Sangeetha Chengappa

Tomorrow Capital, a $100-million operating venture capital fund which invests in early-stage consumer-focused businesses, plans to invest ₹100 crore in the next 12 months. The Mumbai-based fund has three hot prospects on its radar and plans are on to close investments in two of them by January/February, a top executive told BusinessLine .

Tomorrow Capital typically invests ₹7- 30 crore in each business, and has invested nearly ₹100 crore over the last three years in four early-stage start-ups including ZenoHealth (previously Generico) a pharmacy chain selling low-cost generic drugs; Bonito Designs, a home interior design and execution firm; Multiliving Technologies, a tech-based real estate management and rental solution firm; and an edtech start-up which is still on stealth mode.

The fund has exited from its first investment in ZenoHealth as a part of a secondary round successfully with 7x returns and will continue to focus on similar early-stage consumer opportunities in health and wellness, education, sports and fitness, kids consumption, home interiors and furnishings, packaged food and beverages. “We invested ₹13 crore in ZenoHealth during its pre-Series A round, when it had just pivoted to an offline store model and started its first few stores. It was a mix of equity and debt funding which provided the necessary capital to allow the business to scale rapidly and was also beneficial in their run-up to the next round of funding. While we made 7x returns, we are very proud of ZenoHealth which has grown 15x in terms of topline, number of stores and valuation” said Rohini Prakash, co-founder and CEO, Tomorrow Capital.

Siddharth Gadia, Director of ZenoHealth said: “Our start-up’s synergy with a venture capital fund like Tomorrow Capital, has given us the requisite impetus and know how to sustain the business and achieve our long-term goals. They have been instrumental in providing us the right kind of mentorship when we needed it most.” ZenoHealth has raised about $16 million of equity funding, including a $14m Series A round led by Lightbox.

Focussed approach

Tomorrow Capital has nine professionals with functional and business experience rather than investment backgrounds, who work with start-up founders to help scale the organisation and brand, and put in place systems and processes, working closely on areas of sales and marketing and financial management.

“One or two of our team members spend 80 per cent of their time in each start-up that we invest in to help them set up their operations, from hiring for key roles, coaching team members, developing and implementing the marketing playbook for new stores on ground to co-creating the sales and loyalty functions, among others. For instance, we were an integral part of ZenoHealth’s growth from five to 60 stores in 24 months, building a strong brand that stands for affordable healthcare catering to over 8 lakh customers across Mumbai MMR. We look forward to taking this approach forward to other early stage businesses where we can help build scale in a similar way” said Prakash.