Updated: Aug 1, 2021
You know how we turn 21 and suddenly start feeling that we’ve seen enough? Well, this world has a notorious habit of reminding us that we’ve barely seen anything! This time, a 3-month-old startup raised ₹ 1,100 Crore and we're like WHAATTTTT???
Okay that's a little unprofessional. Let's start again.
On 19 July, Indian startup GlobalBees (let’s call it GB) raised $150 Million [₹ 1,100 Crore] in Series A. It’s eye popping because:
Series A is the 1st significant funding round by a startup and is only the starting lap to scaling up. So much attention at Series A stage is totally unheard of!
GB’s Series A is the all-time highest by an Indian Startup. The 2nd largest that we can think of is Novo’s $40 Million [₹ 290 Crore] Series A raised in June’21.
You know what’s the industry average for fund raising in Series A? $4.5 Million [₹ 33 Cr] only (newly added postfix).
Basically, it’s too much glamour for us to let go without a scratch. So, let’s shout together, WHYYYYYY!?!?!?
Why does GlobalBees deserve this kind of attention?
Here’s a list of what makes sense:
GlobalBees is the Indian torchbearer of an idea that has caught fire across economies. It’s dubbed as the Thrasio-style, getting its name from the US startup Thrasio that started this party back in 2018. Basically, GB is doing what Ola, Flipkart and Paytm did, looking at Uber, Amazon and Alipay- replicate a globally burgeoning idea. So just like Thrasio, GB’s plan is to acquire and partner with promising brands that are selling products online (Direct-to-Consumer or D2C brands) and then help these brands to scale up through integration, brand image optimization, operations and products development, performance analysis, SEO, growth marketing and other fancy stuff.
The investors are super pumped by the success story of Thrasio. Here are some headlines:
Thrasio is the fastest profitable company ever to achieve a unicorn status ($1 Billion valuation). In just 3 years Thrasio has now reached a valuation of $4 Billion.
Thrasio has already integrated more than 100 online sellers with more than 22,000 products, and its revenue has risen to $400 Million, doubling in every 73 days!
Thrasio has already achieved success in scaling up the acquired brands. Read more about this later in this article.
A startup is only as good as its founders, right? So, if GlobalBees is going to be the growth engine for D2C brands, whom should it be geared by? Leaders who have done this before? Then we guess the founder of 11 years old E-commerce giant-FirstCry, Mr. Supam Maheshwari should do. No? Okay let’s add his long time buz. partner Mr. Nitin Agarwal and the core team of FirstCry to it. Still No?? Fine, let’s also add reps. from SoftBank, Lightspeed, Premji Invest, Chiratae Ventures and Chrys Capital to its board! --Bids closed--
A business raises money because it needs that kind of money right? So when GB says it’ll be ACQUIRING 30-40 brands with a revenue run rate of $1-$20 Million [₹ 7.5-150 Crore], it essentially means that capital will be the fuel for its business. And to buy brands with such revenue run rates, ₹ 1,100 Crore seems like a modest amount.
But why will online brands be interested to sell to/partner with GlobalBees?
As Maheshwari puts it, after reaching a certain scale, online brands find it difficult to push further. So, with the right people, tools and network in place GB can turn good brands into great ones. Learn from Thrasio’s success stories here. Moreover, if GB is to follow Thrasio’s strategy, it's likely to pay 2-4 years' worth of the brand’s annual profits to purchase the entire brand.
So, owners of online brands can have a strategic partnership with GB to blitz-scale their operations or simply sell their brand for an unmatched price and move on to their next endeavor.
We also asked Ayushi Chamaria, founder of a D2C Brand named Sippin' that sells cocktail mix online, about the rising opportunities with GlobalBees business model. Here's her take:
There’s been a revolution in the D2C space in India with homegrown brands producing extremely fresh and innovative products in niche segments. Sippin's product category, cocktail mix, for example didn't exist until a year ago. The fact is our industry thrives on infrastructure and access. So, with GlobalBees and the like stepping in as D2C growth engines, the industry's access to capital and expertise only gets better from here. I'm excited to witness the change that follows.
But is GlobalBees alone in this space?
We must admit, the Thrasio-style reminds us of the Gangnam-style. No, no, it’s not the lingo. It’s just that Thrasio-style also went viral! There are already at least a dozen other companies that cropped up after Thrasio and have already raised significant fundings by pitching the same idea. Indian startup 10club for example, raised $40 Million [₹ 300 Crore] in seed funding, the highest seed round by an Indian startup. Others include Mensa Brands, Powerhouse91 and Evenflow in India, Branded Group in Europe and Elevate Brands in the USA.
Okay, we're being too kind on them now. If you think about it, there's only a thin line of difference between Venture funds and GlobalBees. Both infuse capital in other ventures and use their network and experience to help the startups grow. It's only when GB goes on to buy these brands in volumes and turn them 10x larger, will it be doing anything different, so to say. Similarly, strategy consultants have also been coaching businesses to achieve better results for a long time now... So, does that mean that GlobalBees holds the potential to disrupt the conventional investment or consulting space? Does that mean that GobalBees is like an agent for the investors who gets the job done for them quicker? But then again, there’s a reason why investors let the founders do the leg work or why consultants take cash (in advance) for consultancy and not equity, right?
Okay now it's your turn to overthink. Until next time…
This article is a part of the July'21 edition of our Startup Newsletter. Here's the complete publication: