MENSA BRANDS- AN ACQUISITION ENTREPRENEURSHIP MODEL FOUNDED BY EX-CEO, MYNTRA, RAISES $50 MILLION IN SERIES A ROUND2 years ago Rituka M
With the acquisition of Medlife by the e-pharmacy unicorn- PharmEasy, the shareholders’ stake was estimated at a whopping $250 million. This development has made PharmEasy the single-largest player in the online pharmacy sector domestically. Ananth Narayanan, who joined the acquired company in 2019 as the co-founder and CEO, after stepping down from the CEO position at Walmart-controlled e-commerce fashion company – Myntra prior that year, made a successful exit from the PharmEasy- Medlife deal.
Setting up his venture, Mensa Brands, Mr. Narayanan has built it based on the business model of a US-based consumer goods company, Thras.io. Following an acquisition entrepreneurship route, the company plays two roles, an entrepreneur, and a venture capitalist. Under this model, the company uses a RCubed model (Reviews, Rating, Rank) that helps in acquiring an existing business and then running the business with to scale operations.
Thras.io surfs the Amazon third-party ecosystem to classify category-leading products, usually with fewer SKUs with over a million ($1-70M) in sales, and assesses the third-party seller based on its discretionary earnings, which is valued at 2-4x multiple. The company also allows the Amazon sellers an option to sell their stake in the business. Mensa aims to take a similar route to the US based company and build a technology-led house for consumer brands based out of India for the world. The D2C skew in the Indian market accounts approximately to a mere 5%, which allows scope for scalability. Mensa intends to acquire and partner with digital/online-first brands with a revenue of Rs. 10-70 crores, which are profitable & can be grown sustainably, and gain a majority stake-holding in such a brand.
In its Series A round, Mensa Brands has raised about $50 million in a debt-equity mix led by Accel Partners, Falcon Edge Capital, Norwest Venture Partners, and marquee angel investors such as Kunal Shah, Mukesh Bansal, Rahul Mehta of DST Global, and Scott Shleifer of Tiger Global, and secured the debt from Alteria Capital and InnoVen Capital. Mr. Narayanan, Founder, Mensa said, “The goal is to invest in and acquire about 50 brands over the next three years, across categories such as home, garden, personal care, beauty and apparel.” Initially aiming to secure a majority stake (50+%), the end goal is to acquire a 100% stake in the brand after growing the brand considerably. With the pandemic bringing a good amount of momentum to the online sales, the time of launch of this acquisition-entrepreneurship company is ideal, as several businesses which satisfy the criteria but are struggling due to lack of funds/technology will gain an impetus by partnering with Mensa, a neutral platform which is not affiliated to a single marketplace. The team at Mensa boasts in-house domain expertise in marketplace-native technology, data mining and digital marketing, category management and operations, brand building, and global expansion, revealed the company statement. The startup intends to push the funds towards product & technology development, growth acquisition, marketing & branding, but the majority of the funds shall be utilized to acquire brands, and create a mensa (Greek for ‘constellation’) of star brands.
Speaking on the investment, Subrata Mitra, partner, Accel Partners said, “We’re excited to partner with Ananth and the team at Mensa. Not only are they truly strategic and high-calibre, but also have chosen a problem—brand aggregation—that we believe has the right tailwinds. With the digital acceleration of commerce globally, this model will be additive to brand owners, platforms, and consumers, and should thus scale rapidly.” Navroz Udwadia, Co-founder, Falcon Edge, added, “Ananth and Mensa are creating a fast growth and profitable startup – a rare combination, and we fundamentally believe that a tech-led roll-up play across categories will create immense value.”