As VC funds dry up, male-grooming start-ups look to FMCG firms for investments

Fast moving consumer goods (FMCG) companies are likely to replace the regular venture capitalists as investors in the ₹3,200- crore male grooming category, as raising money through the regular series-led rounds gets tough.

Recently, Marico picked up a 45 per cent stake in Ahmedabad-based ‘Beardo’, giving a leg-up to the year-old start-up. This has made other angel and seed-funded online men’s grooming players like Bombay Shaving Company, Lets Shave and The Man Company, hopeful of getting investment from FMCG companies in their Series-A round of funding.

“The number of acquisitions in the male grooming category will only increase with time as funding through Series A and B rounds are now on hold. As it gets challenging to raise money, acquisitions will be the way forward with large FMCG companies acquiring start-ups which are more focused on this large category.

“Marico has already snapped up the largest male grooming start-up and now we even have international cosmetic giants like the $6.4-billion Sheiseido who are keen to acquire in India,’’ said Apoorv Sharma, Co-Founder, Venture Catalysts, which raised seed funding for Beardo.

FMCG companies with presence in the male grooming segment like P&G (Gillette), Dabur, Godrej and ITC are already sending feelers, according to some of the nascent start-ups in the male grooming category.

Rohit Chawla, CEO & Co-Founder, The Man Company, said: “FMCG players understand the male grooming space better than VCs and we are expecting to raise our Series A from them in the future. We have already got inbound interest from two large FMCG companies. VC funds are more interested in investing behind technology while FMCG companies understand the category in terms of the products, distribution and manufacturing.’’

Others like Bombay Shaving Company are hoping to improve are valuation before selling stake to a FMCG company.

Shantanu Deshpande, CEO, Bombay Shaving Company, said, “We have already been approached by the top three FMCG companies but we want to take up our valuation before giving away a majority stake and would like to have a turnover to ₹300 crore in the next couple of years. ’’

Apart from helping the start-ups financially, FMCG companies are ready to offer their extensive distribution networks to push the new start-up owned brands. For instance Marico is going to make available its network to Beardo for its products like beard wax and face wash.

“Marico reaches out to nearly 4 million outlets through both direct and indirect distribution and we can reach our brand eventually through its network. Today, we sell online and via salons but it is the general trade that we want to reach with Marico’s help since we want to have a pan-India presence. Beardo, in future, will become a Marico-owned brand, ’’ said Priyank Shah, Co-Founder, Beardo.

Globally, online start-ups have been mounting pressure on FMCG stalwarts like Gillette and Unilever with low-priced razors and blades. This led Unilever to acquire start-ups like Dollar Shave Club last year.

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