shape up. One may call it to be mid-premia phenomena and not really mass phenomena, but this will also go. I know of more than enough instances of how businesses are down by 90 percent and so on, possibly more. And I do not think that will change in the next month or so. But the fact is that people crib if they have to stand in a queue for a movie ticket. They have not done it for such a huge impact in their own life and these are daily wagers and so on. So, it is a brilliant impact. It is showing up on the conviction of most ordinary citizens of the country and at some stage, you have to give in to something which is for the larger good for which it is very welcome.
Anuj: Your conviction was always there. You were one of the first investors in Paytm and that is what we have been told. But, are there enough companies in the industry, in the economy to play this demonetisation? That is something that our viewers would want to know from you.
A: The narrow objective is obviously what you were looking at which is what businesses and stocks to buy into and stuff. What will be important is to really look at really good business, a very big market and a really smart product. If you get these three things right, you have got your businesses right. In the Indian context, again, my sense is that most large players have their own inability to change course, because you are large, you are successful by default, you cannot change course. So you have to look at challengers who can actually unsettle the leaders and there will be a lot of challengers that will emerge from this space. So, like you rightly said, Paytm is obviously one play and obviously, I am biased and I am an investor, but the fact is that leadership role changes every decade. We have seen that historically and I do not think we are going to see any change as we move forward. Maybe that decade will actually shorten further as we move forward. You will get businesses which will become a lot more relevant. I could name a few. A lot of them will be in the private space as we speak right now, but I surely think if one wants to call the demise of leaders, you could not get a better time than this right now. The leadership role, the values for the leaders that we have historically paid, that will all change over a period of time. In the next couple of years, maybe sooner, you will have a lot of new-age businesses which will be a lot more relevant for the next five-ten years which will evolve. The most critical aspect will be know your customer (KYC), so if companies know their customers well enough, they are the businesses which will be a lot more relevant over a period.
Sonia: You were really ahead of the curve with Paytm. What a bull's-eye that was. Now, Paytm is recording five million transactions a day because of this demonetisation. If you had to pick the next big theme, maybe not in the listed space, even in the unlisted market, what do you see as a trend?
A: There is one clear direction that I see. If we look at the last decade in India, there are actually only four brands which have evolved in India and that is reality and it is ironic. You could call Paper Boat as a brand which has evolved, Fogg deodorants which is again one of my investee companies, you could call Go as another one and Patanjali. I frankly cannot think of a fifth brand which has evolved in India. Everything else which has evolved is a platform. So, Paytm is a platform, so is Flipkart and so on, but all other brands that we think today are platforms and not really product brands. So, it is going to be a lot more difficult to identify spaces which will create brands unless they are disrupters in their own spaces. So, if there are large spaces and companies and players are adapt to changing course of these businesses then they will be able to create brands. What spaces to really look at, anything to do with mobile payments, one of it is Paytm, those could be very relevant businesses as we move. Dairy companies. The big theme also as we evolved is unorganised to organised, regional to national and unbranded to branded, so with goods and services tax (GST) also hopefully coming in now. You will start to see a lot of those spaces evolve. So, dairy companies which have historically been very regional strongholds, those could become very large. So, I just think that incrementally investors will need to be a lot more careful than what historically we have been. It is going to be a challenge to really get winners out of the 5,000 odd listed businesses that we have today.
Latha: I want to go back to the first thing that you said. We have managed dematerialisation of shares brilliantly, we have managed prior digitisation, but though they were high end, as you said airline ticketing. Why Paytm? Paytm could be destabilised by the unified payment interface, by the MPIN. Are you seeing that level of Mobile Banking Pin (MPIN) usage, mobile to mobile messaging of money to become the basis of payment in society and if that were to happen, what would you buy, if at all, in the listed stock or in any space?
