ITC pumps Rs 150 million into start-up investment arm Fireside Ventures

Diversified conglomerate ITC has invested around Rs 150 million in Fireside Ventures, which is a fund that infuses money in consumer-based start-ups. “We do have a corpus for investing in start-ups either directly or through a fund. We have recently invested in Fireside Ventures. This is an internal corpus, so we have kept aside some funds at the moment but depending on the opportunity it can be scaled up,” Sanjiv Puri, managing director at ITC Ltd, told Business Standard.

Asked if ITC would be only incubating these start-ups or make them acquisition targets as well, Puri said, “Both are possible. It gives us an opportunity to understand the consumers space. It is an ongoing process of evaluation.”

ITC has been relying on creating its own brands and charted its own way to reach its target of Rs 1 trillion revenue from the non-cigarette business by 2030. However, it had made four acquisitions in the past that opened new territories for the firm, though none of these were start-up companies.

The Savlon and Shower to Shower brands were acquired from Johnson & Johnson in 2015 and paved the way for the company to enter the personal hygiene segment. The Charmis and Nimyle buyout helped ITC enter the skincare and herbal floor cleaner category in the mass segment.

After some months of the Charmis acquisition, ITC launched its own brand of premium skincare products under the Dermafique brand, which is targeted typically towards Indian skin-types.

“We are certainly open to inorganic opportunities to grow our FMCG businesses. We will look at the inorganic route only if it is a strategic fit to our plans and brings in value commensurate to our financial commitment. While we will leverage opportunities for potential buys that will enable us to scale up our businesses, we will continue to build categories organically,” Puri said.

In the past few years, most of the FMCG majors have started investing in start-ups. 

Recently, Britannia has come up with a proposition of funding 10 women-led start-up ideas for Rs 1 million each while earlier, the FMCG arm of the RP-Sanjiv Group came up with a Rs 1 billion venture capital fund to fund start-ups. Like ITC, the RP-Sanjiv Goenka Group will also look at acquisition of these start-up companies at a later date.

Earlier, prominent FMCG companies like Marico and Emami, among others, have also invested in such start-ups. Also, tycoons like Ratan Tata, chairman emeritus of Tata Sons, Mohandas Pai, former Infosys Board member and current chairman of Manipal Global Education, Kiran Mazumdar-Shaw, director of Biocon, among others, has been active in this space.

In April, Marico said it would be picking up a 22.5 per cent stake in the parent of fitness and holistic wellness platform Revofit in a cash deal. This Mumbai-based start-up firm is incubated at Ant Farm, the start-up accelerator founded by former Times Internet chief executive Rishi Khiani.

Also, Emami invested in two start-ups – Helios Lifestyle and Brillare – to complement its own range. It also marked the company’s entry into the premium care segment which hitherto it wasn’t present in.

Previously, T C Meenakshisundaram, managing director of IDG Ventures India, a serial start-up investment firm, said that corporate investors have specific knowledge about the vertical and the supply chain and thus are in a position to offer value addition to the start-ups besides providing them with necessary funds.

Industry officials from the start-up space also echoed that such funding helps the space to grow and promote entrepreneurship as well as aids the funders in going ahead with an idea which is already in place rather than start it fresh on their own.