Why it Makes Sense for Investors to Bet on Consumer Businesses (B2C)

According to the most recent research funding by venture capitalists in direct-to-consumer (D2C) aggregators increased 30 times in a single year to reach approximately $1.2 billion in 2021. VC investment increased from $40 million in 2020 to $1187 million in 2021, resulting in the emergence of four new unicorns in the market.

D2C brands are enterprises that started with an online-first distribution before going omnichannel and get the majority of their revenue or customer acquisition from direct-to-consumer internet channels.

According to the research, "D2C brands experienced exponential growth, driven by a dual demand and supply-side push—increasing depth in online consumer purchasing preferences supported by greater ease of developing an online presence or channels for the brand." Presently larger Multinational Companies are playing catch-up in terms of product and market innovation, and well-run D2C businesses are quicker to market. Fundraising is essential for startups to maintain their advantages and expand to fill significant gaps before more established firms emerge and adapt.

According to India D2C Summit 2022, just 5% of the 600 companies in the D2C sector have reached Rs 100 crore revenue milestone as of yet, while 20% have sales between Rs20 and Rs. 90 crore and the remaining 80% have revenue below Rs20 crore each. These companies may eventually consolidate. They will undoubtedly need to strengthen their offline presence, and D2C brands that have managed to build some recall will still be relevant. Access to finances becomes crucial throughout the construction stage for any D2C firm because they are still reaching out to customers and establishing a base.

Direct-to-consumer (D2C) brands in India are flourishing as significant financing is being invested in the market. According to Economic Times, between January 2020 and August 2021, VC companies supported roughly 146 direct-to-consumer brands with investments totaling close to $500 million. The research added that since the pandemic struck the nation in late March 2020, almost two of these businesses had raised money weekly on average.

D2C brands market and sell items directly to customers through online and offline channels, eschewing the traditional strategy of having numerous supply chain partners. They work in industries like food and drink, personal care, cosmetics, clothing, and electronics & appliances. In India, more than 600 D2C brands are active.

D2C brands provide a number of benefits over conventional brands. These firms have been effective in introducing products rapidly, often within three to four months after they have an understanding of online customers, while incumbent brands typically take nine to twelve months to debut new products.

D2C brands place a strong emphasis on the user experience, controlling variables like delivery and packaging, and how they connect and engage with the users in order to set themselves apart from more established traditional competitors. Millions of millennials and members of Generation Z are choosing these new brands which have developed tailored product offerings over well-known ones. Traditional FMCG companies are responding to the shift in consumer expectations by having a stronger online presence and investing in and acquiring stakes in brands that are built exclusively for the internet.

Notably, D2C businesses are expanding their footprint across India due to a growth in demand from smaller areas. Initially, these businesses only catered to users in metros and tier 1 cities. D2C firms ignore the conventional strategy of having several supply chain partners and instead use online and offline channels to market and sell products directly to customers.

If you’re a passionate entrepreneur with an exceptional D2C business/idea and are looking to fundraise, reach out to us at https://luckbox.vc/index.php/submit-pitch-deck/.?