Captain Fresh, a B2B seafood firm, is preparing for its initial public offering (IPO) and recently raised Rs 100 crore from Motilal Oswal Group, which appears to be part of its pre-IPO funding. The investment comes after the Bengaluru-based company had a strong financial performance in the previous fiscal year, while it was unable to reduce its losses.

Captain Fresh's gross revenue (GMV) climbed by 71% to Rs 1,395 crore in FY24, up from Rs 817 crore in FY23, according to its consolidated financial statement obtained from the Registrar of Companies.

Captain Fresh is a business-to-business seafood marketplace that also offers a farm-to-retail platform. The startup sources directly from agents or farmers and distributes through B2B, B2R, and B2B2C channels. It uses its bid engine, unique quality assessment, and satellite technologies to ensure that demand and supply are matched.

Product sales, which contributed Rs 1,385 crore, were the primary driver of the revenue increase. This represents 99.28% of total operating income. Sales of services and other operational revenue both rose by Rs 1.3 crore and Rs 8.7 crore, respectively.

In FY24, the company's overall revenue was Rs 1422 crore, including an extra Rs 27 crore from interest income.

With a 72.5% increase to Rs 1,311 crore, or 79.55% of total expenses, the cost of materials was the largest expense. Legal fees increased 30.56% to Rs 47 crore, while employee benefit costs decreased 32.45% to Rs 81.6 crore. While other expenses remained largely steady at Rs 170.4 crore, transportation expenditures decreased by 24% to Rs 38 crore.

Overall costs increased by 44.82% to Rs 1,648 crore in FY24, from Rs 1,138 crore in FY23. 

Captain Fresh's loss increased by 4.4 times to Rs 229 crore in FY24, from Rs 52 crore in FY23. Its ROCE and EBITDA margins were -22.95% and -12.10%, respectively. In FY24, the company spent Rs 1.18 for rupee earned in operating income.

According to TheKredible, Captain Fresh has raised a total of $176 million in funding to date, with Matrix Partners, Tiger Global, Accel, Prosus, and Ankur Capital as primary investors. Last year, it also acquired three companies: Senecrus, a shrimp cooker and distributor based in Paris; CenSea, based in the United States; and Koral, headquartered in Poland.The latest money looks to be part of a pre-IPO round.

According to media sources, the company has hired Axis Capital and BofA as bankers for a possible IPO worth $350-400 million.

While the growth in expenditures (and losses) might be attributed to a series of acquisitions and associated costs (particularly legal costs), Captain Fresh appears to be following a strategy. The most significant risk, of course, remains the principal commodity in this example, seafood, which is highly susceptible to supply side shocks caused by both natural and manmade occurrences such as disease outbreaks. However, broader trends continue to favor the industry and Captain Fresh's prospects, as demand remains stable with an upward bias. One can understand what investors loved about the company, but it needs to be seen whether the early signals, such as profitability at EBITDA or even net profits, will be seen by 2025.