Six Consumption Themes That Nikhil Vora Is Betting On
Sixth Sense Ventures | April 30, 2018
https://www.bloombergquint.com/business/six-consumption-themes-that-nikhil-vora-is-betting-on#gs.Z26Kq_E
India’s consumption market needs disruption as it has remained static for decades because of none to minimal innovation, according to Nikhil Vora, founder of consumer sector-focused investing firm Sixth Sense Ventures.
“There is no intellectual property attached to any consumer product, and yet it was symbolised by a duopoly of established brands like Hindustan Unilever Ltd. and ITC Ltd.,” said Vora. The result was that entrepreneurs were too afraid to enter the market as distribution remained controlled, he said. Times are changing fast as the next generation has better risk-taking abilities.
The world’s second-most populous nation offers a huge market as a growing economy and rising incomes mean people will consume more. Several smaller companies have come up to challenge entrenched players even as the cash ban and Goods and Services Tax drives formalisation.
There is a plethora of options in the back-end space yet to be explored, according to Vora. It’s untapped and considered “non-glamorous and non-sexy” for people to invest capital in. These companies are set to become “large and dominant”, he said. That’s why Sixth Sense invested in oral care products maker JHS Svendgaard Laboratories Ltd. and breakfast cereal maker Hindustan Foods Ltd.—both contract manufacturers.
The trick for establishing a brand name lies in identifying pockets that larger players have refrained from investing in, Vora said. Entrepreneurs should also focus on the manufacturing or back-end aspect as brands would usually let go of these as they battle it out with rivals to gain market share, he said. Also, manufacturing is a lower return-on-investment business for players like HUL, ITC and Reckitt Benckiser (India) Ltd., but a great opportunity for contracting firms, he said.
Also Read: Alpha Moguls: How To Play The Great Indian Consumption Story? Here’s Nikhil Vora’s Take
Here are the consumer pockets that Vora is bullish on:
Dips And Sauces
The category remains unexplored by the big brands and thus has ample opportunity for next generation entrepreneurs. Veeba Food Services Pvt., which has a whole range of dips, from mint mayonnaise to garlic chilli spread and a wide variety of salad dressing, has better growth prospects than HUL despite being a lesser known brand, said Vora. Over the next five-ten years, he said, Veeba is poised to evolve as market leaders have nothing to offer in the space.
Oral Care
It’s a basket where market leaders are omnipresent, he said. Yet, there are nooks that have been left out. Toothpaste and toothbrush brands have nothing to offer for kids, Vora pointed out. There is a complete vacuum on that front, which will eventually gain disproportionate amount of attention over the next few years, he said. Sixth Sense identified the opportunity and invested in JHS Svendgaard.
Dairy
The dairy industry is a value-added category that doesn’t seem to be present as significantly as it should have been, said Vora. India is naturally endowed with resources and there is a fairly large target audience for dairy products, he said. He cited the example of ‘Go’ milk brand of Parag Milk Foods Ltd. The product has aced top spots in tier-two cities where leaders like Amul and Nestle India Ltd. failed to have as much representation, Vora said. “It’s a category that requires sustenance and will grow disproportionately.”
Liquor
The liquor industry is still in “extremely early days” of its life cycle, according to Vora. The one key feature in the category is that in India, cigarette businesses are at a multiplier to the liquor. Globally, it’s the opposite. Which means, valuations of cigarette stocks like ITC are higher, leaving enough elbowroom for liquor companies to thrive, he said. “If one wants to buy into social vices, then liquor is a better vice than cigarettes for investors. Liquor still has a long way to go.”
Contract Manufacturers
In the case of consumer durables, 60 percent of the manufacturing is in-house, while the rest it outsourced, he explained. That 60 percent is also available now as the brands are being getting caught in a brand-battle, he said, adding that it doesn’t offer good returns for larger players but can be a potent source of revenue for contract manufacturers. That’s why Vora invested JHS Svendgaard and Hindustan Foods.
E-Commerce And Retail
It’s constantly evolving and is set to see a “fantastic run” ahead, both offline and online, according to Vora. It may seem that online retail is taking over offline, a significant alignment of the two is on the cards over the next three-five years, he said. The shades that can already be seen with Walmart Inc. vying for stake in Flipkart Ltd., he said. “This boom makes the space an attractive bet to invest in.”
Alpha Moguls: How To Play The Great Indian Consumption Story? Here’s Nikhil Vora’s Take
Sixth Sense Ventures | April 28, 2018
Investing in consumption-based companies is all about betting on leaders of tomorrow today. That is Nikhil Vora’s investment philosophy.
The founder of consumer sector-focussed venture capital firm Sixth Sense Ventures said that if a consumer business is good, it will need funding only twice. First, at the seed stage, and second, at the growth stage.
If any business requires capital a third time around, then it is not a consumption-based business. “That’s a certainty I can guarantee,” said Vora, who was an early stage investor in companies like Paytm, Vini Cosmetics Pvt., Parag Milk Foods Ltd.
Better Vice!
