Based in Mumbai product design companywho works with mainstream brands such as the Ayurveda brand and fitness and wellness app announced its new vertical, Lights Out Ventures, which will invest in the first direct-to-consumer (D2C) companies as well as consumer brands.
Lights Out Ventures has already invested in two D2C brandsincluding Mumbai-based nutraceutical brand Super Human Wellnessand Eat Better, healthy snack brand based in Jaipur. The company did not disclose details of the agreements.
Lights Out Ventures aims to make investments from the accumulated income of the product design branch and plans to roll out nearly Rs 3 crore by the end of 2022, Saksham Mendiratta, co-founder of Lights Out Studiorecount Your story.
Founded in 2018 by Saksham and Adil SinghLights Out Studio’s investment arm is a natural fit as the company already works with several D2C brands and consumer internet companies, includingand Fitternity, says Saksham.
He adds that in addition to the investment, Lights Out also brings a network of partners allowing the D2C brand to take its next step.
“It is not an accelerator program or a syndicate and we work as angel investors. We bring with us a network of partnerships, which could benefit D2C brands, for example by connecting them to other funds venture capital for their follow-up tours or distribution and retail network,” he says.
The focus on D2C is all the more relevant as the company works with similar startups on product design. Lights Out Ventures plans to invest in 10 to 15 companies by the end of 2022 with check sizes between Rs 10 lakh and Rs 25 lakh. Lights Out itself continues to be primed.
While India’s addressable market for D2C brands is expected to surpass $100 billion by 2025, the sector has seen the rise of niche funds, as well as increased interest from growth-stage investors.
“Generally, we plan to arrive at the pre-seed stage for D2C businesses with a monthly run rate of Rs 25-75 lakh in sales. This proves that there is a clear product-market fit and business validation. Also, the brand should target affluent markets as we don’t have the knowledge to scale in Tier III and IV markets,” says Saksham.
Investments are managed by a central three-member team, and the company plans to add new members to drive product and distribution strategy.
While the fund will leverage its learnings from Lights Out Studio, there is no service agreement between the two verticals, Saksham clarifies. He adds that the customer selection thesis for the product design business is similar to that of the product design business, with priority given to digital-focused, consumer-oriented businesses that serve the markets. affluent.
“With COVID-19, there has been a spike in interest in customer experience and business differentiation. We have multiple filters before we start working with a brand – it should be in the D2C space, it has to to be a high-growth company so we can use traction data to design a better experience and a better product,” says Saksham.
He adds that potential beneficiary companies should be targeted at wealthy markets, as Lights Out is not focused on improving the experience and design for users in rural India.
Targeting these companies will also help the company expand further in markets like the United States and Canada, where technology adoption and market trends are ahead of the curve.