Funding by venture capitalists in direct-to-consumer(D2C) aggregators expanded 30 times in a year to reach nearly $1.2 billion in 2021, according to the latest report by Bain and Company. From a $40 million investment in 2020, VC investment surged to $1187 million in 2021, helping create four new unicorns in the segment.D2C brands refer to businesses that have the majority of their revenue or customer acquisition from direct-to-consumer online channels or started with an online-first distribution before going omni-channel.”D2C brands witnessed exponential growth led by a dual demand and supply-side push—increasing depth in online consumer purchasing preferences supported by growing ease of building an online presence or channels for the brand increasing,” said the report adding that increasing consolidation and M&A play is expected as brands roll up into aggregators or get acquired by full-stack competitors.Also, there will be increasing competition as global leaders such as Thrasio look to India for growth.”COVID-19 has accelerated D2C adoption, making it necessary for companies to directly connect with customers. We as a brand reported sales from our D2C channel in 2020 at 20%, which is expected to grow to 35% within the next five years,” Vipen Jain, founder, Fitspire, a vegan health-wellness brand. “There is always a prominent theme for a need of stronger direct-to-consumer (D2C) presence, even in industries that have traditionally relied on business-to-business (B2B) and various other platforms. “Several mainstream companies have acquired online-first brands in the past three years. For instance, Colgate Palmolive bought a stake in Bombay Shaving Company, Emami purchased a majority stake in The Man Company, and Parle Products invested in health food company ASAP Bars. Unilever Ventures has a minority stake in personal care brands Phy, while Marico has acquired stake in Just Herbs and Beardo. Even Aditya Birla Fashion and Retail Limited (ABFRL) said it will set up a dedicated company to enter the D2C business across categories in fashion, beauty and lifestyle segments.”Well-run D2C companies are faster to market, while larger MNCs are currently playing catch up with product and market innovation. Fundraising is critical to help startups preserve their advantages and scale up to cover large white spaces before larger players enter and adapt,” said Mohit Bhatia, cofounder, Malaki, a beverages brand.At present, only 5% of the 600 companies in the D2C segment have achieved the Rs100 crore revenue milestone while 20% have revenue between Rs20-90 crore, and the rest of them below Rs20 crore each, which may see consolidation going forward, according to India D2C Summit 2022.”D2C brands that have been able to establish some recall will still remain relevant, though they will definitely need to increase their presence offline as well. During the build stage for any D2C brand, access to funds becomes critical since they are still reaching out to consumers and setting up a base,” said Soumyadeep Mukherjee, Co-founder, SpiceStory. The number of new D2C companies, however, saw a steep decline last year at 134 new online-only brands, reversing the aggression seen in the space which saw over 500 companies enter the segment in FY20 and FY21.