Ease of Doing Business for MSMEs: Knowing each other for over two long decades, Puru Gupta and Sreejith Moolayil were looking for business opportunities until 2015 when they realised the need to reinvent breakfast and snacks for Indian consumers with their brand True Elements. The company intends to clear the clutter in the crowded healthy snacks or food market by providing options which Gupta and Moolayil claimed are free of chemicals, preservatives, and added sugar. According to the company, it is India’s only food brand to be certified as both ‘Clean Label’ and ‘100 per cent wholegrain’ by US-based non-profit organizations Clean Label Project and The Whole Grains Council respectively.
Gupta told Financial Express Online that his products also don’t lose out on taste, unlike other branded healthy products in the markets. “There was so much clutter in the market that everybody was talking about healthy foods but it was very clear that taste precedes everything else. The consumption basket we focus on, which is breakfast and snacks, is around $10-million market. Moreover, Covid accelerated the health consciousness among people and that is where we bring our strengths,” he added.
As most entrepreneurs envision, Gupta and Moolayil’s big goal was to take their brand to an initial public offering. There was another goal that was perhaps even bigger – to ensure the brand outlives them. And to help them achieve that goal, getting a strategic investor on the cap table looked promising.
The company in May this year announced an undisclosed strategic investment into its parent company HW Wellness Solutions by FMCG company Marico in exchange for a majority equity stake of around 54 per cent through primary infusion and secondary buy-outs. “We had never thought of a strategic investment but at the same time we knew anything that gives us the strength towards our goal of the brand outliving both of us, we would look at it. This was what made us move forward with Marico’s proposition,” said Gupta.
On Marico’s part, in their constant endeavour to partner with the right brands, they reached out to True Elements as they were also probably trying to look at (opportunities) in the food segment, he added.
Typically, venture capital investors have an edge over strategic investors as VCs are meant to understand the startup world better than corporates or large business houses investing in new technology ventures. That was probably the only doubt True Elements had getting into the deal to ensure freedom to run the business.
“Most entrepreneurs believe corporates may not understand startups and founders’ mindset. This becomes a big challenge when you are talking to a strategic player. However, we never faced this challenge with Marico. There was no difference in terms of them being empathetic towards what we are doing and giving us the freedom,” Moolayil told Financial Express Online.
In fact, it is very rare but Marico had actually written in the contract that they will not interfere with anything that stifles the operations of the company, said Gupta. True Elements would continue to operate as a separate legal entity without any change in operational control.
True Elements was Marico’s third strategic acquisition in India. The latter had backed skin and hair care products maker Apcos Naturals last year and men’s grooming company Beardo in 2020.
Currently, the company is present across 13 categories, over 70 products and more than 200 SKUs including western breakfast (Oats, Muesli, Granola, Flakes), Indian breakfast (Poha, Upma, Dosa), and snacks (roasted seeds, seed mixes, raw seeds), etc.
Going forward, the company intends to grow more than 2x year-on-year. Gupta said the larger focus would be to build equity around the brand because “that is something we have undermined in last two-three years.”