10Club is one of the many eCommerce roll-up companies doing business these days. What sets them apart is they appear to be doing business rapidly and providing a 100% acquisition offer.
Roll-up e-commerce startup 10club is in advanced talks to acquire 20 new brands across categories of home, sports, and baby and pets.
Bhavna Suresh, Co-founder and CEO of the company, said they will stick to these core categories as it looks to do at least $120-million worth of business through its portfolio brands over the next one year.
“All of us can roll up 40 to 50 brands today, but if you are not able to roll it up to unlock the value, then it’s a disservice to the entire ecosystem. The number of brands we have right now are eight. And if you ask who our next 20 will be, we already know. We have met them, struck a deal and we know what their value is. Our partners know we’ll do it only when we can unlock value, and with every deal it gets easier,” Suresh told BusinessLine.
‘Not playing GMV game’
Home is currently the largest category for the startup, which contributes over 60 to 70 per cent of the business, followed by sports. So far, it has acquired eight brands.
“We are very clear that we are not playing the GMV game. These are highly profitable businesses; our entire portfolio has EBIT margins of about 25 to 27 per cent. They are high cash flow businesses,” she added.
10club’s current portfolio includes Skudgear, Rapidotzz, Beclina and Aurion in sports category, Kraftseeds, Gate Garden and Kriti Kalash in home and MyNewBorn in baby care category.
Founded in 2020 by Suresh, Joel Ayala and Deepak Nair, the startup raised $40 million in its seed funding round in June 2021. The round was co-led by Fireside Ventures and an undisclosed international investor active in the space. The round also saw participation from HeyDay, PDS international, Class 5 Global, Secocha Ventures led by Sanket Parekh, boAt founders Aman Gupta and Sameer Mehta (in their individual capacity) among others.
Getting the deal
10club’s way of expanding its portfolio of brands is through 100 per cent acquisition wherein, it takes over the responsibility of running operations of the startups. Its preferred portfolio companies should be clocking revenue of at least around ₹15-25 crore within the sports category and ₹40-80 crore in home. Eventually, 10club plans to have an omnichannel presence by starting offline stores for its brands.
Once 10club acquires a brand, the entrepreneur is offered incentives to stay back and continue doing what they are best at.
“Entrepreneurs are working 16 to 18 hours a day. They were so busy running and operating that they had no time to innovate,” Suresh said.
“We give the entrepreneurs full cash out. Then we offer them enough incentives to stay back for four or five years. But they always have the choice to walk out if there’s anything they don’t like at any given point,” she added.
“When you have to run a company with somebody it gets very hard to manage. We ensure that we take over the entire operations of a company. Every entrepreneur is different, some of them love product development. We are creating an environment where they will continue doing what they like be it product development, vendor optimisation, ideating, anything they like, we free up their time to do what they are good at. It’s difficult to onboard or hire an entrepreneurial brain externally,” she added.