From an Indian investor’s perspective, liquor is a better vice to bet on than cigarettes, Vora said on the latest episode of BloombergQuint’s special series Alpha Moguls. Globally, liquor businesses trade at higher multiples than cigarette companies. In India, it is the other way round, he explained.
Here are the edited excerpts of the conversation:
We all know about the presence of the great Indian consumer. Everybody has been talking about it since the last 15 years. But it is not reflecting in profits the way that it probably should have. Do you think the next 10 years will see an increase in the profit pool of some of these consumption stories?
We were looking at a situation where the depth in the Indian consumer market was not really there. In the last five-six decades, we have had a situation where the entire Indian market has been symbolised by a duopoly in every category, right from a fairness cream to a soap to hair lotions, which is weird because there is no intellectual property attached to any consumer product. I could make a Dove as good as the Hindustan Unilever Ltd. makes it. So, there is no IP attached to any consumer product and yet it was symbolised by a duopoly. It only happened because there was a fear of taking on the leader in the space. There was a mortal fear of taking over HUL or ITC Ltd.’s distribution. Thereby we did not find enough players jostle for the same brand space because the shelf space would have been very expensive for any player to compete with HUL or ITC.
Life is changing disproportionately as we speak and will change significantly over the next few years. Because of distribution opening up, we will see a lot of new brands evolve and we haven’t seen brand evolution happen in India since the last five-seven decades. Henceforth, we will see that happening with a lot of entrepreneurs coming in and taking their own spaces. The moment they start to do it, the entire business land in India will get reinvigorated. I am very positive about the way values can be created in consumer businesses. There will be an underlying thought that challengers will always grab more market share than the leaders do. To me, there is a lot of wealth which is at the bottom of the pyramid in consumers and I am not saying that from a markets perspective. I am saying that as far as values of those businesses are concerned, I think there is a lot of wealth which is hidden there that will significantly seize up.
For example, let’s say in the case of Patanjali, it has created disruption in marketplace, not that I am a big fan of the way the business is run. They have not really troubled any consumer company because they don’t take more than 10 percent market share in any category, but they are relevant. Patanjali has evolved in the last five years. Vini Cosmetics’ Fogg brand has evolved from the underbelly and taken on the leaders like Axe and HUL. You will see a lot more of that happen. Biba, for instance, has almost created a category of its own. You will see a lot of players come in and take on relevant market leadership in their domain which is not really the domain of the larger consumer company. So, you have to be able to demarcate the difference between the two. One is the static large consumer play like HUL or ITC and the second one is to see where the consumer movement is happening over the next five-ten years. It will take place in the new age entrepreneurial-run companies which will occupy the niche and will become full blown over the next 10 years. That’s where the values lie.
Would you bet on disruptors that are challenging two-three verticals of behemoths like HUL, ITC or would you believe that there is enough potential even in behemoths while they continue to see disruptions and challenges from focussed niche players?
If earlier, one has lived with the mortal fear of taking over leaders, I think that fear does not exist anymore. This means that as new and more players evolve, their ability to take relevant market share in differential categories, will always be disproportionately higher than the leaders’ ability to protect their market share. To me, the value resides in what the future of consumer behaviour will be. For instance, I don’t want to be doing a higher number of black tea sales because they mean nothing to me. I would much rather get into categories which are very futuristic, and thereby a lot more sustainable while entailing higher growth. If I have to look at dips and sauces as the category, I think Veeba might do a better service than what HUL might end up doing over the next five-ten years because they have not even evolved in that category today. So, the challenge is not so much about the category growing at 10-12 percent today. It is great but not as alluring as it was in pre-days.
The challenge is about identifying categories which are going to be relevant in the next five-ten years and whether the large entities are present in those categories. Like are they doing great innovation categories in that fold? I don’t see a significant innovation happening from larger companies for sure. Irony is that disruption can happen from challengers and not from leaders. HUL cannot disrupt their own businesses, nor can ITC do it or Infosys for that matter. You will always have disruptors who are challengers, who will by default be able to take relevant market share by creating a relevant market because the noise value in that category will be a lot larger than what HUL can create in that category. So, the value also resides there. If you come early into those categories, and they require capital only twice, you have the potential to buy a dozen potential HULs in the making. Not of that size and magnitude but of a relevant size and scale which is extremely valuable for all the business which one would look at.
I’m guessing that’s what you’re trying to do at sixth sense as you have closed one of your funds and are in the Round 2, essentially in the second fund you have. I’m also told that you returned the money that you took from the investors well before the schedule timeline. Is that right?
Yes, we are possibly the only fund in the country which has returned capital back within 1.5 years of fund closure for a seven-year fund. So, it looks a fairly decent track to go with. It is in the early days of the journey, but we are happy.
Do you believe that as a fund house, whether through your fund 1 or fund 2, you are betting big on the disruptors as opposed to betting on behemoths and tried and tested models which exist in the country?
There are two options to invest. If one is investing for the next five-ten years, one is really looking at these two things. One is, whether we are betting on innovators who will become relevant in the next 10 years or we are betting on disruptors who are fundamentally just changing the rules of the existing game. We, at sixth sense, are betting on the disruptors. I think that India is not a great innovative market. I haven’t seen any relevant innovation happening in India for the last five-seven decades. If any, it could possibly be counted on the number scale right now.
