Decoding the first fiscal year of GOAT Brand Labs

Ecommerce roll up startups witnessed a lot of action in the last two years with companies in a race to  lap up brands to expand their portfolio. One such firm was GOAT Brand Labs which took over at least 11 brands in 2021. The concept of e-commerce roll up companies is fairly new making financial year 2021-22 the first fiscal year for some of these startups including GOAT - which registered Rs 15 crore revenue during FY22, its first fiscal year of operations. At the same time, the Tiger Global-backed company recorded a loss of Rs 28.6 crore.

GOAT acquires direct-to-consumer (D2C) brands and scales them with its expertise. The sale of lifestyle products is the single source of revenue for GOAT, according to its consolidated financial statements filed by the group company in Singapore.

The company has a portfolio of around 20 brands including its recent acquisitions – Chumbak, Mantra Organics, Henal, Spectrum, and Hiya enterprises.

Here is the list of the portfolio companies:

Moving toward the expense side, administrative costs formed 66.2% of the overall cost. This includes the cost of acquisitions and general administrative expenses which accounted for Rs 29.1 crore in FY22.

Its employee benefit and selling & marketing costs were registered at Rs 9 crore and Rs 3.7 crore respectively which pushed the overall expenditure of the company to Rs 43.9 crore during FY22.

The cost of acquisition outpaced the revenue number for GOAT Brand Labs, which led the losses of the firm to Rs 28.6 crore in FY22. Its ROCE and EBITDA margin were registered at -11.14% and -161.82% in FY22. On a unit level, GOAT spent Rs 2.93 to earn a unit of operating revenue.

GOAT Brand Labs has raised over $80 million to date including its $50 million (debt+equity) round led by Winter Capital, 9 Unicorns, and others. As per the Singapore filing accessed by Entrackr, Tiger Global is the largest external stakeholder with 10.5% of the cap table while the Founder and CEO of the company Vasudev Rishi commands 49.1% of the stake in the company.

Shareholding pattern of the company:

GOAT Brand Labs competes with Globalbees which recorded a revenue of Rs 121.6 crore in FY22 with a loss of Rs 41 crore. Mensa Brands, another competitor of the company, posted Rs 310 crore revenue with a controlled cost during its last reported fiscal year. 10 club, Eveflow, and Powerhouse 91 also compete in the space.

The whole premise of such D2C roll up firms, that they have a set of skills that stand alone e-commerce startups /consumer brands lack, is frankly suspect, if you know your entrepreneurs. In India in particular, every entrepreneur who has defied the odds to build a D2C brand has her own set of hacks and learnings. Whether those learnings are absorbed or lost when they sell, is anyone’s guess, but looking at the performance of these brands after changing hands, one would have to say, it is the latter. We have seen content being touted as a secret sauce, or digital marketing, or simply better data analytics. But looking at the results so far, one has to say, acquisition fuelled ‘professional’ firms have simply not delivered.