Fireside Ventures announces final close of third fund at $225 million

Fireside Ventures, an early-stage venture fund investing in digital-first consumer brands, said that it has closed its third fund at Rs 1,830 crore ( $225 million). This is double the size of its previous fund which had a corpus of Rs 863 crore, and the first fund had a corpus of Rs 350 crore.

Fireside Fund III is anchored by new and existing Indian and global investors which includes, Self-Reliant India Fund, Investment Corporation of Dubai, SBI, Premji Invest, Waterfield - Fund of Funds, ITC Limited, Emami Limited, Sharrp Ventures and several start-up founders.

“What is exciting is that we saw significant demand from domestic capital in terms of the investors that have come in. Over 90 per cent of the third fund is domestic money,” said Kanwaljit Singh, Managing Partner, Fireside Ventures, in an interview. “It is a mixture of family offices, corporates and financial institutions and sovereign funds. The big learning for us is that there is a significantly growing interest and a larger pool of capital in India for funds like us,” added Singh, whose firm did the entire fundraising in a period of 6-7 months.

Fireside is betting big on market for D2C brands in India which is set to touch $100 billion by 2025. Trends like e-commerce penetration, widespread focus on health and wellness, and normalization of virtual experiences were accelerated by the pandemic and have propelled digital-first brands well past the role of “challenger.” In key categories like beauty and personal care, food and beverage, and fashion, D2C brands are competing alongside legacy players.

“People (investors) are buying into our thesis, which is all about consumption, growth of disruptive brands and how they are challenging the incumbents with new business models using digital (platforms) as a channel,” said Singh, 

For instance, over the last few years, D2C brands have almost re-defined the marketing landscape. These brands have led with unique and innovative concepts like building an integrated House of Brands, adopting a platform play approach and building quality goods and services which gives them exposure to global markets.

Fund III will invest in 25-30 startups in keeping with the Fireside thesis of digital-first consumer brands, across the spectrum of health and wellness, edutainment, lifestyle, and FMCG. In addition to products which offer personalized customer experience using data analytics-based value propositions, Fund III will also seek out brands with a strong purpose, responsible practices, and healthy governance.  

Fireside said with Fund III, the venture capital firm reiterates its commitment to continue backing bold, purposeful entrepreneurs who can replicate their success stories across the globe and win over consumers and communities.

Since 2017, Fireside has backed this new wave of consumer brands. The fund has been the first institutional investor in 75 per cent of its 31 portfolio companies, one of which is an unicorn, another is IPO-bound, and an inspiring 50 per cent of which have been founded or co-founded by women.

“We actually had five exits and five partial exits,” said Singh.

Fireside Funds I and II have powered some of the top consumer brands, including personal care unicorn, Mamaearth, and IPO-bound boAt, as well as fast-growing businesses like Vahdam, Slurrp Farm, Kapiva, 91 Cycles, Design Café, FS Life (erstwhile FableStreet), The Sleep Company, Gynoveda, Wellbeing Nutrition and Pilgrim.

Fireside Ventures has raised the third fund at a time when  Q3 2022 in India witnessed only $3 billion in funding, which is 57 per cent lower from Q2 2022, according to a report by data platform Tracxn. This is 80 per cent lower than the peak funding of $14.9 billion received in the same quarter last year. Also, late-stage funding has been impacted the most, with an 88 per cent decline from Q3 2021 and a 64 per cent drop from Q2 2022. The average ticket size has dropped across all stages. But late-stage has seen the biggest drop, from $142 mn in Q3 of 2021 to $42 mn in Q3 of 2022, a drop of over 70 per cent. This shows that investors are not willing to make large investments till the economic conditions stabilize.

“Fundraising is becoming complex and difficult because of the global environment which is true to a certain extent. We also had multiple conversations with global investors. There was very good interest, but the cycles were longer,” said Singh. “On the other hand, we have a very interesting experience with Indian money. Here investors are very keen to invest, are taking faster decisions and have very high-quality money.”