The fact that the market has been so static for the last five decades, really calls for disruption. There could be disruption in differential modes like product packaging, pricing, positioning. It looks like a fantastic opportunity to us. We want to bet on a kick-ass promoter in a big-ass market with a smart-ass product. It is essentially about these three attributes which we love, and you will find it a lot more in disruptors. For example, let’s look at the last one decade in India. There are five brands which have come up in last decade which are Patanjali, Paytm, Go, Paperboat, Fogg. There are only these five-seven brands that have got created in India and none of these brands were created by MNCs. All of them are domestic brands created by first-generation entrepreneurs. So, there have been disruptors. The space has existed...the space for deodorants, milk food and the entire space for Patanjali has existed. They created disruptors in their space to become relevant. Our fund theory has been to identify these disruptors very early on in their life cycle and participate in their journey over their mid-term life cycles.
Is it company, theme or product specific?
At lot of points, it is theme specific. Let me give you a good example of what we bet in the first fund. In the first fund, we have done 10 investments, two of which are listed and eight are private. The two listed investments are up by 7 times and 9 times in two years. They were JHS Svendgaard and Hindustan Foods. We follow the theme in that and it worked beautifully. We think that it will become larger and magnifier in the next five years, contracting. I am a big believer of the fact that India has never seen brand disruption happening over the last five decades. Brand disruption did not happen because distribution was controlled. No one came in and did anything to unsettle leaders in the space. With the opening of distribution, we will see a lot more brands coming into play. As brand battle increases, none of the companies are investing in back-end. Back-end capability is non-glamorous and non-sexy for people to invest capital in. The next generation is surely not investing in back-end as much. So, we think existing strong capable back-end players, contracting companies will become very large and dominant. Most of the brands are getting into the space of trying to attack each other, whereas no one is addressing the back-end part.
Today for consumer companies, 60 percent of their manufacturing is controlled in-house while 40 percent broadly is outsourced. That 60 percent is also up for grabs. As the larger companies like Reckitt Benckiser, HUL, Coalgate, ITC try to address the brand battle with a Patanjali or a PNG or whoever is around them, they will let go off the manufacturing assets. That’s the lower ROI business for them potentially against the brands but it’s a great ROI business for the contracting companies. If they can generate 18-20 percent ROI on their businesses, keeping it sustainable over the life cycles of their businesses, then it accounts for a fantastic cash flow for those companies. Eventually, it will get concentrated because there are very few relevant contracting companies in this country. We think it was a great thing and we played that out in JHS which is an oral care contracting company, which does not work for Patanjali and Dabur. We’ve done that beautifully in Hindustan foods which is the largest consumer contracting company right now.
In the consumer durable space, who wins the bet as there are opportunities for investors across both, one is brand owners and other the contract manufacturers?
There is space which is created by all existing players in this country. There is so much space and room which they have created, as they love to have 70 percent gross margins, 100 percent ROI in their businesses. The fact is that they have created so much space for players to come and nibble into them. So, there is opportunity everywhere. We think that there is a great theme in contracting which is what we have invested in. There is also a great theme to invest in businesses which are relevant in the next 10 years and where the larger players are not present.
Which are these pockets?
We love dips and sauces as a category and it is a great business to be in. There could be a lot of other businesses which can become super niche. Let’s say in oral care category, why is there nothing for kids? It’s a complete vacuum and it is a category which will call for disproportionate attention in the next five-ten years. We think that there will be certain players which will do very well in oral care kids category. In dairy too for that matter. It is a value added category which does not seem to be present right now as significantly as it should be. So, there will be niches which will come in. There are a lot of categories which will call for attention. We invested in a few of them. We think there will be a lot of thickness in being in the space. It is not an either/or opportunity. It is not that we will buy contracting companies and not buy brands. We have loved brands and that’s what we have always done. We will invest in a few of them. They all seem to have done well. As long as we come early, and we think that we can add value to those businesses, we are most happy to go with them.
Do you believe there is multi-year growth in the dairy industry and valuations even if they seem expensive right now, could only get cheaper with time?
What fund has to really be seized about is that the opportunity that the fund is trying to address is large enough, dominant enough and sticky enough for the next five-ten years. As long as we get that parameter right, then we just have to believe that there is enough shelf space for these players. I have invested a bit in Parag Milk which was a private company. What really intrigues you is that if you can get shelf space against Amul on one side and Nestle on the other, then you have cracked it. Amul is the company which will not gun for profits and Nestle is the company which will always gun for profits. If you get shelf space between the two of them, then it is as good as it can get.
If you see today Parag Milk or Go as products, they are at number one or two in tier two cities in India. It is a great way to address the business opportunity. You will see that in a lot many pockets. For dairy, India is naturally blessed and there is a need for people looking at value for dairy products. That is the category which will grow disproportionately. It is the category which also requires a lot of sustenance. So, the larger guys will make them work better for them and ironically it is the category where the largest players have been absent. So, ITC and HUL have done nothing in that category which is a poor statement on the larger guys, but it is also the statement of risk taking appetite of next-generation entrepreneurs in that space.
