Captain Fresh’s IPO Playbook: Tapping Global B2B Opportunity, Acquisition Plans & B2C Ambitions

Captain Fresh’s IPO Playbook: Tapping Global B2B Opportunity, Acquisition Plans & B2C Ambitions

SUMMARY

Captain Fresh, which recently started a pre-IPO fundraise, plans to use new capital to fund growth and expansion, ahead of the potential $300 Mn-$400 Mn public offer

The company has turned EBITDA positive in the first two quarters of FY25, claimed founder and Group CEO Utham Gowda, and added that Captain Fresh IPO is likely to come by the end of the year

Gowda told Inc42 that the company will eventually look to enter the B2C seafood sector in places like the US and Europe, while keeping a majority of its supply-side operations in India

As Bengaluru-based B2B seafood startup Captain Fresh

Captain Fresh


Sector
Agritech
Stage
Debt funding
Total Funding
$175.04 Mn+
is all set to go public by the end of this year, founder and  Group CEO Utham Gowda believes could mean breaking into the highly commoditised consumer market in Western markets in the near future, as well as shoring up supply chain further for global operations.

The company, currently valued at $500 Mn, is also looking to raise up to $100 Mn in a pre-IPO round amid increasing interest in domestic and international investors. It has so far mopped up nearly $17 Mn from a clutch of investors such as Motilal Oswal Alternates and Venture Soul Partners for this pre-IPO infusion.

According to Gowda, the company plans to use the fresh capital to fund growth and expansion ahead of the potential $300 Mn-$400 Mn public offer. And although he refused to share details on the valuation, earlier reports mentioned that Captain Fresh could list at a valuation of over $1 Bn.

At that valuation, the startup would potentially be trading at close to 6X its revenue. Captain Fresh recorded a 70% year-on-year increase in its revenue to INR 1,395 Cr and lowered its net loss by 29% to INR 229 Cr in FY24.

While 2025 is expected to be another windfall year in terms of public listings with new-age Indian companies rushing for IPOs, Captain Fresh will be unique for being the first Indian B2B seafood startup to go public. The ambitious IPO is expected at a time when Indian seafood exports are on a phenomenal growth trajectory, surpassing INR 60,000 Cr so far in FY25, according to finance ministry data.

The government also proposed to reduce the custom duty on materials used in processing and storage of frozen shrimp and fish products to keep up the momentum.

While Captain Fresh doesn’t serve seafood consumers in the US, Europe and other countries directly, it deals with storage, processing and simplifying the supply chain of seafood producers and exporters in India and Southeast Asia. This makes it a B2B supplier rather than a brand, but Gowda revealed that the company plans to enter the B2C segment as well.

Gowda told Inc42 that the company will eventually look to enter the B2C seafood sector in places like the US and Europe, while keeping a majority of its supply-side operations in India. Acquisition of prominent overseas brands could therefore be essential to its core business strategy going forward, beyond the IPO. 

Edited excerpts from a conversation

Inc42: Majority of the workforce at Captain Fresh is based in India, whereas more than 85% revenue comes from outside India. The supply-side operations and markets are in entirely different geographies. What are the obstacles in driving synergies between these sides?

Utham Gowda: Almost 98% of our business is outside of India from a demand standpoint. Now, you need to see how we evolved as a company. When we started the journey, 100% demand and supply were coming from India, then obviously we diversified, and the demand side gradually shifted to offshore markets.

In FY25, we are on track to cross $525 Mn-$550 Mn in topline with 60% demand coming from the US and majority of the rest from Europe.

About 4%-5% of the demand comes from the Middle East, while India is less than 2%-3% in terms of overall business contribution. India makes up around 30% of the supply side, while we source about 40% from Indonesia, Vietnam and the Philippines. Europe contributes close to 20% and Latin America the rest 10%.

We have been profitable for the last two-and-a-half quarters. This is a PAT-positive figure with our EBITDA trending towards $22 Mn-$23 Mn.

When it comes to our workforce, 50% of our 350-400 employees work from India. We also have offices in France, Poland and the UAE. India has been predominantly our technology hub from where we develop all our tools and also manage the overseas operations. Our finance and legal teams too operate out of India.

Inc42: You have an asset-light business model. There are so many steps involved in the sourcing of seafood, packaging, and exporting. Will you elaborate on the business model to tell us how you have managed all this without owning any assets?

Utham Gowda: Yes, we don’t own any farms or vessels. What we have is a bunch of technology tools or operating systems that help stakeholders. It could be a fisherman or a farmer or a factory owner. Our tech platform helps these stakeholders stay engaged with us. Our business model is simple: We buy and sell the inventory. We don’t sell the software.

Our revenue model is not based on subscriptions of our tech assets. It is an enablement that we use these technology tools for. It is a supply chain enablement tool where we are able to work with the stakeholders and gain access to their inventory which we sell in overseas markets.

Close to $400 Mn out of the $550 Mn revenue comes from the US. Our strength is actually on the east of the Mississippi, which is the Southeast US and a little bit of Pacific as well, which is the California area. We store our inventory across 18 or 20 locations in the US and we service almost 500 to 1,000 customers who are largely wholesalers who eventually sell to casual dining and fine dining restaurants across the US.

