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Indian startups feature Bollywood stardom on their cap table

Written by Orchie Bandyopadhyay Published on     7 mins read

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While there has been an incremental interest from Indian celebrities to park their money in fast growing tech startups, a few of them have even set up their own fund to back early-stage companies.

When India announced a two-month-long nationwide lockdown last March to curb the spread of COVID-19, millions of migrant laborers who live on daily wage suddenly found themselves out of jobs. With no income to support themselves, a majority of them started to go home—an arduous journey as with no trains or buses running they had to either walk or cycle for hundreds of kilometres to reach their villages. Indian media was full of news reports of the plight of daily migrant workers who weathered extreme heat and hunger to reach their homes.

It was then an Indian film actor, Sonu Sood, got out of the comforts of his home and arranged for buses ensuring these migrant laborers reach home safely and well fed throughout the journey.

In November, after seeing his work in dealing with blue-collar workers, GoodWorker, a job search startup by Temasek partnered with Sood’s job search app for migrant workers to create a joint venture. GoodWorker made an initial investment of USD 34 million into the new platform.

Later that year, Sood also invested in rural fintech startup Spice Money to empower 10 million rural entrepreneurs digitally and financially.

“Given my experience with migrants over the last one year, I gained an eye-opening perspective on the needs and struggles of the people in towns and villages of India. My vision is to make them socio-economically independent and self-reliant using technology. My association with Spice Money will help us jointly achieve our mutual vision of a digitally empowered rural India,” Sood told KrASIA.

The startup’s technology prowess and extensive reach has given the actor an unparalleled platform to reach out to the folks in rural areas.

Dilip Modi, founder, Spice Money (left) posing with Sonu Sood (right), an actor in India’s Hindi film industry who invested in Spice Money. Photo courtesy of Spice Money.

Similar to Sood, who capitalized on his fame to start his own technology company and invest in another, a host of Indian celebrities from film and sports backgrounds have been showing interest in the world’s third largest startup ecosystem by picking up stakes in tech companies like Unacademy, JustDial, Khatabook, and Purplle, among others.

The latest such investment was by Sachin Tendulkar, one of the most revered sports persons in India, who picked up a minority stake in etdech major Unacademy. As a part of the deal, Tendulkar will also coach students online.

While there has been an incremental interest from Indian celebrities to park their money in fast growing tech startups, a few of them have even set up their own fund to back early-stage companies.

In 2015, former Indian cricketer Yuvraj Singh launched his venture fund, YouWeCan Ventures and said the fund will invest INR 40 crore to 50 crore (USD 5.3 million to 6.6 million) in the next five years in Indian startups. Singh’s diversified startup portfolio includes JetSetGo (a private plane aggregator startup), Holosuit (an AR/VR based tech startup), Healthians (a home diagnostics service provider), EazyDiner (restaurant table reservation startup), SportyBeans (a multi-sport programme for pre-schoolers), and Sports365 (an online sports and fitness company), to name a few.

According to him, the VC firm invests in companies that not only align with who he is, but also make a meaningful difference to the society at large.

A cancer survivor, Singh says his investment in Wellversed, in October last year, was made because the startup can make a difference to society especially in terms of eating healthy food.

“I have tried all Wellversed products and find them top of the line as they are tasty as well as healthy. With the team at Wellversed and my experience in nutrition, I feel we can make a difference in the market.”

He added that in view of the pandemic, YouWeCan had to restructure its strategy in terms of investments.

“But things are looking up now and we are back on the investment track and exploring new funding opportunities to give the Startup India movement a much-needed boost.”

Increasing stakes

Brands have been long partnering with celebrities to acquire new users. But with the meteoric rise of startups’ valuation in the last few years, Indian celebrities are opting to own a stake in these companies for endorsing these brands instead of getting paid in cash.

Just ask Khatabook, a Bengaluru-based startup, touted and backed by sportsman MS Dhoni, who is known for his achievements in cricket, the most popular Indian sport.

“Picking up a stake in the company is an investor’s choice. When a celebrity who could be a perfect brand ambassador for your brand decides to invest in your company, it is a win-win situation. For us, that worked out well with MS Dhoni as he resonates with all segments of audience within the country and represents trust. This has definitely helped the brand,” says Ravish Naresh, CEO and Co-founder, Khatabook.

