Five months old Thrasio model startup UpScalio raised $42.5 million in Series A funding. This move highlights the newfound investor’s romance with the Thrasio style-business model in India.
Nearly a dozen startups in India have been chanting the same mantra of building a house of online brands. The trend has been set by the success of US-based breakout unicorn Thrasio.
The US-based company garnered $500 million in revenue and clocked $100 million in profit in 2020, disrupting the digital consumer goods segment.
UpScalio aims to be a brand investor and operator by partnering with digital-first brands
UpScalio was founded five months back by former McKinsey and Company consultant Gautam Kshatriya, former Bain and Company consultant Saaim Khan, and former Hotstar and Purplle marketing and growth executive Nitin Agarwal. The company has a team of over 50 specialists across functions.
“This team is expected to double to over 100 by the end of the year as the e-commerce accelerator launches operations with its partner businesses,” the company said in a statement.
The company is looking at a ticket size of anywhere between INR 5 crore and INR 50 crore.
“Having said that, we are flexible, especially on the upper end, for high-quality assets and entrepreneurs,” said Gautam Kshatriya, CEO and Co-founder of UpScalio.
“We are in advanced stages of transactions with several brands and will be announcing those soon,” he added.
UpScalio will help the brands with multi-marketplace management, digital marketing, branding, logistics, sourcing, finance and business operations, all optimized using advanced analytics. The company will help them scale in a profitable manner, the statement added.
Indian startup’s Thrasio moment
Indian investors are investing nearly $300 million in the first funding rounds of Thrasio’s India equivalents — many of whom are avoiding the spotlight, not even disclosing their company names to anyone except employees and investors.
Amazon has millions of third-party sellers, which is only likely to grow in the future. More than 1 million sellers reportedly joined the platform last year.
So, for anyone looking to adapt to the Thrasio model, now seems to be a rather lucrative time as India has 10,000-15,000 brands in total, which is undoubtedly appealing.
Mensa, GOAT and the others are looking at brands across small and large sectors- fashion, apparel, home decor, arts and crafts, bedding, yoga mats, bedsheets, premium food items, kitchenware and more.
The roll-up ecosystem that has seen millions in funding is yet to see any actual acquisition. Most of the investments in the sector are currently driven by a growing market and investor acquisitions. In other words, all the money raised is based on promises and a solid pitch.
Nevertheless, these companies are roaring to buy online brands in the next couple of years rapidly.
The bottlenecks
India has a vast retail market, and compared to it, and the online market is relatively small. Online, which appears to be the solution, could be a roadblock, too, going ahead.
Currently, the sector is witnessing a boom given the restriction on movement due to the ongoing pandemic. Experts believe that the future of these models will be determined by what price they buy brands at and how they buy them- using equity or debt.
There is a brawl in the valuation circuit as most Thrasio style startups are well funded and want the best, hottest brands.
They all approach 10-15 of the best sellers, and because everyone is courting the seller, they can command their price. Only the future would tell how these brands are acquired and how much these decisions will chalk the success of the model in India.
