Denim fast fashion products are created by Indian firm Freakins. New designs are introduced weekly and they create products catered for different body types of Indian ladies. Made from denim, they present more than 35 categories and 1500+ designs. Their orders fulfilled in India during the past three years total 2.5 lakh. Puneet further mentioned that their brand is well-known among college students and has been highlighted on Bollywood stars. Their website and markets such Amazon, Nykaa, etc. provide them availability. With 1% equity sought for an investment of ₹70 Lakhs, the founders valued ₹70 Crores.
Shaan has 36%; Puneet has 54%; and Shaan’s uncle owns a 5% stake in the business. Their ESOP pool also comes at five percent. Shaan said they lacked commercial operations, so they called Puneet in to assist them. Puneet revealed that they dedicate ₹4.5 crores amongst ₹30-60 Crore cap from investors. They are also working with another company, which will enable them to raise 70 Crore valuation.
Their first financial year, FY19-20 brought ₹90 lakhs in Freakins. Following this was 644% increase, and they completed FY20-21 at ₹6.7 Crores. Revenue in FY21-22 came in at ₹10.4 crores. Shaan also mentioned that during the first six months of FY22-23, their average monthly sales in ₹90 lakhs. In their first year, they were at the break-even mark; however, in 2021 and 2022, respectively, they lost ₹2.1 crores and ₹3.8 crores. In FY 22–23 they still lose ₹10 lakhs per month. Their gross margin shows 63%. In September 2022 Freakins brought net income of ₹1.05 crores. In the same month, they also paid ₹12 lakhs on performance marketing.
Company Name: Freakins
Founder: Puneet Sehgal & Shaan Shah
Product: Fashion brand
Highlights
1. focusses on women’s denim-based fashion.
2. Emphasises reasonably priced, stylish, fast-fashion designs.
3. Weekly launches unique designs to keep the catalogue interesting.
4. Provides a large selection of denim designs ranging from jeans to coats, skirts to tops.
5. Mostly markets online using its website and top e-commerce systems.
6. Excellent social media presence and direct interaction with consumers who are fashionistas.
Pitch Details
Ask: ₹70 lakhs for 1% equity, valuing the company at ₹70 crores.
Deal: After negotiation Vineeta Singh, finished the deal at ₹50 Lakhs for 2.5% Equity and ₹20 Lakhs Debt @ 12% Interest (Condition – This investment will be a part of a bigger investment round).
Investors: The investment came from Vineeta Singh.
Conclusion:
Freakins had a convincing business plan with a clear goal of enabling Indian women to afford fashionable jeans. Although the brand showed great market demand, investors were raised red flags by financial issues including regular losses. Though the company had a strong gross margin and fast expansion, main issues were low profitability and expensive client acquisition expenditures. The sharks were reluctant to commit despite the brand’s appeal and potential since of the unstable finances. Vineeta Singh presented a conditional offer; however, the agreement never came to pass following the show. Still, Freakins keeps flourishing by using its web presence to grow naturally.
