Venture Captials seek food and drinks ventures

BANGALORE: Food is often a source of comfort for the stressed. Venture capital (VC) firms, it seems, believe in the dictum. They are betting  Indians will still splurge on food even as they tighten belt elsewhere. Not surprisingly, VCs have developed a healthy appetite for consumer-driven businesses in India, particularly food and beverages (F&B).

Kartik Srivastsa, associate at Lightspeed Venture Partners, said the company is keenly looking at consumer-led businesses and is exploring F&B. The VC firm sees processed foods and fast food retail chains as potential investment targets.

VCs say the F&B segment is relatively insulated from the economic slowdown and offers scope for scaling up operations. Mohanjit Jolly, executive director of Draper Fisher Juvertson, said, “I even see opportunities in the fattening samosas and chaats we eat, as there is a case for opening up restaurants that are more health-conscious.” F&B players are making the most of this. Fast food chain Kaati Zone is in talks with VCs to expand its presence beyond Bangalore.

Kiran Nadkarni, the founder of the chain, said, “We are in talks with at least five VCs for growth equity. We plan to become a regional player in the south, expanding beyond our 12 outlets in Bangalore to Hyderabad and Chennai.”

Investment banker Viedea Capital Advisors has just won the mandate to raise VC funding for wine company Vintage Wines. Deepak Srinath, director of Viedea Capital Advisors, said, “We are talking to some VCs who think the wine business in India is just the tip of the iceberg. With affluence rising, the demand for wines will increase.”

Arun Natarajan, CEO of Venture Intelligence, said though VCs have invested in this space earlier, his interactions with them show increased interest in the segment. Venture Intelligence is a research service focused on PE and M&A activity. “VCs have invested $50 million across 19 such firms since January 2006.” Anjana Kaul of Footprints Ventures, which invested in the Mast Kalandar fast food chain, finds options such as cafes, processed foods, and wines interesting.