You have invested in the liquor space. Why have you done that and what are your thoughts?
Almost 10-12 years back, we were the first guys to look at liquor. At that time the attractiveness was you can’t buy the entire Indian liquor space for a couple of billion dollars which was the value of United Spirits Ltd. at that time. It was ridiculous because it is an opportunity which will grow. But we had the dominant player which was plagued by its management issues. But the space is not going anywhere. It will remain and grow. So, we bet on it which played disproportionately very well. I think it is still in extremely early days of that life cycle. Globally, liquor businesses are at a multiplier to cigarette business. In India, it is reverse. In India, cigarette businesses are at a multiplier to liquor business. So, one wants to buy into social vices, then liquor is a better vice than cigarettes for investors. Liquor still has a long way to go.
There are operating hurdles in this country which will remain for foreseeable future, but it will also create opportunity for new players who are able to navigate themselves through this journey. You will have opportunity in various spaces in liquor. We have seen what happens in spirits, beers. Maybe at some stage, we will see the same happening in other categories too, wine perhaps. So, you will have a lot of opportunities in that category. In this category, you will get symbolised by 40-50 percent dominant market share leader. The good part is because these businesses will not need too much of a capital, it is always going to become a seller’s choice market. It will remain valuable. If you compete with global MNCs in that space, by default, the operating standards move up a bit more than what you'd expect to happen otherwise. The moment the operating parameters go up, it becomes a business which is slightly more transparent than before and a lot more valuable than before.
Have you invested in any retail company at all?
We have invested in Ethos which is a brand-play rather than a retail-play, but it is pretty much in that positioning.
We are in the throws of having one of the largest retail player of taking over an incumbent in the Indian online retail space to compete with another behemoth. Any thoughts here?
It is going to be a fantastic time in the Indian e-commerce business or retail business in generic, both online and offline. I have always believed that Indian retailers, let’s say Future Group, has missed out a fair bit of the Indian retail growth story. Because by the time they got relevant and large, it got overtook by e-commerce. So, they did not benefit from the great Indian retail boom. At some stage, over the next three-five years, you will see a significant alignment happen on offline and online retail. The first moves are getting made which is happening with Flipkart, Walmart etc. You will see a lot more happening in that space. While this large behemoth gets created, it also gives great opportunities for vertical specialists to become relevant. Target group of Flipkart to Amazon to Paytm to Snapdeal is almost similar. But there is a great target market evolved because of the e-com boom and those are meant for vertical specialists who will become extremely valuable.
Anybody existing right now?
In the beauty market, the TG is very different to the TG of Amazon, Flipkart or Paytm. So, that category will become relevant. We have very few players like Nykaa, Purple which are dominant players in that category. They will also become valuable. These platforms will become brands and they will have their own parameters. Every brand has its life cycle and the next-generation will not want to own brands which the earlier generations use to wear. The moment you move off from theoretically a Titan, the only way is to go up, which is to wear a Swiss watch which makes Ethos a very relevant player in that category because they are the largest distributors of Swiss watches in the country. So, you will see the evolution happen. It could be offline or online but there will be a great surge for vertical specialists who have TG market which is only theirs to become relevant, dominant and valuable.
Sixth Sense Ventures anchor investor in AVG Logistics’ IPO
AVG Logistics | March 31, 2018
https://economictimes.indiatimes.com/markets/ipos/fpos/sixth-sense-ventures-anchor-investor-in-avg-logistics-ipo/articleshow/63557042.cms
Sixth Sense India Opportunities II, promoted by former IDFC Securities equity analyst Nikhil Vora, has fully subscribed to the anchor portion of the SME IPO of AVG Logistics. The fund has invested Rs 9.41 crore, which accounts for the entire anchor investment portion and 28.47 % of the total issue size. The fund picked up 8,79,600 shares — or an 11 per cent stake — in AVG Logistics at Rs 107 a piece, according to a stock-exchange filing.
The logistics company is listing its shares on NSE Emerge, the stock exchange’s platform for small and medium enterprises. The offer opened on Wednesday and closes on 3 April. The company is proposing to issue 30.90 lakh equity shares and has set a price band of Rs 105-107 per share with a minimum lot size is of 1,200 equity shares. The issue closes on April 3. Systematix Corporate Services NSE 0.00 % is the Book Running Lead Manager.
Delhi-based AVG Logistics, which offers transportation, warehousing and value-added services to leading multinationals and Indian corporates, plans to use the funds raised to set up new warehousing facilities at Agartala and Mysuru and for working capital requirements.
The company owns 264 vehicles including trucks, reefer containers, bulkers and has 3.54 lakh square feet (sq.ft.) of warehousing space. It registered marginal increase in revenues at Rs 195 crore in FY17 against Rs 192 crore logged in FY16. In the first six months of FY18, its revenue was at Rs 103 crore.
