New Delhi, June 4 -- Venture capital firm Rukam Capital, which makes bets in early-stage consumer products and services companies in the country, has crossed the initial target for its second flagship vehicle that it rolled out in 2023 and has tapped the greenshoe option, a top executive told VCCircle.
The Delhi-based VC, which has invested in companies such as speciality coffee brand Sleepy Owl, food and confectionery Go Desi and quick-service restaurant chain Burger Singh among others, has secured capital commitments of more than Rs 200 crore (around $21 million), the target of the fund and is exercising greenshoe of Rs 100 crore, founder and managing partner Archana Jahagirdar told VCCircle.
Rukam Capital Fund II, a Category-II alternative investment fund (AIF) registered with the Securities and Exchange Board of India (SEBI), was launched in late 2023, a few months after Rukam wrapped up fundraising for its maiden vehicle, which closed at Rs 150 crore.
The vehicle is also backed by government-backed lender Small Industries Development Bank of India (SIDBI), which committed Rs 20 crore to the fund last year.
Rukam's second fund marked its first close in late 2024 and expects to reach the final close by the end of the year. It has invested in six companies from the second vehicle, including the fashion brand AntiNorm, the perfume brand Fragnote, and the retail startup ZenZebra.
"One reason we want to exercise the greenshoe option is because of the kind of startups we're seeing," said Jahagirdar. "The founders now understand what it means to raise from a VC, and there's much more velocity. We're going to see companies grow bigger much faster. "
Rukam Capital focuses on early-stage consumer startups, particularly in beverages, confectionery, personal care, and packaged food. The second fund is putting anywhere from Rs 2-10 crore as the first cheque in its portfolio, with Rs 20 crore in a few exceptional cases.
"The arrival of Gen Z, and hopefully once Gen Alpha also enters, we've got a very, very strong consumer cohort, which is willing to pay that premium to get the right product that stands for who they are, rather than the other way round, that you just pay the least amount of money," she added.
Study on Gen Alpha
A recent study on Generation Alpha, conducted by Rukam Capital in partnership with YouGov, gathered insights from 4,000 participants aged 9 to 16. The research was split equally between qualitative and quantitative surveys, with 2,000 respondents in each group. The study drew conclusions on several subjects, including screen time, brand choices, social awareness, lifestyle and hobby preferences, spending and saving habits, and the growing influence of these children in households.
Gen alpha is broadly people who are born between 2010 and 2025, who have been exposed to online media from the time they are born and who are yet to enter the workforce.
Jahagirdar said that there was little data on this set of consumers available currently.
The report made some noteworthy observations.
For instance, Gen Alpha showed strong brand loyalty, with 1 in every 2 children asking for specific brands in lifestyle, food and fashion choices. It also captured the spending and saving habits of these children, noting that seven in 10 kids showed curiosity about earning money through chores, crafts and digital activities. Around 45% showed interest in earning, and 14% showed signs of saving.
The report underscores the importance of better-for-you brands, Jahagirdar said, adding that parents of Gen Alpha are strongly influenced by their children's choices. Gen Alpha's parents are mostly the group identified as millennials.
"If you don't do 'better for you' products and positioning, the Gen Alpha decision maker in the house will get the parents to not buy those products. So it was to understand who is influencing that decision in the house," Jahagirdar said.
Investing themes
Discussing Rukam Capital's investment strategy for its second fund, Jahagirdar said the firm remains bullish on beauty and personal care and fast-moving consumer goods, in addition to Gen Alpha-driven themes.
"Quick commerce has made FMCG more viable, so I think that has been a big game changer for a lot of FMCG companies, especially in food, ice cream, and such categories," she said.
Rukam Capital's second fund will also look at companies that operate in the unbranded sector and companies offering products with mass, masstige and premium pricing.
In addition, Rukam Capital will continue to scout for companies from sectors such as jewellery, pet care, footwear, home, kitchen, travel, snacking and beverage, Jahagirdar said.
Published by HT Digital Content Services with permission from VC Circle.