Edelweiss Discovery Fund – Series 1 Cat II AIF

Consumer Brands

• Large opportunity: Retail market expected to grow to $1.7 Tn by 2025.
• Category creation: Entrepreneurs are targeting the unorganized segment and offering more convenient alternatives. E.g.: Licious for fresh meat.
• Technology Enablers:
  • E-Commerce – quick access to vast distribution.
  • Social Media – cost-effective marketing for focused target group.

Specialized E-commerce

• Large Opportunity: ECommerce GMV touched $40 Bn USD in 2020 and growing at 20% CAGR.
• Benefits of Specialization:
  • Specialized players tend to dominate niche categories and have lower customer acquisition costs and higher retention.
  • Focus on procurement and logistics leads to higher Gross Margins and superior service quality.

B2B Disruptors

• Large Opportunity: Several B2B services, businesses are disrupting traditional inefficient solutions in logistics, supply chain and other functions
• Market share gain from unorganized: These companies are rapidly taking share from unorganized segment. E.g. Logistics $174 Bn industry, only 3% organized.
• Technology differentiation Using technology to drive superior service levels to end users.

Company A

• Company A is a supplier of pallets to companies for their supply chain operations
• Company A has pioneered a leasing model that enables FMCG companies to use pallets and crates on a pay per use basis.
• Technology dashboard for FMCG customers to track their supply chain operations in real time.
• LFY Rev : 177 Cr, Growth Rate : 20%

Company B

• Company B buys used electronics through the exchange programs of e-commerce platforms. The products are then refurbished and sold on e-commerce platforms.
• India’s smartphone market is 173 mn units in FY21 and smartphone user base is ~500 mn & growing at double digits. These drives demand on both the demand and supply side for the company.
• LFY Rev : 345 Cr, Growth Rate : 41%

Company C

• Company C began with the premise of offering group fitness as a more sustainable alternative to solo training. It has grown to become the largest collection of fitness D2C brands.
• Extended offerings to online fitness sessions, ecommerce for fitness gear, health food, mental health solutions and telehealth.
• LFY Rev : 250 Cr, Growth Rate : 257%

Company D

• Company D is a high speed long distance trucking aggregator, specializing in efficient solutions for time-sensitive cargo of ECommerce, Courier, Pharma and Retail businesses.
• They use technology to significantly improve customer supply chain metrics – asset utilization is 2x industry, Customer TATs better by 20%
• LFY Revenue 91 Cr, Growth Rate 49%.

Company E

• Company E operates a marketplace for hospital to procure medical devices and consumables.
• Traditional distribution channel, particularly for consumables is fragmented – unreliable and high channel margin.
• The company provides a single window sourcing platform along with an efficient logistics solution to ensure timely delivery of critical products.
• LFY Rev : 559 Cr, Growth Rate : 220%

Company F

• Company F is disrupting the agency channel for insurance distribution.
• 120,000 offline advisors tied up with the platform to sell insurance policies online.
• Also a technology company, selling its risk assessment platform to insurers as a SaaS product
• LFY Rev : 164 Cr, Growth Rate : 30%

The fund aims to select fundamentally strong companies on a high growth trajectory

Origination

• Edelweiss Network
• Strong ties with VCs and Investment Banks
• Top-down themes proprietary deal ideas.

Transaction Execution

• Due diligence to cover commercial, accounting and legal matters
• Deep focus on strong corporate governance

Active Portfolio Monitoring

• Work closely with founders on overall business strategy
• Help with key senior hires
• Bolt-on acquisitions
• Strengthen governance

Exit

• Proactive approach to engage with prospective buyers / bankers
• Exit negotiation and deal execution

• Low dependence on IPO markets.
• Focus on backing high quality companies. Will also have exit opportunities via secondary transactions or sale to strategic buyer.
• Rigorous fundamental-based approach. Will not chase popular names at unrealistic valuations.
• Mid-Stage PE provides margin of safety: Potential for valuation multiples to expand as the companies gain market share
• Strong emphasis on assessing disruption-risk as part of commercial diligence
• Invest only in companies that have established product-market fit and attractive unit economics.
• Focus on background checks of owners and key management.
• Fund management team has extensive experience to check for corporate governance