10 years ago, successful entrepreneurs would sell their business, make some money, park some of it in real estate or elsewhere, and may or may not decide to invest in new start-ups. Often the ones that decided to invest in start-ups did so through a fund and investments were in safer bets, often through a family office structure.
Examples are many: After the stake sale to iGate, at about $1.2 billion or Rs 6,755 crore, the scions of the Patni family, Amit and Arihant, launched a $75-million growth fund. Rakesh Malhotra, founder of inverter manufacturer Luminous Power Technologies, set up Ncubate Capital Partners to fund new ideas, after selling his company to French electrical major Schneider Electric in June 2011 for Rs 1,400 crore.
Similarly, Ronnie Screwvala launched Unilazer Ventures after selling his stake in UTV to Walt Disney for over Rs 800 crore. Deepak Ghaisas, the former CEO of iFlex Solutions, also set aside some of the wealth generated from the company's sale to Oracle in 2005 to invest in technology start-ups.
That was a more structured and calculated approach to investing in start-ups. Some entrepreneurs of the MakeMyTrip era tell me: Today's guys have money in double digits. For us, money was scarce, resources were too constrained to think of investing in companies while we were still building the business. Then, where was the time? There was a strong urge to give back, though, and they did their share of mentoring and giving back through entrepreneur-networks like The Indus Entrepreneur.
True, today's entrepreneurs have the money, lots of it. But I think what is the most compelling thing driving investments in start-ups is the need to stay in the know of new technologies. India's start-up poster boy, Naveen Tewari, the Founder and CEO of mobile advertising company InMobi, believes staying with start-ups is all about learning: "We all go to school and then we go to college. We always look back and miss our school or college days. Investing in start-ups answers, how do I go back to our school…solving problems and situations that are very different."
Technology disruptions rarely come from within an organisation. It can usually be the work of a small team that has the time and mental space to identify new problems and devise fresh solutions to solve them. Technology and 'online' is the new imperative and unless you keep talking to the start-up out there, you would not know what is happening. So today, I find that the busiest entrepreneurs have the time to meet start-ups. Often they are not related to what their own business is all about. So you know that there is no strategic interest involved.
I mean, what does Sachin Bansal's Flipkart have to do with a company that shortens news pieces? The Bansals did invest in a company called News in Shorts, which was recently lapped up by hedge fund Tiger Global.
I met PayTM founder Vijay Shekhar barely a few days after the company announced funding interest from Alibaba, while he was extremely busy closing the process. Sitting across the table, while he told me his story and his inclination to help start-ups, he said: I used to meet many start-ups regularly earlier, not now, there is little time I have. At the end of the conversation, I asked him, what are you doing next today? "Just meeting a couple of start-ups yaar," he said.
That is the thing. I met Indiagames founder Vishal Gondal who is now busy building wearable device company Goquii at a hotel lobby in Delhi. And that was while he was already speaking to a start-up team, wanting to set up an online grocery business. "How did they find you?" I asked. "They had kind of called me and I said, okay, lets meet here," he said. Vishal meets businesses that are away from gaming, something he has already done and knows enough of. "There is no kick in gaming anymore, Taslima," he said.
Often the company that is investing gains more than the investee. For the investee, of course more than the funds it is the real-time knowledge the entrepreneur who is still in the rough and tumble of his business gets him, which is the real oyster. The knowledge and mentoring bought in by early-stage funds and venture capitalists can be dated, though the networks they can bring in can be more substantial than busy entrepreneurs.
The quality of technologies that entrepreneurs today are dabbling with is quite mindboggling and the world will recognise it gradually. "It's a very different calibre," says Sashi Reddi, who founded software testing company AppLabs and made Rs 1,200 crore selling it to Computer Sciences Corporation. Reddi is bowled over by great ideas especially in the Internet of Things (IoT) area.
Three years ago in 2011, Sashi invested in Glassbeam, which has its development centre in India. The start-up - which works with the biggest technology companies in the world, Hitachi and IBM - works on a technology to capture and read data on the performance of machines. Also YuppTV, an investment that Sashi made last February, doubled its revenue from $10 million in calendar year 2013 to $20 million by the end of 2014. YuppTV, founded by Uday Nandan Reddy, has operations in Hyderabad and provides Indian content for internet televisions across markets that have a huge Indian population such as the US, the UK and Australia. The company has exclusive rights from over 200 television channels.
For serial entrepreneur Krishnan Ganesh, who has built and sold several companies, the most famed one being TutorVista, investing in start-ups is "getting the nasha without getting intoxicated". He loves the start-up energy and talking to them. Ganesh once told me he gets so many business ideas in his head all the time that it is difficult to sleep.
I think what is more important that start-ups getting cheques from start-ups is informal networks building up. Few people would be busier than the Bansals of Flipkart or the Snapdeal founders, who rarely agree even for media interactions now. So I was quite surprised when Rohit Bansal, co-founder of Snapdeal, turned up at a small IIT-Delhi event where he would be addressing hardly 20 people. "Investing in start-ups will keep us young," he said.
In the Narayana Murthy era, successful entrepreneurs were Gods. Two-people start-ups could only read their success stories and admire them or listen to them at a business event and enjoy every word of it. But you would dread saying an informal "Hi!". Today you can actually write a LinkedIn invite to Sachin Bansal. And chances are, he will call you for a quick chat. Yes, I have evidence. Read my story "The New Angels." It begins with an interesting anecdote: The New Angels
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