Ideas|Products|Startups|VCs

Chennai based Marquee Investor Peepul Capital LLC has invested Rs 70Cr in early stage lingerie and active wear manufacturer Brandis Marketing and manufacturing pvt. ltd. Brandis currently has got two brands in the market – Beyouty, an lingerie brand targetted at mid segment and have 2GO which is an active wear brand available in tracks, tshirts, shorts.

Investments will come in multiple tranche and Brandis has received Rs 30Cr in its 1st tranche. Funds will be utilized in developing the production unit, Hiring team in middle level, marketing and distribution and Brandis is confident of achieving a topline of ~Rs 280Cr in 3 years.

Brandis was incorporated in mid 2010 with the aim of launching global capable brands in the apparel and accessories space. Brandis is promoted by Nischal Puri veteran in the Indian apparel industry. Before starting Brandis, he was heading the marketing and strategy at Page Industries (Jockey India). He has been instrumental in establishing and growing Jockey brand in India.

During his tenure in Jockey he changed the direction of the brand from being an men innerwear brand to a lifestyle brand. He was instrumental in launching the exclusive stores for the brand besides changing the consumer perception of the brand from innerwear to an category inclusive brand. Nishcal Puri was responsible for spearheading the listing of Page Industries in NSE & BSE.

The market is growing at 24% and the unorganized is Rs20bn. The size of the Indian lingerie market is Rs56.28bn and can be segmented as follows:  a)  ECONOMY (Rs35.06bn growing at 17%) b)  MIDDLE (Rs12bn growing at 22%) c)  PREMIUM (Rs8.32bn growing at 32%) d)  SUPER PREMIUM (Rs900mn growing at 56%).

Brandis Marketing is going to launch lingerie in luxury segment and also coming out with specialized category targeted at youth.

In lingerie space Brandis Marketing will directly compete with Enamor, Lovable and Jockey and in men’s active wear space it will take head on with Jockey, Hanes.

Popular investments Peepul Capital has made in are – Unibic cookies, Medplus, Univercell.

vcBytes, a product and investment consulting firm played the role of transaction adviser to Brandis Marketing and closed the deal with Peepul Capital. vcBytes Congratulates Brandis Marketing and Peepul Capital and quite confident of excellent outcome from this investments.

-Hitesh, vcBytes.com

You have founded a startup, prototype is done, some beta users paying some or no money and you approach a VC for series A fund. VC would be interested in knowing your product, market size and also the pre-money Valuation.

So What is pre-money valuation and and how do you determine the pre-money valuation set on the company.Pre-money refers to the valuation of a company or asset prior to an investment or financing. Where does it come from? It mainly depends on the space/industry the company is trying to foray and also into the stage of the company. There is no rocket science in calculating the pre-money valuation and it is generally discussed between entrepreneur and investor.

Pre-money valuation can be simplified and easy way is to determine the equity percentage the investor would receive for their investment.

For instance a VC invests $2M in a startup with a pre-money valuation of $3M, it implies the VC expects to own 40% of the company. In simple words the post-money valuation is the pre-money valuation plus the amount invested. Thus on raising $2M, the investor intends to own 40% of the company after the investment the pre-money valuation must be $3M.

A common misunderstanding and practice which is followed while calculating pre money valuation is derived from company’s potential earnings, with a discounted cash flow analysis (DCF) of the unleveraged cash flows. There is high probability that these projections will prove wrong and it will be determined by the financial numbers and not by the investors.

A mix and match of under mentioned three factors should be considered to derive a pre-money valuation.

1. The negotiation between entrepreneur and investor and percentage ownership described above.
2. The investor’s experience with previous investments of similarly staged companies.
3. Serial Entrepreneurs have a tendency to demand a higher valuation as compared to 1st time entrepreneur.

- Hitesh