Ratan Tata: Ratan Tata: Wisdom for free, money for nothing

Ratan Tata’s personal investments in Indian consumer internet companies, beginning a decade ago, provided much-needed credibility to the fledgling ventures striving to forge a reputation for themselves. He was among the earliest leaders of India Inc. to bet on what was an infant startup ecosystem at that point.

Tata, who started personal investments through family office RNT Associates, wrote relatively smaller cheques but founders said his wisdom and integrity from decades of being at the helm of a large conglomerate brought strong validation.

He made his first investment in ecommerce marketplace Snapdeal, which was followed by companies such as Bluestone, CarDekho, Urban Company, Ola, FirstCry and Lenskart.

During a chat hosted by Vani Kola, founder of domestic venture capital fund Kalaari Capital, in February 2015, Tata while discussing the new breed of entrepreneurs, had said, “The hopeful thing is that in today’s context there are young, bright, capable entrepreneurs who risk not being a part of big companies and are setting up their own enterprise to make a difference.” The days of seeking protection through legislation should not be the way we see growth in India- young entrepreneurs should guide against seeking protectionism, he said.

“People did not congratulate me as much when we first raised funding as they did when Mr Tata invested in us,” said Amit Jain, cofounder and CEO of used car sales platform CarDekho. “Tata Group is known for trust and when we met him… he seemed like the most trustworthy person. From that perspective, our company values are also based on trust, being humble while being successful and ambitious as well.”

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A piece of advice from Tata in a meeting in 2015 became the company’s guiding focus.

“Somewhere in the middle of the conversation, he said, ‘Make it into an auto ecosystem.’ This meant not just cars but having aspects such as finance or insurance. I think that helped us in creating the vision, which we finally executed later over the years,” Jain said.

Another entrepreneur derived a value system from Tata’s words of wisdom.

“I remember our first meeting with him in a surprisingly humble office in Fort, Mumbai,” said Abhiraj Singh Bhal, cofounder and CEO of home services platform Urban Company. “Mr Tata listened to our pitch patiently and then told us, ‘India needs what you are building. Keep the quality high, and everything else will follow’.”

At the time of the meeting with Tata in 2015, the startup–then known as UrbanClap–was less than a year into operations.

“His advice guided us as we evolved Urban Company’s operating model from an open marketplace to a more tightly managed, full-stack services platform,” Bhal added.

Gaurav Singh Kushwaha, founder and CEO of omnichannel jewellery retailer Bluestone, said, “With him, it was about the credibility that his name gave you. In our business, trust plays a very important role. So Mr Tata’s name gave confidence to our employees first and foremost… and also to our customers because credibility is very much required when you’re selling gold and diamond jewellery.”

Bluestone was Tata’s second personal investment in 2014 after Snapdeal.

Ecosystem boost

Besides his personal investments through RNT Associates, Tata also sought to invest through a venture capital fund floated with the University of California as a sponsor. The UC-RNT fund, which was set up to back Indian new-age companies, however, did not take off after key stakeholders on both sides of this partnership had other priorities emerging by 2017 when it took its foot off the gas pedal.

Entrepreneurs and investors cited the second-order effect of Tata backing Indian startups.

“Sometimes, we don’t realise that he was probably the first person of such stature and importance in the Indian business fraternity to notice the Indian startup ecosystem,” said Kunal Bahl, cofounder of Snapdeal. “A lot of large conglomerates and businessmen came in after that. In some ways, he validated Indian startups for other Indian business groups. He single-handedly bridged the divide between traditional Indian businesses and new-age Indian companies.”

In addition to investing in startups, domestic venture capital funds such as Kalaari Capital and Chiratae Ventures also took him onboard Tata as an advisor.

“I hadn’t gone with a plan,” recalls Kalaari Capital’s Kola, when she first met him in January 2015. “But I said to him I am very committed to building the Indian entrepreneurial ecosystem, and since you’re thinking of investing in the Indian startup ecosystem, it would be great if you could join us as an advisor.”

Between 2014 and 2017, there were questions over startups and whether they would be able to scale, Kola said.

“There was potential but no IPOs had happened… but he was a staunch believer of startups in India,” she said. “I remember he once told me: ‘If this phenomenon was happening 30-40 years ago, I would have loved to be an entrepreneur.’ He wanted people to build for India… and he met founders who had deep pride, clarity and a sense of purpose towards what they were building.”

Sudhir Sethi, founder and chairman of Chiratae Ventures, said having Tata as an adviser was a stamp of approval.

“His name being associated with us gave confidence to the Indian capital… a lot more Indian capital came into Chiratae,” he said. “Today, we have raised 50% of our capital… almost Rs 5,000 crore, from India, and I must say that people like Mr Tata have played a stellar role in bringing about this change.”