Fireside’s strategy for 2025 is to go in faster, catch them young(er)

Bengaluru: Fireside Ventures, an early-stage venture capital firm focused on consumer brands, plans to scout for more seed-stage investment opportunities in 2025, tweaking its strategy so it can back a larger number of startups with high growth potential.

“We have started looking at more seed deals as a part of our pipeline creation," Fireside founder and managing partner Kanwaljit Singh told Mint in an interview.

“Typically, in the last few funds, we were looking at companies which would have ₹60-70 lakh of (monthly) revenue, maybe ₹8-10 crore (in) annualized revenue, and we would put in some money and help them. But we realized that the innovation, the new deal creation (are) happening now much earlier," Singh said.

Seed-stage funding represents the first round of equity financing, typically small amounts, in a startup that’s yet to establish a business or have a steady revenue stream.

While such investments involve more risk, India’s startup ecosystem has considerably matured over the past decade and is seeing a higher calibre of entrepreneurs emerge, including executives from large companies such as Flipkart and food- and grocery-delivery platform Swiggy.

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Walmart-owned Flipkart’s initial public offering is expected in 2025-26, nearly two decades after the online marketplace was founded. Meanwhile, the 2014-born Swiggy made its public market debut in November amid a dozen startup IPOs this year.

“Let’s say a former Flipkart executive wants to start something new, he’s seen (a problem) from the Flipkart experience and has some great ideas in a great category. Now, if we wait for that person to reach ₹60-70 lakh (in monthly revenue), it’s too late," Singh said.

“We don’t need to see ₹60-70 lakh of revenue before we get comfort in knowing whether this is a good business or not. We can take the judgment call faster. We have great understanding of how to build these businesses, so we are coming in earlier in these companies," he added.

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Going smaller

Fireside’s new strategy stems from its increased ability and confidence to help seed-stage startups from Day 1, according to Singh, a former Unilever executive who founded the firm in 2015 after leaving Helion Venture Partners, where he was a co-founder and senior managing director.

Another dimension to the shift in Fireside’s investing strategy is its decision to back more startups, said Singh. “We may even end up doing a slightly larger number of deals with smaller cheque sizes. Here (in seed-stage deals), we can go as low as maybe ₹4-5 crore."

Fireside Ventures, which typically invests ₹10-14 crore in early-stage startups, manages over ₹3,000 crore of capital across three funds and has invested in about 50 consumer brand startups including Mamaearth, boAt, Yoga Bar, Bombay Shaving Company, and The Sleep Company.

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Overall this year, early-stage funding, which includes seed and Series A funding, declined to $3 billion across 1,533 deals through November from $4 billion across 2,137 deals in 2023, according to research platform Tracxn.

Fireside Ventures in December co-led a ₹8 crore pre-series A investment round in athleisure brand Terractive. Earlier in January, the firm led a ₹17.3 crore seed-funding round in Moxie Beauty, a direct-to-consumer haircare brand.

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Riding the wellness wave

Singh is particularly bullish on the healthcare and wellness space, reckoning that solutions that can be sold like a consumer brand exist for anyone who wants to improve their physical or mental health.

“If you see even the pharma players, all of them have now got fairly robust and (have) very high ambitious plans for building the consumer health side of it. Earlier, it was very much prescription drugs. But today, you take Cipla, Zydus, or any of these guys, they have built some very large direct-to-consumer businesses," he said.

“Fireside is riding that wave of saying consumers are conscious about their health. They want to control themselves and they are willing to spend to manage that," Singh added.

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Fireside isn't the only investor chasing younger startups in India. Amsterdam-based Prosus, which has backed Byjus, Swiggy, Urban Company, and PharmEasy, participated in a ₹160 crore funding round in web3 startup Kratos last year, marking its first seed-stage investment in India.

Another early-stage venture capital firm 8i Ventures, which has backed coffee chain startup Blue Tokai and fintech startup Slice, earlier this year launched its seed-funding programme, through which it will invest $250,000-$2 million in seed-stage startups.