Tiger Global Management is in talks to invest in former Myntra CEO Ananth Narayanan’s eCommerce roll-up firm Mensa Brands, only months after it raised its first round and before it has shown any meaningful traction, led by rapid acquisitions and a growing market, sources said.
Mensa Brands could raise about $20 million in the round led by Tiger, valuing it between $400-500 million, said these people, who requested anonymity since discussions are private. Mensa was valued at about $65 million in its Series A round in May.
The company plans to acquire fast-growing eCommerce sellers in the apparel, home appliance, personal care, and beauty space, with annual revenues of Rs 7-70 crore ($1-10 million roughly). Mensa’s pitch to these brands is that it can help accelerate their growth, provide digital marketing and technology chops and help them even expand globally.
It has signed a Letter of Intents to acquire 15 companies so far, more than it had expected, part of the reason why it is raising money again, said one person aware of the matter, requesting anonymity since discussions are private. Mensa goes from the first discussion with a seller to cash in the bank in four weeks, as per its website.
These roll-up brands typically use a mix of debt and equity and fund their acquisitions. Debt is cheaper to raise and carries a lower cost of capital than equity- on which investors expect a handsome return, due to which investors recommend that these upstarts fund buyouts via debt.
For this reason, Mensa and others have raised debt along with equity, something early-stage startups don’t usually do. In its much-touted $50 million Series A round, around $30 million is debt commitments from Alteria and InnoVen Capital. This money has only been committed and will be given to the company when it has to actually acquire the brands. The equity was raised from venture firm Accel, Falcon Edge Capital, and Norwest Venture Partners.
Notably, Scott Shleifer, partner at Tiger and co-founder of its private equity unit is an angel investor in Mensa, even as Tiger itself invested in GOAT Brand Labs, another eCommerce roll-up firm that competes directly with Mensa. Tiger led a $36 million round in GOAT, founded by Flipkart’s former fashion chief Rishi Vasudev, along with Flipkart Ventures and Mayfield.
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