Aniket PujariThe Bengaluru-based startup’s lack of success in orientating its business model towards stronger target markets and failure to pivot to an alternate strategy in time led to the current state of affairs, four people with direct knowledge of the matter told Mint, seeking anonymity. Over the past six months, payments to multiple vendors have been stalled, while employees have only received delayed and partial salaries, the people said.
The company is now consulting lawyers and its investors, with a consensus emerging towards filing for insolvency with the National Company Law Tribunal (NCLT), the people cited above said.
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Multiple attempts to reach Bhavna Suresh, 10Club’s cofounder and chief executive, including a detailed email seeking a comment on 11 March, did not elicit a response.
Business model breakdown
10Club sought to follow what is globally known as the ‘Thrasio’ model. One company would consolidate multiple small e-commerce brands and sellers under its umbrella, and then operate them as a single, organized company.
By doing so, companies such as 10Club and its competitor Mensa Brands promised to expand operating margins by reducing overheads such as office, accounting and legal expenses, and other costs of operation—allowing small brands to generate bigger returns. Mensa Brands became ‘India’s fastest unicorn’—achieving a valuation of $1.2 billion within six months of commencing operations, in November 2021.
10Club, however, has not come close to showing any promise of turning profits. The company’s annual financial filings with the Registrar of Companies, Ministry of Corporate Affairs, accessed by Mint via business intelligence firm Tofler.in, showed that as of 31 March last year, its net loss stood at ₹116.3 crore—up from ₹16.6 crore in FY22.
Within a year of the $40-million seed funding round, the startup in June 2022 raised an additional $30 million, including debt from existing investors to continue its acquisition and expansion plan.
“It’s difficult to pinpoint a single cause of failure here—let’s just say that 10Club put its bets in the wrong places, and once it did, it was difficult to back out of brands they had already acquired,” said one of the four people quoted earlier. “Its focus on home accessories and furnishing as its niche area of focus did seem good on paper, but its inability to detect stiff competition coming from legacy home firms, as well as global giants such as Ikea, left it with little room to turn its business around.”
10Club’s roll-up model focused mainly on home care categories such as gardening, kitchen, home decor and furnishing. Some of the brands that the company acquired included gardening brands such as Kraftseeds, Gate Garden, and Kriti Kalash; sports brands such as Skudgear Rapidotzz, Beclina, and Aurion; and MyNewBorn in baby care.
The company was already “out of cash”, according to the second person quoted earlier. “It has stopped funding the brands it acquired.”
“The founders’ vision did not play out, and failing to execute and lack of adept management at the venture further hurt its prospect,” said the third person. “The brands that 10Club acquired did not work out, and this is a capital-heavy field since it requires constant acquisitions and aggressive marketing campaigns.”
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10Club is close to receiving several wind-up petitions from the brands it acquired, as certain payouts are pending. Existing investors, too, have backed out of offering a way out, people associated with the business said.
“There’s no clear path to stabilizing the business for the most part, and there’s nothing in it for existing investors to offer further respite to 10Club,” one of the people cited above added.
The e-commerce aggregation business, which offers small margins, has proved difficult worldwide. In November 2023, Thrasio, the pioneer of the model, shut shop—even after being valued at $10 billion.
