Carrying Cash And Cachet the Angels Come Marching in

BySharan Poovanna The New Indian ExpressPublished:03rd May 2015 06:00 AM

Last Updated:03rd May 2015 10:05 AM

Email0New generation entrepreneurs have an unusual problem. No, we are not referring to capital, theres plenty of it. Typical resources, infrastructure or talent issues too are taken care of. What companies seem to clearly not have on their side is time.

Back in the old days, the Ambanis, Tatas and Murthys took time to build flourishing billion-dollar businesses, and remained away from the media glare. But, in this digital era, when the gap between perform-or-perish has significantly narrowed, success needs to be instant.

This is where senior businessmen, who ducked the hang-up-your-boots-after-65 trend to don investor/mentor roles in their second-innings, come in. For start-ups, it works in multiple ways. Theres access to premium capital, overnight recognition, and more importantly, invaluable guidance on product or services, which could make all the difference. A case in point is online travel agent Cleartrip, which counts K Ram Shriram, founder-investor, Google, as an investor and development mentor.

Ram was against the idea of outsourcing the development of our technology platform and insisted we do it in-house. Week after week, he oversaw its development, giving suggestions to simplify the platform, like featuring lowest price on top, considering the price-sensitive Indian market. Today, these have emerged as our core-strength, says Subramanya Sharma, Chief Marketing Officer & Senior Vice President, Cleartrip, which clocked $800 million revenue last fiscal.

In hindsight, Rams idea not only paid off but also gave Cleartrip an edge over others. With evolving technology, Cleartrips speed of customization was much faster. What would have taken three months to customize had we outsourced, took us mere weeks. In fact, other market players, who initially outsourced, later migrated to in-house development, adds Sharma.

Online furniture curator Urban Ladder is relying on none other than Ratan Tata, Chairman Emeritus, Tata Group, who is investing in his personal capacity. It is great that many business leaders are taking interest in start-ups. Along with investments, these leaders bring their entrepreneurial experience and mentorship to the organization, explains Rajiv Srivatsa, COO & co-founder, Urban Ladder. He adds that Tatas investment reassures the company of their path of value creation. We are able to structure our global supply chain much better with inputs from Mr Tata, he points out. For entrepreneurs, flocking to successful businessmen is not always about funds.

Experience and mentorship is key, according to Rajeev Rao, who is the founder of FreshWorld, a specialty retailer selling fresh farm fruits and vegetables in electric carts in Bengaluru. FreshWorld counts Infys Kris Gopalakrishnan (Kris) as an investor. The quantum of funds does not matter. What matters is a reinforcement and validation of our concepts and the potential in our business, he says. Companies want to leverage on the enormous wisdom these leaders have gathered over time. Entrepreneurs look at things from a particular tangent, whereas accomplished leaders look at them from a broader view, says Rao.

The sentiment resonates with Shailesh Agrawal, the co-founder of Bengaluru-based Governance, Risk Management and Compliance Management (GRC) company, Clonect Solutions. Its not about the money but the challenges, products and strategic moves, he says, adding that even though it makes a huge difference with the presence of accomplished business leaders, its ultimately the product that defines billion dollar dreams.

Some are looking for specific expertise. For instance, Clonect roped in Balakrishnan (Bala), former CFO, Infosys, Balakrishnan and former HR head Mohandas Pai among others recently.

Its the kind of work that helps us build ecosystems around compliances, says Agrawal, adding that Bala and Pais experience was crucial due to expertise in legal and compliance issues.

One reason is to encourage innovation and entrepreneurship, especially in new and emerging technologies and business models. Second is to expand the ecosystem for economic activity, job creation and wealth creation, says Kris, who invested in nearly half a dozen companies after his stint with Infosys.

Many retired business leaders, who have created billion dollar enterprises or led them, have committed to the cause of emerging companies. Kris has partnered with his colleague and former Infosys CEO, SD Shibulal, to set up Axilor ventures, a start-up incubator and VC fund. According to Bala, their collective experience can help companies scale up.

Investments are more strategic in nature than just financial help, he says. Bala has personally invested in three companies and is part of the over `100 crore VC firm Exfinity. Though Bala was believed to be in the race for the post of CEO at Infosys, he retired to pursue his entrepreneurial ambitions.

The VC firm also has Pai, former Wipro Chief Girish Paranjpe, former CEO of iFlex Deepak Ghaisas, former OnMobile COO Rajiv Kuchhal and chairman and managing director of Mantri Developers, Sushil Mantri. Each of them is reported to have invested `20 crore into the fund that backs over a dozen start-ups.

Calling it the first wave, Bala says this trend will gain strength. Hinting at the Silicon Valley, he says that most people there work in the industry, establish themselves and then come out and help create more entrepreneurs. Vinod Khosla, co-founder, Sun Microsystems, is one such eminent example. His Khosla Ventures founded in 2004 has over $4 billion under management.

Large companies are looking to partner with startups specializing in niche technologies. Acquiring or partnering with such companies, experts say, takes less time to expand into new areas than if they were to be organically developed. Bala says that both scenarios are beneficial. In the Silicon Valley, large companies are buying over start-ups or partnering with them. It depends, he adds.

US-based cross platform mobile messaging service provider, WhatsApp, was acquired by Facebook for a staggering $19 billion. Closer home, Flipkart and Snapdeal have spent millions to acquire smaller companies to pursue their vision. And, if the main motive of the emerging companies is only to be acquired, then, as Bala points out, the point is to expand the ecosystem, not constrain it.