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Zouk, a Mumbai-based D2C lifestyle brand, has raised $1.5 million (Rs 11.75 crore) in funding in a pre-Series A round. The round was led by Stellaris Venture Partners while Manish Chowdhary and Karan Chowdhary, Founders of Wow Skin Science, and existing investor Titan Capital participated.

“We connected with Zouk Co-founders Disha Singh and Pradeep Krishnakumar some time last year. Later, with a recommendation from Mamaearth Co-founder Varun Alagh, which is our portfolio company, we had an interaction with the team,” said Rahul Chowdhri, Partner, Stellaris Venture Partners.

“Aside from the fact that it is interesting how they are building the company, the kind of customer love that they have is rare to come across. And that is what finally led us to invest in them.”

Positioning itself as a 100 percent PeTA-approved vegan lifestyle brand for bags, wallets, and accessories, Zouk aims to utilise this funding in expanding its presence in India and new global markets like the US, Canada, Europe, and the Middle East, in addition to expanding its team in India. 

“D2C is a massive opportunity. We need to break it down to tier-geography. Hit one geography first, make a playbook for ourselves, and then expand to different geographies. The geographies we are targeting now, we have already done bespoke orders and have been testing waters there.

“Our first milestone is to scale Zouk to a 100 crore brand in the next couple of years. We then want to chart the path to hitting Rs 1,000 crore in the next few years,” Disha says.

Zouk is also looking to strengthen its supply chain and distribution channels, and extend its product line to offer contemporary products, thereby building the category, and encouraging market acceptance of a cruelty-free lifestyle.

In January 2021, Zouk raised seed capital from Titan Capital, Beardo Founders Ashutosh Valani and Priyank Shah, and Mamaearth Founders Ghazal Alagh and Varun Alagh. 

The growth so far

Zouk was launched in 2016 with an aim to create a wide range of stylish and functional products for its customers and build an iconic global consumer brand from India. 

According to Disha, all of Zouk’s products have an essence of India with Indian motifs, prints, and fabrics, and are built to serve today’s needs. She gives the example of Zouk’s office bags for women, made using Ikat, jute, and khadi fabric, and that can comfortably hold a laptop, tiffin and more.

Having gained over 50,000+ customers with a 4X growth in the last seven months, Zouk aims to double its consumer base every six months for the next five years. The team is also seeing good response from Tier II and Tier III cities, with increased internet and smartphone penetration boosting the number of online shoppers in these cities.

“We are building an enduring company for the long haul. We feel we have just started and are working on expanding our presence to other markets. In the coming years, we will see a much more expandable product line at every distribution point,” Disha says.

Learning from investors

Stellaris Partners has earlier invested in D2C brands such as Mamaearth, Shop101, and Swiflearn. Rahul, Stellaris’s lead investor for the deal, had stints in product management and consulting roles at Microsoft, MarketRx, i2 Technologies, and BCG.

Also, Mamaearth, and Wow Skin Science’s founders have already expanded to international markets and gone on to build big brand names.

“We are already taking help from them in building our expansion plans, and scaling internationally. These people have built such big brands that, for us, that experience and learning is extremely valuable. We also believe that Stellaris’ addition to the board will help guide the team to become an iconic brand in the coming years”

The D2C market opportunity

According to Rahul, when Stellaris started investing in the D2C space years back, many didn’t believe venture-style scalability was possible in these businesses.

“As an investor, our effort is to invest in companies that can scale fast. When we started, that belief was missing. Traditionally built on offline distribution, there was a certain pace at which one could grow out there. Try to go too fast, you will not get those returns, and you actually can fall flat.”

“What has changed is that now a lot more investors understand how online can play a differentiating role here. They can figure out which product is working, and distribution has increased as more customers are available online, and a lot more channels are available for marketing as well,” Rahul says. 

Brands like Zouk are leveraging this opportunity.

Bipin Shah, Partner at Titan Capital, believes that doubling down its investment in Zouk is a potential bet that will massively scale up to hit hundreds of crores of net annual revenues in this decade. 

“Zouk’s 100 percent vegan products, with a mix of style and function, have massive potential in global markets. The real kicker for me was that all their products have an essence of Indian handicraft and craftsmanship, which I believe will resonate well with consumers in the US, Canada, and Europe,” says Manish Chowdhary, Co-founder of Wow Skin Science.

Going forward, with more players expected to join the retail, lifestyle, and fashion categories, competition is bound to increase. 

But Rahul believes that if one can figure out the consumer fit, and with founders of the right mindset on board, D2C brands can exit much earlier than a lot of other businesses in the country. 

“As investors, we do look for a large exit. In the current scenario, we feel that at $10 million- $20 million EBITDA, a company in this space can go for an IPO. It is not that there are a lot of D2C brands at that level right now. But, the opportunities are huge due to increasing customer attraction towards such brands and their willingness to pay,” Rahul says.