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The Indian government’s initiatives like ‘Digital India’,‘Make In India’ and ‘Startup India Standup India’ have resulted in the country experiencing an entrepreneurship boom, and it heralds a perfect time for big industry tycoons to invest in startups. And, one of the biggest names from Indian business, Tata Sons’ chairman emeritus, Ratan Tata seems to have vouched for that.
Ratan Tata (rated as one of India’s most active angel investors last year) has recently invested in specialty tea e-tailer Teabox.com. This is the fifth investment right in the beginning of 2016 for Tata; others four companies which received funding this year include- animal lovers’ portal DogSpot.in, startup analytics firm Tracxn, coupons site CashKaro and baby products portal FirstCry.
“This is closely related to supporting young entrepreneurs who are doing something you respect or are in an area that you feel has been ignored. We have a consumer population of 300 million that may go up to 600 million in the years ahead,” Mr. Tata said in an interview to Tata group’s internal publication. He added that there are tremendous opportunities in reaching this population and the task is being undertaken by passionate young people who need backing.
During the last few years, Ratan Tata has invested in many startups. From ecommerce to auto, Tata's investment portfolio is as varied as it can get. The top industrialist is an investor in firms like Snapdeal, Kaaryah, Urban Ladder, Bluestone, CarDekho, Sabse Technologies, Xiaomi and Ola.Tata’s most profitable bet probably has been one of India's largest horizontal online marketplaces Snapdeal, which caught his attention way back in 2014. He put in investment of Rs.10 crore ($1.5 million) in Snapdeal, the e-commerce marketplace owned by Delhi-based Jasper Infotech Pvt. Ltd, and it put his interest in the country's online startups right in the spotlight.
Ratan Tata has pumped little over Rs.20 crore into 10 Indian start-ups over the last few months. His investment indicates the huge potential of this sector but what led the veteran industrialist to invest in startups and especially e-commerce startups in the first place?
An entrepreneur’s value system, his commitment to the innovative startup idea and the reach of e-commerce are among the key factors that influence Tata’s decision to invest. Mr. Tata avers, “By and large I have been backing businesses in the e-commerce space, because they enable goods and services to reach people who could never have been catered to before in this manner. They never got a chance previously to order what they wanted, have it delivered to their doorstep, pay when they receive it, and return it if not acceptable. This sort of reach has never been there in the brick-and-mortar world.”
At the same time he throws caution to the wind. An investor in a slew of Indian and international startups, Ratan Tata feels that “some of the valuations are pricey” and he supports only those new businesses that are “really making a difference”. While Tata invests in only those ideas that excite him, he also needs to get a good impression of the team backing the venture.
Almost every startup that Tata has invested in has seen a significant jump in valuations. What could be the reason for this?
It is the credibility and value that Ratan Tata brings on board which has proved as a boon for the startup companies. Tata’s investment is an endorsement of the company. More than an investor, he actively plays the role of a mentor (whether as an advisor to VC firms or as stakeholder in start-ups).
Tata, who served as the Chairman of Tata Sons for over two decades until his retirement in 2012, is also associated with some venture capital funds as advisor, including Kalaari Capital and Jungle Ventures. Ratan Tata is the most important investor for startups and he boldly takes all the risks; in fact he has saved many when their bank balance was very low. Tata is building a portfolio of new-age businesses across sectors ranging from consumer internet – particularly e-commerce – to social impact, e-health, home services, animal care and clean-tech sectors. And we wish this novel start-up champion the best!
To get the list of startups in which Ratan Tata has invested, checkout our next blog.
What do you feel about Ratan Tata’s foray into startups? Do give your comments below. We would love to chat on this.