Exits for investors and founders are hard to come by in the Indian startup ecosystem, and complete exits are very rare. But the men’s grooming brand Beardo has just managed the feat, offering full exit to its founders and backers within five years of its inception.
Marico had acquired a 45% stake in Beardo in 2017 and recently the Mumbai-based firm bought the remaining 55%. While the details of the transactions are yet to be disclosed, Fintrackr estimates that the total value of the acquisition is in the range of Rs 350 to 400 crore.
Beardo’s founder Ashutosh Valani confirmed the exit of all stakeholders to Entrackr but refused to share the financial details of the deal. When asked about the revenue projection for FY20, Valani said, “We did about Rs 80 crore net sales in the last fiscal.”
According to Fintrackr’s estimation, the total acquisition amount is anywhere between 3.5X to 4.5X of the revenue in FY20. It’s worth noting that the company had posted net profits in the past two fiscals.
While Beardo had managed to post an operating profit of around Rs 13,513 during FY18, it was the following fiscal in which the company’s performance improved substantially. Since Marico acquired 45% stakes in Beardo in FY18, its distribution network accelerated multifold in the fiscal.
Regulatory filings show that the company recorded EBITDA of Rs 62.3 lakh in FY19 at a margin of 1.3% during FY19. Return on capital employed improved drastically from -5.07% in FY18 to around 2.07% during FY19 on account of increased sales and improved efficiencies in the business.
“We had a profit of 3 to 5% EBITDA on net sales in FY20,” Valani said.
Before we delve deeper into the estimated fortunes made by founders Valani and Priyank Shah, and backers, let’s gain some background on Beardo’s journey. With a focus on beard grooming products, Beardo has evolved into a personal care and grooming brand for millennials. It sells private label products like beard oil, serum, face washes, soaps and balms.
Beardo’s regulatory filings show that Venture Catalyst (VCat) had invested close to Rs 2.5 crore in the company and held a 1.63% stake before the acquisition whereas Snapdeal’s founders Kunal Bahl and Rohit Kumar Bansal had invested Rs 50 lakh.
Fintrackr estimates that VCat has made around Rs 14-16 crore while Snapdeal’s founders exited with anywhere between Rs 5-7 crore. VCat, Bahl and Bansal had invested in Beardo on the same valuation in 2016. Besides stakes against equity, Bahl and Bansal also owned some advisory shares in the company.
Both Valani and Shah held around 22% stake each in Beardo which they have offloaded to Marico. Both the co-founders together have made between Rs 150-180 crore in this transaction. The duo reaped similar returns when Marico bought out their partial stakes in Beardo in 2017.
Beardo’s successful exit is a reward of creating a category that never existed. While men’s grooming and personal care space has been growing for the past two decades, theirs was an attempt to create a brand around beards and moustaches.
When asked what triggered the founders to think of a brand to cater to a niche that never existed before, Valani said, “We understood that a beard was one of the closest things for a man as it is right on top when you define him. So, rather than just going to the market and claiming that this men’s face wash is 20X times better than that of others, and is better in price and quality, we had to dig in the category and build ourselves from there on and spread the wings.”