Sanjay Gupta, managing director & CEO, said the company has an extensive network of 49 branches across 23 states and plans to expand its networks in more cities, besides adding own fleet of vehicles and warehousing space to cater to more number of customers and routes.
Sixth Sense Ventures comes as anchor investor in AVG Logistics
AVG Logistics | March 29, 2018
https://www.vccircle.com/sixth-sense-ventures-comes-as-anchor-investor-in-avg-logistics/
Third-party logistics services provider AVG Logistics Ltd has raised Rs 9.41 crore ($1.45 million) as anchor investment from consumer-focussed venture capital firm Sixth Sense Ventures ahead of its initial public offering.
The VC firm’s second fund, Sixth Sense India Opportunities II, picked up 8,79,600 shares—or an 11% stake—in AVG Logistics at Rs 107 apiece, according to a stock-exchange filing.
The logistics company is listing its shares on NSE Emerge, the stock exchange’s platform for small and medium enterprises. The offer opened on Wednesday and closes on 3 April. The company has set a price band of Rs 105-107 per share.
Sanjay Gupta, managing director and CEO at AVG Logistics, said Sixth Sense Venture’s expertise, reach and deep understanding of the consumer sector will help the company scale its business.
“The business is totally consumer-sector driven, which makes it extremely sticky,” said Nikhil Vora, founder of Sixth Sense.
Founded in 2010, Delhi-based AVG Logistics offers transportation, warehousing and value-added services.
As on 30 September 2017, the company had warehouses in Modinagar, Ghaziabad, Delhi and Panipat with total space of 3,54,000 sq ft. It has 49 branches across the country.
The company made a net profit of Rs 4.43 crore on revenue from operations of Rs 194.74 crore for the year through March 2017. Clients from the fast-moving consumer goods segment accounted for 57.2% of total revenue.
This is the second investment by Sixth Sense Ventures’ second domestic fund.
The fund made its debut investment earlier this month, backing Eupheus Learning. The education company develops textbooks and their digitised versions to integrate class and home learning.
The second fund, which has a target corpus of Rs 350 crore ($54 million), was aiming to mark the first close by March-end. However, Vora had said that the fund size might increase as talks with a few foreign investors were on.
Sixth Sense had raised Rs 125 crore in its first fund. It backed 10 companies, including gaming arcade operator Smaaash Entertainment Pvt. Ltd, Hindustan Foods Ltd, JHS Svendgaard Laboratories Pvt. Ltd and hyperlocal logistics service provider Grab.
Exclusive: Sixth Sense Ventures’ 2nd local fund closes debut deal
Eupheus Learning | March 19, 2018
https://www.vccircle.com/exclusive-sixth-sense-ventures-2nd-local-fund-closes-debut-deal/
Sixth Sense Ventures’ second domestic fund has made its first investment, a top executive of the consumer-focused venture capital firm told VCCircle.
Founder and chief executive Nikhil Vora said his firm has backed Delhi- based Eupheus Learning, which develops textbooks and their digitised versions to integrate class and home learning.
Sixth Sense has picked up a significant minority stake in the company, said Vora, not disclosing the investment amount. He added that he has joined the board of Eupheus as part of the transaction.
Commenting on the investment, Vora said, “We like the edu-tech space as it offers perpetual demand. We like Eupheus because of its strong and experienced promoter backing and it being the only unique player to have seamlessly integrated class-learning and home-learning solutions.”
Eupheus, operated by Proficiency Learning Solutions Pvt. Ltd, claims to have presence in over 1,500 schools. The clientele list includes Narayana Group of Educational Institutions, GD Goenka Group, and Delhi Public School Society.
Eupheus currently offers textbooks in 10 subjects (English, maths, general knowledge, environmental science, and others) for students of classes one to eight. It offers the same textual content in digitised version. The ed-tech firm seeks to develop its offerings in terms of subjects and classes both.
The services are offered on a subscription basis, and the solutions can be bought in a bundle or as standalone units.
“We have a readiness of will for learning solutions and with Sixth Sense this shall get further sharpened for curated solutions, which shall serve the fundamental needs of Indian K-12 space (kindergarten to class 12),” said Sarveshwar Shrivastava, co-founder of Eupheus.
The company has in the recent past partnered several global institutions to bolster its presence in the K-12 learning space, such as World Book Inc., RoboGarden Inc., Sanako, Fiction Express and Primo Toys.
Eupheus founders
Around 40 people, including the founders, Shrivastava, Rohit Dhar, Ved Prakash Khatri and Amit Kapoor, moved out of global education company Encyclopaedia Britannica and invested out of their pockets to launch the venture, Eupheus, in June 2017.
Shrivastava, a graduate of University of Illinois, had worked with General Electric, Corning, Telecom Australia, NIIT, Pearson and Encyclopaedia Britannica before launching the venture.
Dhar started his career as a teacher after completing his post-graduation in 1988 and was Shrivastava’s colleague in Encyclopaedia Britannica.
Khatri has over two decades of experience as sales executive in the K-12 publishing industry space. He has been associated with publications such as Ratna Sagar and Oxford in the past.
