When Ratan Tata endorses a startup, it is likely to become a successful business in the years to come – his eye for potential is second to none.
HEAD SHOT
- Ratan Tata started investing in Indian start-ups after his retirement as a chairman from Tata Group in 2012.
- Tata has investments in over 30+ companies, with over 50 percent of them successful ventures.
- Some of the big start-ups associated with Tata are Ola, PayTM, Xiaomi, Snapdeal and Urbanclab.
- Ratan Tata has a privately held investment firm RNT Associates to back innovative startups and also invests in some on a personal level
Manufacturing everything from salt, steel and car to operating India’s biggest Hotels and Hospitals, the Tata name has had a prominent position in the Indian business ecosystem.
Since his retirement in 2012, Ratan Tata has taken on a new key role of catalyst for India’s indigenous new age businesses. A keen observer with eye for talent like no other, Tata’s investments in the Indian startup ecosystem can match those of the most ingenious Venture Capitalist firms.
Ratan Tata’s investments have fared much better than most angels.
In the cut-throat competition of the Indian market, where 90 percent startups fail, more than 50 percent of the startups that Tata backs go on to achieve substantial success and profitability.
The Startup ecosystem in India
While addressing an event organised by Venture Capital Firm IGD Ventures India, Ratan Tata said “I don’t think we have as many really disruptive start-ups in India as we do overseas.”
In the past, Ratan Tata has opined on the difference in perception in India where the environment is not as conducive for great idea at the germinating stage.
Instead of support and backing of uniquely innovative ideas, there’s a trend in the industry to settle for lower risk and what’s more practical.
Tata’s investment timeline
Ratan Tata began his adventure as a start-up investor with Altaeros, a company founded at the famed Massachusetts Institute of Technology to make high altitude wind turbines that would generate twice the energy of conventional ones.
Tata’s interests in Indian startup ecosystem include highly successful unicorns and profitable firms like Snapdeal, Paytm, Ola, UrbanLadder, and CarDekho – to name a few prominent ones.
When Tata joined Kalaari Capital, a venture capital fund, as an advisor, he opined of his vision while investing.
What Tata looks when evaluating an investment in a startup is the quality and intelligence of the entrepreneurs.
Tata’s investment gems
PayTM: Ratan Tata made a personal investment in One97 Communications, which is the parent for Paytm and took the role of an advisor to the firm. PayTM hit it big post demonetizatiin, with a heavy drive to digital economy. From big showrooms to small tea vendors, millions now use Paytm as a payment option.
Ola Cabs: Another big success story where Ratan Tata has substantial interest is Ola Cabs, India’s answer to US ride-hailing firm Uber. In 2015, Tata invested in the company in his personal capacity. RNT has an investment interest to the tune of Rs. 400 crore in Ola. Tata is now one of the primary stakeholders in Ola’s new vision of Ola Electric which is developing an electric mobility ecosystem in India.
Xiaomi: Ratan Tata was the first Indian to invest in Xiomi, the Chinese smartphone major which has taken the Indian market by storm with its cutting edge and price sensitive products. The amount of the funding was not disclosed. Xiomi is one of the popular consumer technology companies in India. With flagship brand Mi, its products include mobile handsets, laptops, tablets, smart devices and smart home products.
Snapdeal: In August 2014, Ratan Tata invested in his personal capacity in Snapdeal. Along with the investment, Snapdeal tied up with Tata Value Homes to sell apartments across five cities (Bangalore, Chennai, Pune, Mumbai and Ahmedabad).
Zivame: In September 2015, online lingerie selling platform Zivame raised funding from Ratan Tata who backed the brand to reach as many Indian women as possible. Zivame was founded by Richa Kar and Kapil Karekar in 2011 and is known for its quirky brand campaigns.
Urban Ladder: Based in Bengaluru, Urban Ladder is a popular furniture selling platform. It is currently present in 12 cities around India. The online furniture retailer secured funding from Ratan Tata in November 2015.
CashKaro: The Gurgaon-based company, founded in 2013 by Rohan and Swati Bhargava, raised an undisclosed amount from Ratan Tata in January 2016. Cashkaro is a coupons and cashback site rewarding customers for visiting online retailers.
UrbanClap: In December 2015 UrbanClap raised an undisclosed amount in funding from Ratan Tata. UrbanClap is a one-stop destination for all urban lifestyle services which has a large community of local professionals and handymen to take care of any house-hold related service from plumbers to electricians.
LensKart: . In April 2016, Lenskart, an online retailer that sells eyewear such as sunglasses, eyeglasses, contact lenses etc., secured funding from Ratan Tata. LensKart has opined in the past that Tata’s roleis more of a mentor/ advisor rather than a financial investor.
Cardekho: Jaipur-based Cardekho raised an undisclosed amount from Ratan Tata to kick-start their new stream of insurance business. The startup was to be the centre of the South-east Asian automobile ecosystem from buying or selling a car whether it’s new or used to leveraging insurance and financing for your purchases.
How Ratan Tata invests?
Ratan Tata set up a personal investment firm RNT Associates in India in 2009. The firm has only one other stakeholder in his long-trusted aide RK Krishnakumar who is the former MD of the Taj Group of Hotels.
Ratan Tata champions analyzing and catalyzing local start-ups through his personal investment vehicle RNT Associates. RNT has partnered with University of California to fund start-ups working on long-term solutions.
RNT Associates set up with a $300-million venture capital fund in partnership with the University of California to cut bigger cheques for growth stage capital. Among the fund’s investment interests are cab-riding platform Ola and financial-technology start-up Mswipe.
On his investment aptitude and ability to identify talents startups with potential, Kalaari Capital Advisors MD Vani Kola said:, “Ratan Tata is an icon and role model to all entrepreneurs.”
Ratan Tata effect on a startup’s fortunes
The impact of Tata’s backing doesn’t just spell fresh money for dreams of next-gen entrepreneurs. His investment in a company means faith in its concept.
Endorsement from Tata does sheer wonders for the credibility of companies no matter if its at the product development stage or yet to hit profitability in the market.
Ratan Tata’s investments also boast a significant number of unicorns like Paytm, Ola Cabs, Xiaomi, Snapdeal, Urbanclap and LensKart. Investments from Tata not only provide financial backing but gives credibility and high-profile network connections to work with.
Founders and CEOs of Indian companies look towards Tata as an idol.
Having Ratan Tata as an advisor and a mentor is an unparalleled boost to young turks trying to make it big in the Indian market.
PARTING SHOT
- Ratan Tata doesn’t only invest in promising start ups but takes on advisory and mentor roles for early stage entrepreneurs.
- With his vision and keen eye for potential, Tata has backed around 40 start-ups, more than half of which have achieved success.
- For Ratan Tata, the quality and intelligence of the entrepreneur are major things while investing in a start-up.
- For the startup founders, Ratan Tata’s backing affirms credibility and faith in the potential of their concept and gives increased chances of interest from other investors in the market.
