Summary
Bengaluru: Aavishkaar Capital is poised to spearhead a new investment round for Zouk, a prominent direct-to-consumer fashion brand. This investment marks Aavishkaar Capital’s inaugural entry into Zouk’s funding structure and the tech-driven fashion sector, according to informed sources who spoke with Mint. The funding round is anticipated to conclude at approximately $8 million, attracting participation from other pre-existing investors. One insider indicated that this infusion will primarily involve new capital, with a secondary component of 5 to 10 percent likely. This capital injection, potentially Zouk’s most significant to date, aims to facilitate the company’s expansion in both its online and offline activities. Additionally, discussions with certain existing investors are reportedly in the preliminary stages, with the round expected to finalize within the next few weeks. Neither Zouk nor Aavishkaar Capital provided comments when approached by Mint for further insight. Aavishkaar Capital, which has established eight funds since its inception in 2001, traditionally focuses on three primary investment sectors: financial inclusion, food and agriculture, and essential services. Recently, the firm has increased its focus on tech-enabled domains, including climate technology. Aavishkaar Capital targets investments in early to growth-stage firms, with typical funding amounts ranging from $5 million to $25 million. The firm operates not only in India but also across various regions in Asia and Sub-Saharan Africa, managing approximately half a billion dollars in assets. Its Indian portfolio includes companies such as Agrostar, Ergos, GoDesi, and Utkarsh Small Finance Bank. Zouk previously secured $3 million in a Series A funding round led by Stellaris Venture Partners in 2021, valuing the company at nearly $40 million. This round also saw participation from prominent entities including Titan Capital, Sharrp Ventures, and various notable investors from the business community, as noted by market intelligence firm Tracxn. Over recent years, investors have increasingly favored innovative D2C brands across sectors, particularly in fashion and health, as changing consumer patterns have led to a surge in premiumization. Established industry leaders have lost market share to emerging startups, which have excelled in product innovation and supply chain strategies tailored to appeal to the preferences of Generation Z and millennial consumers. Recent investments in traditionally competitive categories have included significant funding for brands such as Mokobara (raising $12 million), Pant Project ($4.25 million), and Libas ($18 million) within recent months. Zouk specializes in the production of bags, wallets, and footwear. It has effectively utilized prior fundraising to enhance its promotional efforts, expand its product range, bolster its workforce, and strengthen its supply chain, in addition to establishing offline retail locations. The brand maintains a robust online presence via its own website and platforms like Amazon, Myntra, Flipkart, Ajio, Nykaa, and Tata Cliq. Zouk currently operates physical stores in major Indian cities, including the National Capital Region, Bengaluru, and Mumbai. This commitment to offline expansion is aligned with strategies implemented by other leading startups such as Purplle, Nykaa, and Mamaearth, which are likewise embracing an omnichannel approach in response to shifts in consumer shopping behaviors post-pandemic. A study conducted by RedSeer Strategy Consultants, in conjunction with investors Accel and Fireside Ventures, has underscored the necessity for brands to evolve towards an omnichannel strategy to leverage the expansive Indian retail market, which is projected to surpass $2 trillion by 2030, with 90 percent remaining offline. Brands are encouraged to view online platforms as potential customer acquisition tools for their offline operations while simultaneously evaluating the optimal timing for entering offline markets, selecting appropriate channels, conducting pilot projects, and implementing strategies that enable synergy between online and offline sales. Founded in 2015 by Disha Singh and Pradeep Krishnakumar, Zouk raised its initial round of external funding from Stellaris six years later. In the preceding year, the company saw its revenue from operations more than double to ₹47.4 crore, while its losses escalated to ₹10.5 crore, compared to a previous loss of ₹77.4 lakh in FY22. For continuous updates on corporate developments, please refer to the Mint News App for daily market insights and business news.
Original Source: www.livemint.com
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