And Kapoor, a graduate of TA Pai Management Institute, earlier held the position of director, digital sales, at Encyclopaedia Britannica South Asia.
Sixth Sense’s new fund
The second fund, which has a target corpus of Rs 350 crore ($54 million), was supposed to mark the first close by the month-end.
However, Vora said that the fund size may increase as talks with a few foreign investors were on.
The firm, which is planning to deploy money in 12-15 companies from the new fund, will maintain its consumer-focused theme.
Sixth Sense had a target corpus of Rs 125 crore for its first fund and had backed 10 companies, including gaming arcade operator Smaaash Entertainment Pvt. Ltd, Hindustan Foods Ltd, PepsiCo Inc’s Kurkure snack brand, JHS Svendgaard Laboratories Pvt. Ltd and hyperlocal logistics service provider Grab.
Nearly 50 investors, including family offices and high net-worth individuals, besides Small Industries Development Bank of India, had come in as limited partners for the first fund. Vora said that the fund has started giving returns to investors.
Vora’s investments
Vora was recently reported to be investing in his personal capacity in Gujarat-based Advance Syntex Ltd, that makes glitter powder and polyester film. He was an early investor in One97 Communications Ltd, the parent of digital wallet firm Paytm. He sold his stake in One97 to Chinese e-commerce giant Alibaba in May last year, reaping almost 75-fold gains.
Around the same time, Vora also exited his investment in Kangaroo Kids Education Ltd, when the operator of pre-schools and K-12 schools was acquired by EuroKids International Pvt. Ltd.
Vora is also an investor in Fogg-deo- maker Vini Cosmetics, which raised funds from private equity firm WestBridge Capital Partners in September 2017. He has also invested in Noida-based Soothe Healthcare Pvt. Ltd, the firm behind Paree brand of sanitary napkins.
Besides, Vora has invested in Avigo Capital-backed sports-focused digital display solutions firm Technology Frontiers and aircraft maintenance and repair company AirWorks, which is backed by private equity firms New Enterprise Associates and GTI Capital.
Deals in ed-tech space
Other ed-tech startups that have raised funds recently include Toppr, which secured $100,000 (Rs 65 lakh) last month as part of an extended Series B round from Hong Kong- based early-stage investor Axis Capital Partners.
In the beginning of this month, Buddy4Study raised $3 million (Rs 20 crore) in a Series A round from existing investor CBA Capital, which is backed by the Michael and Susan Dell Foundation.
In early February, CollegeDekho raised $2 million (Rs 13.2 crore) in its third round from London-based Man Capital LLP, Girnar Software and others.
Last month, Pune-based ed-tech startup Rubix108 Technologies secured $1 million (Rs 6.5 crore) in a pre-Series A round led by Polaris Fund.
Bengaluru-based iNurture raised Rs 28 crore in a Series C round led by Ventureast in the last week of January.
Aeon Learning Pvt. Ltd raised $3.2 million (Rs 20.43 crore) in a Series B round from MEMG Family Office LLP in the last week of January.
Sixth Sense’s Nikhil Vora to invest in glitter-powder maker
Sixth Sense Ventures | March 5, 2018
https://www.vccircle.com/sixth-senses-nikhil-vora-to-invest-in-glitter-powder-maker/
Nikhil Vora, founder of consumer sector-focussed venture capital firm Sixth Sense Ventures, is investing in a company that makes glitter powder and polyester film, according to a note the firm sent to its shareholders seeking approval for the investment.
Vora, according to the note, will invest nearly Rs 4 crore ($610,000) in his personal capacity in the Vadodara, Gujarat-based Advance Syntex Ltd, which operates under the brand name Midas Glitter.
Vora will pick up a stake of around 14% in the company, the note shows.
When contacted, Vora confirmed the development. An email query sent to Advance Syntex didn’t get any response till the time of publishing this report.
Advance Syntex has been making metallic yarn since 1974 and introduced glitter powder in 1980, according to its website. Besides glitter powder made of polyester metallic film, the company makes metallic yarn, lacquer-coated aluminium-metallised polyester film and other products.
The glitter powder the company supplies is widely used in plastic moulding, fabrics, decorations and events.
The company posted net sales of Rs 54.6 crore for 2016-17, a 12.6% rise over Rs 48.5 crore for 2015-16.
Vora’s previous bets
Vora was an early investor in One97 Communications Ltd, the parent of digital wallet firm Paytm. He sold his stake in One97 to Chinese e-commerce giant Alibaba in May last year, reaping almost 75-fold gains.
Around the same time, Vora also exited his investment in Kangaroo Kids Education Ltd when the operator of pre-schools and K-12 schools was acquired by EuroKids International Pvt. Ltd.
Vora is also an investor in Fogg deo maker Vini Cosmetics, which raised funds from private equity firm WestBridge Capital Partners in September 2017. He has also invested in Noida-based Soothe Healthcare Pvt. Ltd, the firm behind Paree brand of sanitary napkins.
