Goat Brand Labs acquires Chumbak, and four others as consolidation starts in D2C sector

Chumbak and four additional direct-to-consumer (D2C) brands have already been bought by Goat Brand Labs, an e-commerce brand roll-up company, bringing its portfolio to 20 whole, the company confirmed. In the D2C brand space, this is another another big sale. This is the best offer for Goat since the company's founding in 2021. Goat is backed by Flipkart Ventures and Tiger Global. The other four brands were not addressed by the company in its prepared statement. Comparatively, they are smaller than the Chumbak.

A homegrown home and lifestyle brand, Chumbak clocked gross sales of about Rs 100 crore in the last 12 months, according to a person briefed on the matter.

It sells various products, such as bags, accessories, home decor and other products, through its online platform and physical stores. Sources said the company clocked close to Rs 66 crore in revenue in 2022 with a loss of nearly Rs 35 crore. In 2021, it clocked revenue of Rs 52 crore and a loss of Rs 34 crore.

Goat has acquired a majority stake of around 80% in Chumbak while its cofounders hold around 13%. Post the acquisition, Goat will continue to work with Chumbak's founders Shubhra Chadda and Vivek Prabhakar, along with CEO Vasant Nangia.

E-commerce brand roll-up firms typically acquire anywhere between 70-80% of a firm and then work with the founders to scale the brand and its products further.

The Bengaluru-based firm was last valued at Rs 273 crore, in November 2020, as per data from Tracxn. Sources directly aware of the matter said Goat had acquired the brand at a significantly lower value than its previous valuation. Chumbak has raised over Rs 300 crore in funding since starting in 2009.

Gaja Capital and Matrix Partner held a 42.5% and 25.7% stake in the firm, respectively, as two of its largest investors. For Chumbak’s investors, the deal isn’t yielding any return on investments. “This is not a venture capital deal where it is priced based on the last valuation. There was a discussion on how to structure the deal and it’s definitely lower than the previous valuation of the company,” one of the people mentioned above said.

The D2C brand space saw a massive infusion of capital across categories due to the Covid bump-up in online shopping. Last December, Hindustan Unilever Limited invested in Zywie Ventures, which sells plant-based supplement brand Oziva, and Nutritionalab, which owns nutritional products under Wellbeing, to enter the Rs 30,000 crore health and wellness market.

On December 8 that HUL was in talks to buy Oziva. TMRW, an Aditya Birla Group venture, also said in November that it will be investing Rs 290 crore in eight D2C brands, including casual wear brand Bewakoof. Goat co-founder Rishi Vasudev said the plan is to make Chumbak a Rs 500 crore brand by 2025.

“Chumbak, since its founding days, has been an Indian homegrown D2C brand that appeals to a global audience. Our vision is to make Indian D2C brands world famous and we have built multiple capabilities for that,” said Vasudev. “This partnership is the perfect recipe to grow the brand exponentially by expanding its global reach, both online and offline, through a tech and data-driven approach.”

Last year, Goat acquired multiple well-known D2C brands, including The Label Life, and true Browns. Goat, which raised $50 million in a mix of equity and debt funding last June, competes against Alpha Wave-backed Mensa Brands, e-commerce firm FirstCry’s Globalbees, as well as the local arm of US firm Thrasio here. Rameswar Misra is Vasudev’s cofounder at Goat.

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