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Sixth Sense plans second fund, distribution platform

September 26, 2017

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;; 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.