The Small Print
Corporate honchos bet big on Indian start-ups
Innovation programmes are acting as a bridge between the corporates and start-ups helped the latter manage their talent and cashflow well.
What do Amit Burman, Anand Mahindra, Azim Premji, Binny Bansal, Kunal Shah, Mukesh Ambani, Ratan Tata have in common other than each of them being bosses of leading business houses of India They have all invested in Indian start-ups. The promise of high growth and a mobile-enabled population of 1.3B has helped India attract investors of all types to its start- up ecosystem. Indian start- ups have seen a steady rise in investments from unicorn founders to corporate honchos.
In most western countries it is quite common for large firms to work with start-ups. History is full of such instances. Over a hundred years ago in 1914, DuPont, a large diversified chemicals company, realised that the expanding automobile industry would provide a good market for its own products. DuPont grabbed this opportunity by investing in General Motors which at that point was just a six-year-old automobile company. Over the years, Nike, Virgin, Microsoft, PepsiCo, Johnson & Johnson and many more have set up investment funds and other innovation programmes aimed at start-ups .
Innovation as a bridge
However, in India, until recently, given the differences in culture, mindsets and working styles it seemed unlikely for large corporates to work with start-ups on innovations and invest in them. However, now innovation programmes are acting as a bridge between the corporates and start-ups . Corporate involvement has helped start-ups in managing their talent and cashflow well. It enables big picture perspectives and moving beyond daily firefighting.
Many Indian companies, particularly in tech sector, are actively supporting start-ups working on Artificial Intelligence and Machine Learning. These start-ups often pioneer the technologies of future. These collaborations are not limited to AI or ML, corporates in India are engaging with start-ups that are working on disruption in sectors like healthcare, education, transport, retail, and many other sectors.
Since January 2020 there have been close to 10 investments by corporates or family offices. Some of the major ones include:
One interesting trend seen in these investments is that companies that are market leaders in their sector are investing in the startup to build a tech that would disrupt the sector in near future. Corporates these days are ready to embrace the change, even if its in a disruptive technology. This will help them survive and grow in long run.
According to S&P index, the average lifespan of a company has decreased from more than 30 years in 1990 to less than 20 years. Large corporates will have to be vigilant, constantly looking for disruptors of tomorrow or else their fate is already sealed.
*Disclaimer: The views expressed herein constitute the sole prerogative of the author. They neither imply nor suggest the orientation, views, current thinking, or position of FICCI.
Dr Param Shah is Director - UK, Federation of Indian Chambers of Commerce & Industry (FICCI).