Ananth Narayanan-led Mensa Brands, a start-up which owns and operates an umbrella of direct-to-consumer (D2C) brands, has achieved a net revenue of Rs 1,500 crore in the last 12 months of operations ended May 2022.
Mensa Brands founder and CEO Narayanan, who is also former Myntra and Medlife CEO, told FE that the firm is now targeting to double its net revenue to Rs 3,000 crore in the next 12 months.
Mensa kick-started its journey in May 2021 with plans to partner and invest in digital-first brands across fashion and apparel, home and garden, beauty and personal care and food and scale them exponentially. The start-up works closely with founding teams to accelerate growth on marketplaces, through the brand’s websites, and global platforms by using a combination of initiatives across product, pricing, marketing, distribution, and brand building with a technology platform at the core.
To date, the company has acquired 20 brands in the fashion, beauty and lifestyle space, and Mensa claims that the majority of them have grown by 80% in the last 12-months in terms of revenue since their integration with Mensa. Additionally, Mensa also claims to be profitable although the firms did not share detailed financials.
Mensa Brands usually acquires a controlling stake in these D2C brands providing it direct control of the operations, expansion, and strategy. The revenue earned by these companies in the last 12-months is together accounted for as Mensa’s revenue in its books.
“The revenue that we recognised across the 20 brands in the last year stood at Rs 1,500 crore which is the net revenue reported by all of them. We plan to acquire another 20 brands in the next year which will potentially double our overall revenue,” Narayanan said in an interview with FE.
The start-up emulates a business model similar to US-based Thrasio, which acquires and manages around 100 independent Amazon sellers and direct-to-consumer (D2C) brands. Thrasio is now valued at $10 billion and also reported a profit of $100 million on revenues of $500 million in FY20. The US-based company is reportedly eyeing the Indian market although it’s yet to finalise expansion plans.
Narayanan said Mensa Brands only acquires brands that are already profitable with revenue of above Rs 20 crore and above along with an average order value (AOV) starting from Rs 600 to Rs 6,000. The company also has internal benchmarks that look for customer reviews and ratings of the product, and other important metrics such as the value of repeat purchases and lifetime value (LTV) of users before the acquisition.
“Most of the brands we acquire have top sourcing quality and design and when we onboard they usually have revenues plateauing at Rs 20-40 crore annually. We usually try to triple their revenue within just six to nine months post-acquisition,” added Narayanan
Out of the Rs 1,500 crore revenue reported by all the brands currently managed by Mensa, around 10% of this comes from offline sales channels. In addition, more than half of Mensa’s brands are available outside India across the US, Canada, UK, Germany, Singapore, and UAE contributing to 20% of the revenue, according to Narayanan.
He also added that currently Mensa is only focused on three verticals mentioned earlier, but may expand into new categories depending on market dynamics. “Fashion, beauty and lifestyle categories together are $120 billion in market size in India with gross margins of over 60% and we will be focused on these segments in the near term. We may be interested in big categories like consumer electronics but we would never get into the mobile phones market,” Narayanan said.
For example, a men’s apparel brand named Dennis Lingo acquired by Mensa last year has already achieved a 2X growth in terms of revenue since the acquisition in October 2021. Narayanan told FE that the brand has already hit a Rs 100 crore revenue run rate currently. This was possible due to rapid expansion in digital marketing, quality control, and the expansion of warehouses across new geographies, he added.
Talking about fundraising plans, Narayanan said that Mensa is yet to utilise its entire capital base and is currently sitting on a large amount of dry power. Mensa has raised a total of more than $300 million in equity and debt since its launch last year. “We still have enough money left in the bank, especially for the next 20 acquisitions for next year. We are not raising any capital immediately,” Narayanan said.
