Thrasio CEO calls India a big long-term bet, to invest $500 million

Thrasio, the US company which pioneered the model of acquiring private brands on Amazon.com and scaling them up, plans to invest $500 million in India as it sees the country becoming a significant market in the long term, Chief Executive Officer Carlos Cashman told ET in an exclusive interaction.
Thrasio has made its first acquisition in India by purchasing a majority stake in consumer durables brand Lifelong. ET first reported in October that Thrasio was in talks to acquire Lifelong and would be entering the Indian market.

While the deal terms weren’t disclosed, Thrasio is said to have paid $150-200 million for the stake. Lifelong, backed by Tanglin Venture Partners and the Hero Group, will be renamed Lifelong, a Thrasio company as part of the deal where existing investors and the founders have taken a partial exit in the company.

“This deal also includes a multi-year structure based on certain milestones,” a person aware of the matter said. Lifelong cofounder Bharat Kalia will lead the operations for Thrasio in India.


Cashman told ET that this is the first time the three-year old firm, which raised $1 billion in a funding round led by Silver Lake late last year, has opted to go with a local partner outside its home market, as India is one of the fastest growing ecommerce markets and requires its own understanding to navigate and acquire top selling brands on Flipkart, Amazon India and other marketplaces. Globally, Thrasio has over 200 brands under its belt.

“This ($500 million) is frankly a baseline commitment. The Indian market is so huge. It is way behind compared to the United States, Europe and elsewhere, but ecommerce is growing, marketplaces like Flipkart or Amazon are growing and this dynamic around the world is increasing,” Cashman said, explaining his long-term bet on India. “While right now in India, the opportunity to acquire as many brands and put them together is not as great as in Europe and China, but it’s coming. It’s a much larger market and it’s coming faster.”

The company doesn’t have any particular timeline for this capital to be deployed, but it will be used over the next few years depending on how the market develops, Cashman said.

Cashman started looking at India about a year back. According to him, India is not only the fastest growing market but also one of the most attractive ones and the investment committed for now is the least it can do for such a big market.

“The cultural difference and the infrastructural differences on how a product is delivered… The Amazon ecosystem in the US and Europe is very similar. We know we can’t do that in India. So that’s why it is really important (to have a local partner),” Cashman said, adding that the only other market which looks similar (to India) is Latin America.

Thrasio surpassed the $1 billion revenue mark last year, according to Cashman, and he expects India to contribute in double digits (percentage) to its business in the next 12-24 months. “I would love to see India growing to 25-50% of what we do ultimately. I am looking at this 5-10 years out. So, when you look at the growth rate of different economies and outlook, you can reasonably see that happening,” he added.

India Plans Amid Competition
Thrasio comes to India at a time when the space is seeing increased competition from local Thrasio clones—two of them, SoftBank-backed Globalbees and Falcon Edge-backed Mensa Brands, have turned unicorns.

More competition is good for everyone and it will lead to more brands getting acquired and create liquidity for founders, Cashman said. “There have been 100 companies around the world who are funded to do what we are doing. I think that's a great thing. It’s great for entrepreneurs and they are getting exits.”

Platforms like Mensa Brands and Globalbees have been acquiring early-stage brands in the fashion, home and beauty categories. Tiger Global-backed Goat Brand Labs and 10Club are among the other prominent ventures in the space in India currently.

Also Read: Thrasio-style startups: Decoding the new mantra for creating a house of brands

Kalia, who will lead Thrasio India, said it is looking to acquire brands with an annual revenue of a few crores to even Rs 100 crore, in categories like home & kitchen and health & fitness.

“We want to do deals that are good for both the entrepreneurs and for us. It is important they get a good outcome. We prefer doing a larger percentage (acquisition) upfront because we have built a system which we can use to scale these brands,” he said, adding that these brands will be able to leverage its distribution across the country along with centralised marketing across platforms and a customer service network. “We can take these brands (on the network) and scale them.”

The Thrasio clones in India are also working with a similar model where they typically own between 51% and 70% and then work with the founders to scale it up. There are usually incentives involved based on certain growth targets.

According to Kalia, Thrasio India is not looking at long-tail categories like fashion and food for now. “We will continue to go in categories that are adjacent to this (existing categories),” he added.

Cashman added that competition will always be there as its core premise is to scale brands on leading marketplaces globally. “We are not going to be the only answer (in that case),” he added.

India Unit IPO?
Cashman told ET the Lifelong deal contour includes the possibility of listing the India business here separately in the future. He did not share any further details on it. The company hasn’t set any timelines for it yet, he added.

“It’s definitely on the horizon but it depends on the execution (of India business),” a person aware of the matter said.

“Lifelong has built market-leading capabilities in consumer insights, product design, supply chain and brand-building. This has allowed them to dominate multiple product categories in India's digital ecosystem, while being capital efficient,” Ravi Venkatesh, managing partner at Tanglin Venture Partners, said. “We led their Series A in 2019, and continue to be excited as they embark on this partnership with Thrasio.”