A conglomerate acquiring a significant stake in a D2C startup will not spark off as much discussion as compared to a 5 month old startup that acquires ten D2C consumer brands in a row. If you are a proud founder of a small online business, the idea of exiting will not begin to kick at the back of your mind. But the emergence of Thrasio-style startup Mensa Brands is speedily acquiring fast-growing digital-first brands and scaling their products.
What is the Thrasio- style of acquisition?
Founded in 2018, by Joshua Silberstein and Carlos Cashman Thrasio is a US startup that acquires successful third-party Amazon sellers to give the founders a profitable exit. Its team of experts today now manages a global portfolio of nearly 100 brands and is valued at $6 billion based on its latest funding round.
Witnessing Thrasio tasting success, Mensa Brands emulated a similar model. The startup founded by Ananth Narayanan, the former CEO of Myntra and cofounder of Medlife within a short span of 5 months since its inception has acquired 51 percent and 75 percent in several consumer brands such as Karagiri, Dennis Logo, Priyaasi, Ishin, Hubberholme, Anubhutee, Helea, and Villain, etc. with each venture’s average revenues worth $3-$4 million before acquisition. With these acquisitions, Mensa Brands aspires to become a tech-led house of brands.
Thrasio is a US startup that acquires successful third-party Amazon sellers to give the founders a profitable exit.
Mensa Brands globalising the acquired D2C brands
Mensa brands are focused to acquire D2C brands from verticals of fashion and apparel, beauty and cosmetics, and soft-home furnishings that are capable to generate annual revenues between Rs 7 crore to Rs 70 crore. Through its team of experts wants to globalise the acquired D2C brands by leveraging their expertise in driving growth, product, merchandising, technology, supply chain, and access to global markets.
D2C brands in recent times have gained enormous popularity and profits amongst the neo-consumerist Indians who are willing to spend more on products and services that make their lives easier, more individual, and more controllable. Especially, in beauty products, customers are purchasing that has less sulphur and are vegan. D2C apparel sellers are becoming more size-inclusive for all shapes and sizes.
How Mensa plans to make the brands global
Mensa follows a three-step process to understand a brand’s potential.
First Step: Decoding the brand‘s journey both financially and qualitatively.
Second step: After thoroughly knowing the business, the second step includes coming up with a fair and transparent commercial construct.
Third step: It consists of carrying out due diligence and verification of financial statements, sales, costs, marketing, and supply chain. If Mensa is satisfied with the brand’s growth prospects, it attaches a valuation and undertakes the preparation of contracts and other paperwork to integrate the seller.
Soon after the brand undergoes integration process Mensa brings its expertise across various functions such as marketing, technology, supply chain, inventory management, logistics, and product development to scale the acquired brand rapidly. A part of the profits earned in the process is distributed to the startup founders.
Lastly, these Thrasio-style startups will thrive on acquiring profitable D2C brands, which can be a bright future since according to a study by Avendus Capital the D2C market is estimated to be $100 billion by 2025. But, this thing should be taken into consideration that although India has a huge retail market, people shopping from the online market is completely is yet in its infancy to bring huge economies of scale.