Kolkata-headquartered conglomerate, ITC Limited, is now looking to invest directly in Indian startups, with a focus on fast-moving consumer goods (FMCG). ITC chairman Sanjiv Puri reportedly said that the company already invests in alternative investment funds (AIFs), which, in turn, invest in startups. ITC has invested in Fireside Ventures and is closing an investment round in another fund. “While FMCG is a focus area for startup investment, we are not closed to other opportunities either,” he said.
ITC is looking to use own cash reserves to invest directly in startups that could give the company access into newer categories and business models, or provide digital or physical infrastructure.
The conglomerate recently forayed into ecommerce where it is currently piloting to sell Fabelle chocolate products. It will sell all FMCG products on its online store from August. It will start with deliveries to Mumbai, Delhi, Chennai, Kolkata, Bengaluru and Hyderabad initially.
The company has tied up with ecommerce logistics partners for last-mile delivery and its own ecommerce distributors will fulfil orders.
The FMCG sector has been booming in India and has become the fourth largest sector in the Indian economy. It is projected to grow 20.6% annually to reach an estimated $103.7 Bn in market value by 2020.
ITC is also optimistic about long-term growth due to India’s low per capita consumption and demographics. “Some of the policy directives and reforms will also lead to higher consumption. We are not pulling back our investment and it will, in fact, go up due to the opportunities that will come,” Puri said.
ITC joins the club of companies such as Goenka Group, Marico etc. Last year, RP-Sanjiv Goenka Group created a venture capital fund of $14.74 Mn (INR 1 Bn) to invest in FMCG startups.
India is home to over 39K active startups across different sectors. According to Inc42’s Indian Tech Startup Funding Report H1 2019, Indian startups raised $5.85 Bn across 360 deals.
Ecommerce ($1.03 Bn), fintech ($1.01 Bn) and transport tech ($1.22 Bn) emerged as the top sectors in terms of the total funding amount. The share of the top three sectors in the total funding raised by Indian startups in H1 2019 was 48.83%.