He also states that a celebrity would opt for an ownership incentive only if he/she has trust and support for your brand’s vision and growth.

“Such engagements are more organic,” says Naresh.

Indian film actor Malaika Arora says her association with Mumbai-based yoga-based wellness platform Sarva Yoga began as just another endorsement. But with time, she realised that she wanted to take this association to another level and do something significant as yoga is so close to her heart.

She is a co-founder of Sarva and its women-centric brand, Diva Yoga.

Yoga entrepreneur and Sarva founder Sarvesh Shashi, says: “We couldn’t have got a better person than Malaika whose heart and soul is in yoga.”

Sarva is a classic example of a startup that has taken glitterati buzz and cash, and used them to its massive advantage.

India cricketer Shikhar Dhawan, who invested in the startup last summer, told KrASIA, “The Sarva app allows me to practise yoga even when I am on tours playing for India.” Sarva is also backed by American singer Jennifer Lopez, Bollywood actor Shahid Kapoor, Indian playback singer Aishwarya Rajinikanth Dhanush, among other celebrities.

The startup has raised over USD 10 million in all its funding round, and with the COVID-19 pandemic and lockdown, it is focussed on ramping up its digital presence. Sarva and Diva Yoga have a global digital reach of over 200 million people.

After receiving a fair amount of traction in the US, the UK and Singapore, Shashi says: “These nations are good markets for yoga specifically from a mental health standpoint.”

Prolific investor and India cricket team captain Virat Kohli, who made his first investment in Football Club Goa, an Indian professional football club based in Goa, in the Indian Super League (the top flight of Indian football), in 2014, says his investments are just an extension of who he is.

Cred
Indian cricketer Rahul Dravid in an advertisement of Cred. Photo courtesy of Cred.

“I have never tried to manipulate my way into a collaboration or into a deal with a brand with the intention to make money and exit in this much time. Money is a by-product of the right intent,” Kohli said during a talk hosted by Forbes India. He added, “If you only intend to make money then yes, you will make money for six months but then you will have no trust factor.”

Besides, having a set of his own brands such as One8 and Wrogn, Kohli has invested in a range of startups including a social media tech startup, Sports Convo, and a chain of gym and fitness centres, Chisel Gyms. The mobile gaming startup, Mobile Premier League, in which he invested an undisclosed amount in 2019, is nearing unicorn status. Kohli has also invested in Hong Kong-based startup Zeeva Electronics to launch MuveAcoustics, that manufactures audio systems such as speakers and headphones.

Dilip Modi, founder of Spice Money, in which Hindi film actor Sood has invested, said celebrity investors, like professional VCs are looking to invest in companies that will bring them higher returns in the future.

He adds that a key deciding factor for celebrity investors to back a firm would be the cause or the problem the said company is trying to solve.

“However, the scope of their association and terms of investment vary. So, there’s no one investment model that is being preferred over the other,” Modi said.

Speaking about paid endorsements, Naresh from Khatabook added that brands have to explore them as well because the end goal is to communicate brand values to the target audience effectively.

But there are some who find the involvement of celebrities from the worlds of Bollywood and cricket “typically a hollow one.”

“In India, a celebrity is paid money to say the right things about the brand on tout,” said Harish Bijoor, brand strategist and founder, Harish Bijoor Consults Inc. He adds that in this basic and primary model of brand endorsement, credibility is low, but visibility is high.

“The new model, where the celebrity is an investor, is all about getting not the word of the brand endorser in, but all of him or her in,” he said.

For the startup, this is a win-win model as it’s affordable and the cost is that of either diluted equity or invested equity. While for the celebrity, they look forward to harvest rewards.

“Delayed gratification is the name of the game,” Bijoor said.

A source close to a few celebrities who are doubling as investors told KrASIA, “By being methodical, selective, and genuine, many of these stars not only enhance the startup’s brand through their association, but also enhance their own overall personal brand. And none of this is overlooked by the consumer.”

As for these celebrities continuing to use their global audience to spread the word about Indian startups and help them get further recognition, Singh believes that since his goal is to contribute to the Indian government’s Startup India movement, YouWeCan Ventures plans to aggressively invest this year, focusing on sports, health, and education sectors.

While Sood said: “Through my partnerships and associations, my goal is to continue offering employment and self-employment opportunities to the migrant population that has suffered great set-backs during the last year.”

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