Bengaluru: Wipro Consumer Care Ventures, the venture capital arm of Wipro Consumer Care and Lighting, is shifting its investment approach to focus on more mature consumer startups, as India’s startup ecosystem enters a more measured growth phase.
The firm, which has primarily backed very early-stage companies for nearly a decade, will now concentrate on pre-Series A and Series A rounds. Through strategic support and capital deployment, the firm aims to reduce risk and deliver greater value.
The firm will now invest up to ₹10-25 crore, including follow-on investments, while limiting its shareholding to 20%, according to its managing partner, Sumit Keshan.
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“In the past, we have done rounds smaller than ₹10 crore,” the executive said. “We would now like to look at slightly more scaled companies. We realize that the value addition to a very early-stage company from a company like Wipro is limited. We can actually add much more value when there is scale.”
He added that startups in early stages require different guidance than mature companies. Moreover, later-stage startups are closer to potential acquisitions and, therefore, offer shorter exit windows for investors.
The firm has set its sights on startups that have demonstrated clear product-market fit—or how well a company is able to meet the needs of the target consumer—and will actively make more follow-on investments from its second fund. It will focus on startups with a revenue run rate of ₹2 crore a month, versus its earlier criteria of ₹1 crore.
D2C funding
India’s direct-to-consumer (D2C) landscape, or firms that sell products directly to consumers through their own website and e-commerce marketplaces, is witnessing a slowdown in funding activity, with startup funding declining 18% to $757 million in 2024 compared to $930 million a year earlier, as per estimates by market intelligence platform Tracxn. Growing investor caution amid a global economic slowdown, oversaturation of the market with undifferentiated brands, and fluctuating unit economics caused by high customer acquisition costs have impacted the sector.
While early-stage startups grabbed the biggest portion of the funding in 2024—nearly $355 million—investors are focused on backing firms that prioritise profitability and sustainable growth.
Capping its shareholding will allow founders to have more skin in the game and run the firm in a more efficient manner, according to Keshan. “We have bought stakes of more than 25% in some portfolio companies in the past, but we think that the skin in the game for founders should be much higher because the behaviour of the founder having a 60-70% stake is different from one having 20%. A business head can be motivated with some incentive, but to motivate a founder is very tough because that has to come from within the individual.”
A founder with substantial shareholding is better equipped to tackle the challenges and nuances of building a business, according to the executive.
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Formed in 2015, the consumer sector-focused investment arm of Wipro Enterprises Ltd has made several bets in consumer companies in India and Southeast Asia, including men’s grooming brand Ustraa, clean beauty brand Soulflower, and bakery brand The Baker’s Dozen. It recently made its first investment in a petcare brand with Goofy Tails, marking its third investment this year. Its two funds have a combined size of ₹450 crore. Wipro Consumer Care and Lighting is a subsidiary of Wipro Enterprises.
After investing in DSG Consumer Partners Fund IV, a consumer-focused venture capital fund based in Singapore, in March 2022, the firm is open to expanding its LP (limited partner) investments to more investment firms that align with its larger goals, including expanding access to deals to a wider geography, according to Keshan.
