Tech-First Venture Capitalists Target New-Age Consumer Brands for Investment

Tech-first venture capital firm Nexus Venture Partners , renowned for its expertise in software-as-a-service (SaaS), is poised to lead a USD 5 million funding round in specialty coffee brand abCoffee , sources familiar with the matter revealed. This investment is expected to triple the coffee brand's valuation to approximately USD 15 million in less than six months. In a separate development, Nexus has reportedly extended a term sheet to Aukera, a lab-grown diamond (LBD) manufacturer.

Accel , an early investor in Flipkart , is also finalizing a USD 12 million funding round in fast fashion brand NEWME , as per the same sources. Accel had divested its stake in Flipkart last year. Additionally, Peak XV Partners recently spearheaded a USD 12 million funding round for the luggage brand Mokobara . Nexus's investment in AbCoffee comes at a time when specialty coffee chains like Third Wave and Blue Tokai are challenging larger competitors such as Starbucks and Tim Hortons.

Founders of AbCoffee and Aukera, Abhijeet Anand and Lisa Mukhedkar, respectively, declined to comment on the fundraising talks. An email sent to Nexus remained unanswered. "Startups like AbCoffee are considered consumer brands, but they are heavily leveraging technology for better capital efficiency in stores & coffee sourcing. This is where investors like Nexus see potential in these firms," explained a source familiar with the AbCoffee investment. The startup currently operates around 27 stores and plans to add 13 more in the coming months across New Delhi and its headquarters in Mumbai. It may also enter Bengaluru."They are focusing on grab-and-go models, offering a basic cappuccino at around ?97.

Aukera, on the other hand, has witnessed a surge in demand for LBD diamonds due to the price drop in both natural and lab-grown diamonds, as reported by ET last November. LBD diamonds are more affordable to affluent young consumers compared to natural diamonds. "Investors have been seeking new investment themes since the funding slowdown, and consumer brands have emerged as a focus area across funds. If the product is compelling and appealing, investors are eager to invest, recognizing that the offline market is substantial," said an investor in the sector.

Recently, it was reported that direct-to-consumer skincare firm Foxtale Consumer raised approximately USD 14 million in a funding round led by Singapore-based Panthera Growth Partners. Other startups like The Souled Store, The Good Bug, and Solethreads, also secured venture funding last year, thus generating a potential for future expansion.