Earphones maker boAt has raised $100 million from private equity firm Warburg Pincus at a valuation of $300 million, a validation of the company’s emergence as a local hero in electronics manufacturing and its growth prospects.
The funds will be used by the four-year-old company to boost its research and development capability, expand its product portfolio and gear up for manufacturing in the country.
“The investment is great news for not only the company but also for the entire direct-to-consumer (D2C) sector. The investment has come at the right time as we make efforts to ramp up our manufacturing and global supply chain,” said Aman Gupta, co-founder of boAt.
boAt has emerged as a local champion in the electronics manufacturing sector, where few Indian companies have been able to make a mark. In the September quarter, the Delhi-based company reached the top five in the global wearables market, the first Indian company to do so, according to researcher IDC.
About five years ago, Micromax, which rose to become India’s second-largest mobile phone seller in India, was driven out of business by the onslaught of cheaper and better Chinese phones.
boAt, founded by Gupta and Sameer Mehta, started off as a seller of audio products such as earphones, headphones, soundbars and speakers, but has now positioned itself as a lifestyle brand for millennials and expanded into ‘wearables’ last quarter (in November) with the launch of its first smartwatch Boat Storm.
The company sources most of its components from China and Taiwan. “The electronics that go into most of these products and contribute 30-40% of the product costs are not made in India. These manufacturers are in Taiwan and China. Besides, we are behind China in the mechanicals also by 5-7 years but hopefully within the next 1-2 years, with the scale that boAt has, we will invest thoroughly in this and bring up that ecosystem where we will be on a par with China over the next 2-3 years,” said Mehta.
boAt has a 30-35 member R&D team in Bengaluru and is in the process of setting up an R&D lab to cut its reliance on outside product designers.
Mehta said the company will focus on building capabilities in domestic R&D and undertake vertical integration across both the hearable and wearable space with the government’s support. IDC attributed boAt’s success to its strong marketing campaign and partnerships with local cricket teams. The company had signed several India cricketers including KL Rahul and Shikhar Dhawan as brand ambassadors.
For Warburg Pincus, the investment in boAt gives it an entry into the burgeoning audio and wearables market in India.“We see a compelling growth story in boAt and believe the company is well-poised to build upon the strong leadership position it has carved out within the industry,” Vishal Mahadevia, MD and head, Warburg Pincus India.
Fireside Ventures was an early investor in boAt and has put in ₹21 crore so far.
“boAt has grown to become the market leader in the lifestyle accessories segment. It’s the perfect example of a consumer brand built successfully on quality, consumer insights, smart pricing, and focused marketing,” said Kanwaljit Singh, founder and managing partner, Fireside Ventures.