Ratan Tata, The Accidental Startup Investor
For Tata Sons Ltd.’s Chairman Emeritus Ratan Tata, who has invested in over a dozen startups since he hung up his boots at the Bombay House, becoming an investor in upcoming new-age companies has been "an accident".
The patriarch of the $110-billion salt-to-software Tata Group, arguably one of the most successful investors of all-time, was an early backer of the ride-hailing platform Ola (ANI Technologies Pvt. Ltd.), and Paytm (One97 Communications Pvt. Ltd.) in 2015, making these investments in his personal capacity.
He also has a small stake in One97 that owns Paytm, and took on the role of an adviser to the startup. He made his maiden e-commerce investment in Snapdeal.
Tata's other top startup investments are:
- Fitness startup CureFit
- Weather forecaster ClimaCell
- Auto portal CarDekho
- Online furniture mart UrbanLadder
- Eyewear online retailer Lenskart
- home rental platform NestAway
- Petcare platform Dogspot
- Electric mobility startup Tork Motors
Tata carries out these investments through his firm RNT Associates.
"I became a startup investor partly by accident. During the years that I was with the Tata Group, I always looked at the startups as a sector that is exciting but somewhat untouchable because somewhere or the other there will be conflict of interest with Tata Group," Ratan Tata told Chiratae Ventures Chairman Sudhir Sethi in a talk on Tuesday evening.
"But when I retired I was free from it and I started making small token investments from my own pocket in what I considered to be exciting companies. So, what I did was to take some more risks than I might have taken under different circumstances. With 2-3 years into this, it became a learning experience, as this sector is very active and have the best minds," said Tata.
"Contrary to common belief my pocket is not so deep,” he added.
Listing out his rationale for the companies he has invested in or advising on, Tata said a promoter’s “fire in the belly”, ideas and the solutions they offer are the drivers of his investment decisions.
"In my case it was selection from intuition, in fact I would say talking with the founders, drawing conclusions from their attitude, maturity and their seriousness meant more to me than any other thing or factor," Tata said.
Tata is not worried over the large cash burn that startups report month-on-month, saying they are here to stay—indicating that venture seed capital funds are the way forward. "Look at other countries, startups have been there for much longer. It goes without saying that this sector will grow and it already has proven to be the case. It will continue to do that in the coming years.”
On what is the right time for a startup to go global, Tata said, "I don't think there is a right time. It is for the founder to determine whether going global will give him/her an opportunity to expand the market."
On whether he will encourage other business families to emulate his investment proclivity, Tata said, "I think it will come naturally. You cannot force them. It comes from the success the sector has."
Tata would like to see his presence grow in the startup sector based on the funds he has deployed. "But the excitement of being in new areas, participating in something that has not been done is the most exciting and absorbing thing. This is something I am looking forward to in the coming years.
"On technology side many breakthroughs are happening which is not conformed to any one sector. There is opportunity in healthcare, medical treatment, online and manufacturing.
"I am glad the startup space is growing and becoming so prominent. Now more and more big companies will recognise that there is another way to do something and that something might be the better way to do cheaper and most cost-effective way.
"After all, Indians are entrepreneurs at heart. What we need is opportunity to flourish. And I think startups are doing just that. I wish them all success," Tata said.