Besides, Vora has invested in Avigo Capital-backed sports-focussed digital display solutions firm Technology Frontiers and aircraft maintenance and repair company AirWorks, which is backed by private equity firms New Enterprise Associates and GTI Capital.
Meanwhile, Sixth Sense Ventures is on the verge of marking the first close of its second domestic fund. The fund has a target corpus of Rs 350 crore ($54 million) and aims to invest in 12 to 15 companies.
Sixth Sense’s first fund had a corpus of Rs 125 crore ($19.2 million) and backed 10 companies, including gaming arcade operator Smaaash Entertainment Pvt. Ltd, Hindustan Foods Ltd, JHS Svendgaard Laboratories Pvt. Ltd and hyperlocal logistics service provider Grab.
Sixth Sense Ventures nears first close of second fund
Sixth Sense Ventures | February 13, 2018
https://www.vccircle.com/sixth-sense-ventures-nears-first-close-of-second-fund
Sixth Sense Ventures is soon going to mark the first close of its second domestic fund, the consumer-focused venture capital firm's founder and CEO told VCCircle.
According to Nikhil Vora, the second fund with a target corpus of Rs 350 crore ($54 million) will mark the first close by the month-end. “Nearly every investor who participated in our last fund are coming back for this vehicle. We will mark the first close anywhere between Rs 150-175 crore by February-end.”
Vora, however, hinted that talks with a few foreign investors are also on and the fund size may increase if they come on board. “There are some global consumer companies that we are in touch with. If they participate, it will be outside of the Rs 350 crore.”
The VC firm, which is planning to invest in 12-15 companies from the new fund, will maintain its consumer-focused theme.
Fund-I
Sixth Sense had a target corpus of Rs 125 crore for its first fund and had backed 10 companies, including Gaming arcade operator Smaaash Entertainment Pvt. Ltd, Hindustan Foods Ltd, PepsiCo Inc’s Kurkure snack brand, JHS Svendgaard Laboratories Pvt Ltd and hyperlocal logistics service provider Grab.
Nearly 50 investors, including family offices and high net-worth individuals, besides Small Industries Development Bank of India had come in as limited partners to the first fund. Vora said that the fund has started returning capital to its investors.
“Sixth Sense has become the first fund, ever, in the country to return capital back to its lead investors within one to one-and-half years from the date of the closure of a seven-year fund,” he said, adding that they have already returned about Rs 25 crore to SIDBI.
“We’ve have only exited from JHS, but the exit route looks brighter for several companies within the next two years.”
Vora’s investments
In his personal capacity, Vora has invested in One97 Communications, the parent of mobile wallet and e-commerce firm Paytm; Kangaroo Kids Education Ltd, which runs Kangaroo Kids Preschool and Billabong High International School; and Vini Cosmetics, a consumer goods company that had also raised funding from Sequoia Capital.
He has also invested in Avigo Capital-backed sports-focused digital display solutions firm Technology Frontiers, and MRO AirWorks, which counts NEA and GTI Capital as its investors.
Earlier this year, he had sold his stake in Paytm to Chinese e-commerce giant Alibaba, reaping gains of almost 75 times.
Sixth Sense buys into Sachin-backed Smaaash
Smaaash | November 27, 2017
https://timesofindia.indiatimes.com/business/india-business/sixth-sense-buys-into-sachin-backed-smaaash/articleshow/61812617.cms
Domestic consumer focused venture capital fund Sixth Sense Ventures has struck possibly pre-IPO deal with Smaaash, the country's largest network of in-city family entertainment centers owned by Shripal Morakhia and cricket legend Sachin Tendulkar.
Smaaash Entertainment, co-owned by former owner of SSKI-Sharekhan Shripal Morakhia and former cricketer Sachin Tendulkar, is known for its sports simulation technology and proprietary gamification technologies such as a unique twilight bowling zone, motor racing and bike racing simulators and the go-karting tracks in Mumbai and Gurugram.
"Smaaash is uniquely positioned to fulfil the latent demand of family entertainment within city boundaries, which is almost non-existent and there is a huge first mover advantage with limited free space, increasing urbansition and higher disposable income," Sixth Sense founder and CEO Nikhil Vora said. Sixth Sense is said to have invested just under Rs 30 crore though the the investment figurewas not disclosed officilaly.
Smaaash operates 30 centers with six lakh sqft of entertainment zone across top Indian metros and had recently acquired blue0 entertainment, a bowling venture from PVR Cinemas and Major Cineplex. Smaaash is said to be consider an IPO sometime in 2018.
Exclusive: Tendulkar-backed Smaaash raises capital from Sixth Sense Ventures
Smaaash | November 27, 2017
https://www.vccircle.com/exclusive-tendulkar-backed-smaaash-raises-capital-from-sixth-sense-ventures/
Gaming arcade operator Smaaash Entertainment Pvt. Ltd has raised fresh funding from Sixth Sense Ventures, the head of the consumer-centric venture capital firm said.
Nikhil Vora told VCCircle that Sixth Sense picked up a minority stake in the company. “I believe Smaaash will have an extremely interesting journey, being an entertainment player with a compelling product proposition and a futuristic global gaming play.”
