Quick Commerce Fuels a Sweet Funding Rush for Ice Cream Start-ups

Even as summers recede, ice-creams continue to sizzle in India, thanks to the fast-growing quick commerce (Q-Comm) business, which is spurring unprecedented demand for the dessert and an increasing flow of startup capital into the sector. With VCs and their ilk licking their lips at the mouth-watering prospects of Q-Comm, 2024 promises to end up as a record year for the business.

Since 2020, when the Q-Comm business started, fund flows to the ice cream segment have grown consistently, with 2024 set to erase all previous records having already scooped up $26.5 million, according to Tracxn. 

Venture Capital Bets Big

VC firms are increasingly betting on the ice cream sector as a high-growth opportunity, thanks to the expansion of quick commerce. BDO India partner Jeetu Bairathi notes that this period is particularly favorable for new-age ice cream companies: “The ice cream market is on an upswing and is expected to grow at a 12 per cent CAGR,” he says. “The ice cream market has a bright future, driven by increasing per capita consumption and overall growth."

Several new-age ice cream start-ups have already made headlines for securing significant funding. In June, guilt-free ice cream brand Go Zero raised $1.5 million, while Hocco closed a $12 million round. Very recently, Mangalore-based Hangyo Ice Cream also raised about $25 million. It is indeed raining cash for these startups.

Ninad Karpe, founder and partner at 100X, describes the surge in funding driven by quick commerce as a cultural phenomenon. “Quick commerce has transformed the ice cream sector in India, he explains. “It's a category perfect for impulse buys, making it an ideal match for Q-Comm. For VCs, it's about tapping into a new wave of demand for innovation and quality. in a market that is just starting to grow. The potential here is truly mouth-watering."

Sweet innovations on the rise 

Quick-Comm's on-demand delivery model is fueling an era of instant gratification that resonates with the digitally savvy Gen-Z urban consumers. More than ever people are reaching for their phones to satisfy a spontaneous craving for ice cream, a convenience unheard of until recently. Increasing disposable income and evolving consumption habits are feeding into this indulgence. 

However, there is a twist. Many consumers seeking healthier options are dialing new-age vendors like Go Zero, Hocco, Brooklyn Creamery and Scuzo. These upstart brands are racing up the ranks and outpacing established names like Amul, NIC and Kwality Walls in quick commerce.

Alisha Chona Shah, founder and CEO of Ice Cream Works remarks: "We are setting ourselves apart by focusing on healthier, artisanal flavors that appeal to evolving consumer preferences. Investors are excited by the sector seeing it as a strong bet given its alignment with health. trends.

Although established brands continue to hold sway in Tier-1 and Tier-2 cities through conventional retail, new-age companies are leapfrogging them in urban centers through quick commerce, offering healthier versions like low-calorie, sugar-free and vegan ice creams, categories that traditional brands are yet to explore. 

Quick commerce: a game changer 

Quick commerce has played a pivotal role for these ice cream startups