Titan Capital invests in stealth mode startup Powerhouse

Snapdeal founders Kunal Bahl and Rohit Bansal’s Titan Capital has made an investment in a stealth mode startup Powerhouse, said two people aware of the development. The investment is significant as Powerhouse would acquire and operate small and medium-sized brands that sell their products on e-commerce marketplaces such as Amazon and Flipkart.

“Powerhouse is in discussions with several venture capitalists and angels who are likely to participate in its larger funding round. The talks are beyond early-stage and it may end up raising up to $10 million,” said one of the people requesting anonymity.

According to Powerhouse’s website, the company is looking to acquire brands that are primarily sold through e-commerce marketplaces. It focuses on brands that generate profit between Rs 1-10 crore in their last 12 months. 

Powerhouse is in advanced discussions with at least a dozen online brands for acquisition and will likely be announcing the first few acquisitions shortly, said sources. “The size of brands Powerhouse is looking at seem to be ones where venture capitalists are not interested given their relatively smaller scale,” said the second person who also requested anonymity.

Queries sent to Powerhouse and Titan Capital did not elicit an immediate response.

Experts tracking the space say that Powerhouse is aiming to be the Thrasio or Target Group of India. For the uninitiated, Thrasio is one of the fastest-growing companies in the US having raised over $1 billion over the last three years and has acquired more than 100 brands.

Over the past 12-15 months, several startups have emerged in the US that acquire smaller brands that sell through online marketplaces, primarily on Amazon. And, investors including heavyweights are pouring in large amounts to beef up their position in the emerging opportunity. 

Early this month, Tiger Global led a $150 million round in Target and brought it out from stealth mode. As of now, it has acquired about two dozen brands across Europe, the US and Asia in categories such as home, leisure and lifestyle.

Powerhouse seems to be inspired by Thrasio and Target Group and could emerge as private equity firms that would drive merger and acquisition for small scale brands that built over the internet. The concept is likely to be evangelised for many and we will see significant interest from the investor community in India as well.