A: Like we just said, the changeovers are very drastic. You have to really invest in businesses which are up for disruption and who understand disruption in their own businesses to change course. I have said this earlier also that every business has a life cycle. Non-banking finance companies (NBFC) had a life cycle in the 1990s. They almost died. There are possibly 4-5 which are really relevant today because fundamentally, they were intermediary in a space where the raw material was capital which fundamentally meant that only banks should survive. And I have said this before, IDFC was also lucky to be in that space at some point of time. They had to convert into a bank, which they have done. Banks, today, not necessarily in the next year or so, but over a period of time, will be a struggling spot. So, payment gateways become relevant. Who knows what the next stage is. But today, in the next 4-5 years, there seems to be very visible business to be betting ourselves on. I just think that it is important that we somewhere demystify this entire premia that we have historically paid for large scale businesses because large scale businesses, by its own nature are not as fleet footed as they used to be earlier. Earlier, the biggest trend that they had was they had their distribution power and that ensured that no other player could actually compete with them. Today, distribution means nothing. There are multiple methods of distribution which is available and which will mean that challengers will have a lot more capability than historic to compete.
Sonia: In fact, I wanted to ask you about this same conversation that we had about three years ago on the alcohol space. I remember you used track United Spirits very closely and you did mention that United Spirits profits will double over the next three years. But since then, Diageo has come into the fray, things have not really panned out as well, so many regulatory earnings. How did you read into that?
A: I agree. I think we have made a mess out of what our numbers should have been and we have never been great at predicting near-term numbers. But specifically in the case of Diageo, their integration did not really happen at all. So, beyond the regulatory and state issues that we keep grappling with, they could not really get their hands together between Diageo India and the United Spirits operation. Second, they have made just the biggest mess of a diligence that one can ever think of. There were enough grey shades which were known to almost everyone in this country. I am surprised someone who bought just the disproportionate stake into that business did not realise what is behind it. It was up in the air for everyone to realise it. Maybe we gave them a better sense of judgement that they have done all that to take I forward. I still refuse to believe that a business where you continue to hold 60 percent market share in this country and you cannot be profitable, it is just insane. It is just not practical. Pernod Ricard has a much smaller stake in India.
Sonia: So you write off that story?
A: No, you do not write off. Obviously, large businesses or relevant global businesses have their own learning curves and they eventually get it right.
Latha: Do tell us how much more of a downside you see in the market and all the big brands you are talking about are not in the listed space – Patanjali, Paper Boat and Go. So, in the listed space, how would you participate in the eventual upturn which should come after this cleansing?
A: What I can say for sure is that if I just look at something which has been very close to me, is the consumer space, I can tell you for sure that someone like GlaxoSmithKline (GSK) is almost shut down their Horlicks plant. Someone like Reckitt Benckiser is losing Rs 10 crore per day today. Someone like Hindustan Unilever or Emami, obviously which are seasonal plays are losing out on their best season, winter. Someone like Lever is obviously struggling with the large packs that they have and so on. So, the entire consumer businesses today, this quarter is almost a write off if one really looks at that. As far as markets are concerned, my sense in that also is that investors adjust themselves, so you will also have the same quality of investors to come in to bet for a larger good. So, there will be players who will be willing to bet for the next couple of years and more who will start to participate a lot more actively. And the near-term guys really move out and withdraw themselves which is perfectly how market behaviour should be. Listed space, precisely why we have set up a venture fund, there is just so much of value in private because early stage entrepreneurs are the one who will challenge the leaders and they are almost always in the private domain. So, we really focus there.
Anuj: Since you track media as well. Media is also changing, a lot of digital consumption. Even our channel for example, now gets consumed on Facebook and Twitter a lot more. Any particular niches in that area, listed or unlisted?
A: Personally, I have always like PVR amongst all the players which are there. I have struggled with your own business, Network 18 group for a lot reasons beyond content. You have always been brilliant at content and quite poor in corporate governance, sorry for this. PVR is very interesting. They do not control the content, but they control the distribution and that is way powerful. And it is the distribution which very rarely can be replicated. So, I would continue to remain fairly positive there.