Emami eyes investing in start-ups

The Kolkata-based Emami group, which has business interest in fast-moving consumer goods, retail and pharmacy, is now looking at the start-up space to make investments.

Promoted by entrepreneurs R S Agarwal and R S Goenka, the group has already received applications from domestic and foreign start-ups, seeking funds to launch or expand operations.

The new venture has been conceived by the sons of the promoters, Aditya Agarwal and Manish Goenka.  A new division has been created to evaluate and fund start-ups. It will report directly to the board of directors of the group. 

“We are not limiting ourselves to selected verticals. Once a business idea has been evaluated and is to our liking, we’ll take a call on funding,” Aditya Agarwal told Business Standard.

The funding will come from the group’s consolidated coffers and not from any of its individual business units. The investments would not be made in a personal capacity by its promoters and directors.

The group is, however, yet to decide on the nature of funding and the equity it will take up in the start-up ventures it will fund. “This is a new venture. We have jumped in and are putting things in place”, Aditya Agarwal said.

Though large corporate bodies have been funding start-ups across the country, this is the first time a corporate group from the east has ventured into the space. Senior corporate personalities, such as Ratan Tata, interim chairman of Tata Sons, Mohandas Pai, former Infosys board member and current chairman of Manipal Global Education, Kiran Mazumdar-Shaw, director, Biocon and others, have been active in this space.

According to www.track.in, which monitors the Indian start-up funding scenario, five corporate bodies — Hero MotoCorp, Mahindra UNIVEG, Mahindra Holidays and Resorts India, the Shapoorji, Pallonji group, and Eureka Forbes — have invested in four start-ups in October alone. The total fund was about $28 million.

In September, Eros Labs approved a seed fund of $500,000 in Alternacare, a start-up. The same month, another consumer internet start-up, Tinystep received $1.5 million from Flipkart Logistics.

According to T C Meenakshisundaram, managing director, IDG Ventures India, a serial start-up investment company, the corporate investors have specific knowledge about the vertical and the supply chain. Thus, they are in a position to offer value-addition to the start-ups, besides providing them with the necessary funds. However, he cautioned the corporate investors to maintain sufficient reserves and set their expectations right about return on investment to avoid future disappointment.

Asked if at a later stage these corporate investors would eventually takeover control of the start-up, Meenakshisundaram said, “Start-ups have a tendency to sell the business. These corporate investors should look forward to either buying the start-ups they fund or sell their stakes to others.”

The Calcutta Angels Network (CAN) said entry of corporate houses in the start-up funding space would help the ecosystem expand.

“Corporates fund start-ups when they like an idea and expect returns on the same but don’t have the necessary managerial capability to go with the idea,” Sidharth Pansari, president, CAN, said.