We have also acquired a couple of brands which feature among the top four or five in the US as far as the seafood category is concerned. We have also made some acquisitions in Europe. We typically get bulk orders from large overseas brands and retailers on a six-month to one-year contract.

Inc42: But how does Captain Fresh simplify the supply chain side issues for fish farmers, especially when it comes to exports? 

Utham Gowda: On the supply side, there are broadly two sets of stakeholders. First, the fishermen. As long as we can generate and showcase a demand on the platform that keeps us connected, they keep up the supply and, in most cases, also manage the logistics by delivering the products to our locations.

These locations are essentially the partner factories. They make the second stakeholder in the process. So, if you take, let’s say, the Indian landscape, we have partnered with nearly six such factories. We also have partners in Indonesia and the Philippines. Now we have started in Europe, too.

Inc42: And these are franchise partners or do you own a part of these factories?  

Utham Gowda: We do not own any factory. We enter into one-or-two-year contracts with factories that typically suffer from underutilisation. These are mostly mid-level factories without any front-end in the consumer market and without any sales or marketing machinery or in some cases they also don’t have the strength that we have on the supply side.

Our tech platform helps us source from all parts of the Indian coast. We pass on some of these benefits to the factory partners, but the biggest benefit for them is that we are able to fill up the factory capacity. We have our own front-end demand in the US and Europe.

This is where technology comes into play in a big way. We are able to drive the operations in the factory using our remote management with the help of the tech tools we have. At the start of our exports business, we had around 25 people in each of the factories across various steps because we wanted to control the quality of production and performance. Today, we can manage each factory with just four or five persons, because technology takes care of the rest of the things. This part of the value chain is very similar to what, let’s say, Zetwerk does or Infra.Market does in categories like fabrication or construction materials.

The output from the factory in our case is largely frozen products or value added products which typically have a shelflife of 20-24 months. The input to the factories, on the other hand, is a fresh product which has a shelflife of under three days. The frozen products are exported to the end-market, which is ourselves in this case, and then through our distribution brands, we sell them to retail chains.

Inc42: You seem to be shifting from asset-light model to owning brands through acquisitions. Right?

Utham Gowda: Any incremental capital that we raise is always going to be towards inorganic growth. As you can see, the business is already throwing up cash. So, we don’t really think we need money for organic initiatives.

Due to confidentiality limitations, I won’t be able to share specific details, but I can definitely confirm that acquisition is a very large part of our growth strategy and all the incremental capital raise – be it in the private realm or in the public realm – will go towards a lot of these initiatives in the US and Europe where the seafood market opportunities still lie hugely untapped.

Inc42: Coming to the IPO bit, what is the strategy of the company in terms of maintaining the profitability streak?

Utham Gowda: The IPO is obviously the primary goal. We believe we can do an IPO because we have been profitable and we see clear levers of how this profit can nearly double in the next four to six years. We believe this is the right time to go to the public market because of the runway in terms of the prospects of profitability. There are multiple steps towards the IPO and having a healthy balance sheet is a primary condition. We require investments and some of it may include secondary raises.

Inc42: What is the time horizon you are looking at? 

Utham Gowda: We are looking at the end of 2025.

Inc42: Most of the listed Indian startups have markets in India. Captain Fresh, however, sells mostly outside India. What makes you confident that the Indian public market will be able to understand the dynamics of your business model?

Utham Gowda: Take the Nifty 50 pack, for instance, and take a look at the companies that are dependent on dollar revenues. You’ll be amazed that they make up the majority of the market cap for the index. This group includes IT services firms, auto component makers and speciality chemicals and manufacturing companies.

I think our theme is right up the alley in terms of that and I’ll explain why. We are basically playing the digitisation wave 2.0, while digitisation wave 1.0 continues to be played out by large players like Infosys and TCS. Digitisation 2.0 is about bringing mid-tier companies which includes retailers in the US to forefront of digitisation.

If you look at our customers – wholesalers and distributors in the US – there is a lot of supply of seafood but there is very little data that goes along with the seafood because the entire value chain is very fragmented. Now, with the emergence of digitisation wave 2.0, you have vertical SaaS players with the ability to do both supply chain and inventory and not just sell softwares.

This is an IP that is created in India and it is a control tower that is run from India, which means that there is substantial control over everything that happens across the world. So, we believe India is the best place to list because this is where the value is getting accumulated in terms of both IP data and also in terms of the growth levers.

Inc42: Will Captain Fresh venture into the B2C space too?

Utham Gowda: Brands in the US and Europe are definitely exciting for us, but it is too early. I always believe that this is a commodity which means that the first thing that you need to solve is the supply chain before you start putting your brand out there.

We will obviously follow the same sequence as we’ll continue to work on the supply chain side and when we feel confident we would definitely love to explore the branded play in the US and European markets.

For us, the logic is very simple: You have supply and you have the ability to sell that supply in high per-capita income markets, which means that you can make more margin selling there.

[Edited By Kumar Chatterjee]