New Delhi, July 14 -- Financial services firm Capwise Financial, known for its investment banking practice, is set to roll out an early-stage consumer-focussed fund under its newly-created Venture Studio vertical, a top executive told VCCircle.
Venture Studio will not only invest in portfolio companies but also provide operational support, handholding founders through their growth journey. To build the ecosystem, Capwise has set up six specialised platforms across marketing, technology, distribution, human resources, finance and product development.
"The venture studio was created based on the realization that digital brands require universal capabilities regardless of the category they are in," said Nitin Agarwal, managing director of Capwise Financial. "Instead of having each consumer brand repeat the same efforts in building infrastructure, Capwise built these capabilities as six separate entities. The goal is for founders to access market-leading capabilities on demand, allowing them to make fewer mistakes, use less capital, and grow faster."
Agarwal said these six platforms are not internal departments but independent entities with their own respective founders, and Capwise acting as a strategic shareholder with a significant minority stake.
"These companies provide services to the open market, as well as to the venture studio's portfolio," he said.
Meanwhile, Venture Studio is in the process of applying to the Securities and Exchange Board of India (SEBI) for a licence to launch a Category-II alternative investment fund (AIF). The fund aims to raise around Rs 250 crore ($25.9 million), including a greenshoe option of Rs 100 crore, from domestic limited partners (LPs) such as high-net-worth individuals (HNIs), founders and family offices.
The fund plans to take early-stage exposure in 12-15 consumer companies, with ticket sizes of Rs 7-10 crore for entry-level investments and Rs 15 crore for follow-on rounds
"The fund aims to focus on digital-first brands selling goods. This includes categories like beauty, nutraceuticals, and home improvement. The decision to focus on consumer brands is driven by the belief that while commerce platforms operate as monopolies or duopolies, brands can exist by the thousands and innovate continuously," Agarwal said.
He added that India's consumer brand ecosystem, which began taking shape around 2016, is relatively young compared with the platform ecosystem that emerged around 2008. "Brands are now outpacing platforms in terms of market capitalisation.platforms may only emerge once every decade, whereas new successful brands are created every year," he said.
Venture Studio has already made a few initial investments from Capwise's proprietary balance sheet, which will eventually be transferred to the fund.
Capwise, which is also in the process of obtaining a merchant banking licence, operates a non-banking financial company (NBFC) as well that offers venture debt to early-stage startups. "By combining equity (through Venture Studio), lending (through the NBFC), and operational capabilities, the aim is to provide a comprehensive support system for early-stage companies," Agarwal said.
Published by HT Digital Content Services with permission from VC Circle.