Vora, who has joined the company’s board as part of the transaction, said the VC firm has made a large investment in Smaaash, but did not disclose the quantum of funding. Sixth Sense typically invests between $7-10 million (Rs 45-65 crore) in its portfolio firms. VCCircle could not immediately ascertain the financial details.
Smaaash is promoted by Shripal Morakhia, who is credited with building some of the most reputed Indian consumer and financial services brands, including SSKI, Sharekhan, YOBOHO, Amar Chitra Katha and iDream Productions.
Smaaash Entertainment
Smaaash is backed by cricketer Sachin Tendulkar and sports investment fund FidelisWorld. In April, VCCircle had reported that Smaaash had hired Axis Capital Ltd and Edelweiss Financial Services Ltd to manage its proposed initial public offering.
Set up in 2009, Smaaash owns and operates sports-centric digital entertainment centres for cricket, football, racing, bowling and other recreational activities.
The company operates 30 centres across India, besides having a global presence through its centres in the US, China and the West Asian countries.
Smaaash has aggressively invested in research and development to develop its gaming properties, and have a number of patents for virtual and augmented reality-based offerings, including for cricket and football.
In May 2014, FidelisWorld had bought a 39% stake in the company for $10.8 million. In August, the company had agreed to acquire multiplex chain PVR Ltd’s bowling joint-venture BluO Entertainment Ltd for Rs 86 crore ($13.5 million) in an all-cash deal.
Sixth Sense Ventures
Sixth Sense made the final close of its debut fund last year, after readjusting the target corpus of the fund.
Its portfolio firms include Weddingz.in, an online marketplace for wedding venues and vendors, JHS Svendgaard Laboratories Pvt Ltd, an oral care products firm, and Mumbai-based hyperlocal logistics service provider Grab.
The venture capital firm had recently appointed Nimisha Nagarsekar, the former head – of commercial and investor relations at Colgate India, as its chief financial officer.
Vora’s investments
In his personal capacity, Vora has invested in One97 Communications, the parent of mobile wallet and e-commerce firm Paytm; Kangaroo Kids Education Ltd, which runs Kangaroo Kids Preschool and Billabong High International School; and Vini Cosmetics, a consumer goods company which had raised funding from Sequoia Capital.
He has also backed sports-focused digital display solutions firm Technology Frontiers which is also backed by Avigo Capital, and MRO AirWorks which counts NEA and GTI Capital as its investors.
Earlier this year, Vora had sold his stake in Paytm to Chinese e-commerce giant Alibaba to reap gains of almost 75 times.
Sixth Sense plans second fund, distribution platform
Sixth Sense Ventures | September 26, 2017
https://www.livemint.com/Companies/eEwmoW0W4AWhibd4tp500H/Sixth-Sense-plans-second-fund-distribution-platform.html
Venture capital firm Sixth Sense Ventures is planning to launch a second fund of Rs250 crore by next month, founder Nikhil Vora said.
Vora, a former managing director at IDFC Securities and its co-head of research, launched Sixth Sense in 2013 to make early-stage investments in consumer-focused companies.
Sixth Sense raised Rs125 crore for its first, seven-year rupee fund. Its initial investment was in Ethos watches, a retail chain for luxury watches in 2014, followed by food delivery service Grab; oral care products maker JHS; weddingz.in; Soothe healthcare and road side assistance company Cross roads. Its average investment size is Rs5-10 crore.
With its second and larger fund, Vora plans to now also tap overseas investors.
“We expect some global consumer companies apart from institutional investors and other existing high net worth individuals (HNIs) and family offices to invest for our second fund,” said Vora.
Sixth Sense is also setting up India’s first third party distribution network to help upcoming consumer companies reach their products to consumers efficiently. It is expected to be operational by December end, said Vora. Nimisha Nagarsekar, head of commercial and investor relations at Colgate Palmolive India Ltd has been hired to head the platform, he added.
“We understand and realize that the biggest bane for consumer entrepreneur is that the cost to get the shelf is very expensive. The established companies actually realize that the distribution is not yielding them the benefit they ought to get. On the other hand, we have these new companies which are coming up, and they don’t have distribution.
“Through our platform, we can fundamentally marry the two and be the platform of choice for these new brands which are evolving and can get them on board with the existing distribution structures of established companies,” said Vora.
“In the existing distribution networks, every company has hundreds of people reaching out to same stores, selling to the same chain, which is a fairly inefficient model because someone who is selling a single product line is still having hundreds of feet on street to sell to the same stores,” added Vora.
Sixth Sense will not create its own network, but will leverage existing networks.
“We are not creating our own feet on street. There is already a huge distribution network there with every company. We will ensure that they marry to the companies which come to us and connect these two, which will improve the economics,” said Vora.
The platform will be entirely funded by the venture firm.
Even as it plans to raise a new fund, it continues to aggressively chase investment opportunities for its current fund.
On 14 September, Mint reported that Sixth Sense Ventures is in talks to buy a small stake in condiments and sauce company Veeba Food Services Pvt. Ltd, in a deal valuing the company at over $100 million.