Entrepreneurs can take several years to scale up and get onto the path of profitability. So, it is important to stay with them for the long term, says Namita Thapar, executive director of Emcure Pharmaceuticals and Shark Tank India judge. She adds that startups are a small part of her investment portfolio, but expects their share to get bigger as she is more bullish on the back of her startups’ performance. In an interview, Thapar opened up on why she expects Pune to play an even bigger role as a startup hub in the coming years. Season 2 of Shark Tank India will stream on Sony Liv from 2 January. Edited excerpts:
What is the percentage of startups in your overall investment portfolio?
Startups are currently a very small part of my portfolio. However, I may increase my share given how well my portfolio has done. About half of my portfolio companies are in various stages of fundraising in their next round.
Any success stories from season 1 of Shark Tank India?
My solo investment in Rare Planet is the biggest success story of season 1. When they pitched in season 1, they were at four stores with ₹70 lakh sales per month. Since then, their scale has grown by 8-times in store count (at 32 stores now) and their sales have grown by 6-times, at ₹4 crore per month. This business proves that social impact and profitability can co-exist.
For the rest of your portfolio, how do you allocate money between assets – equity, debt, etc.?
A significant chunk of my allocation is towards equity with debt being about 10% of my overall portfolio. I am a value investor with a long-term outlook on my equity investments.
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How do you monitor your portfolio companies? How frequently do you engage with them?
I wouldn’t call it monitoring as I believe in empowering the founders and letting them know that I am available for them when they need me. Having said that, I try to schedule meetings with the founders if I am travelling to the city where they are located or if founders are coming to Pune and I am also there. I have a team that regularly connects with the founders, gets quarterly updates, and helps them with marketing, finance, distribution networks, recruitment and fundraising.
What is the time period for a typical exit for you? How long do you stay put with an investee company?
I am one for the long haul once I have invested. It takes several years for an entrepreneur to scale up and get onto the path of profitability. I believe in staying with my founders for long term and help them succeed.
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Do you try to diversify across sectors or pick companies that are closer to your own business domain?
I follow a 4F investment framework – Founder, Foundation, Financials and Fit. I have elaborated on these concepts in my book ‘The Dolphin and The Shark’. As long as a company fits in this framework, I invest in them irrespective of the sector that they belong to. However, I get particularly excited when I see pitches in healthcare and pitches by women entrepreneurs.
How much time you get to evaluate a pitch before it is presented to you on the show?
None. We don’t get to know anything about the companies beforehand. Once the founders walk in through the door, we make our decision in an hour on an average. This is, of course, followed by a structured due diligence process.
Once you’ve made an offer, have there been occasions where you’ve backed out?
Most deals go through. The only ones that don’t are the ones where the team discovers something during the due diligence, which brings out facets of the business that didn’t come out clearly in the original pitch. Also, many times, founders want to pursue deals that come to them after the show has aired, where their business is getting significantly higher valuation than our offer on the show.
What is your IRR (internal rate of return) on your startup investments in the past 5-10 years? How does this compare with your other investments?
Too early to calculate IRR. So, can’t comment.
How do you see Pune’s role as a startup hub?
Pune is already home to several unicorns with three of them — FirstCry, XpressBees, and GlobalBees — founded by my friend Supam Maheshwari, whom I have interviewed in my book ‘The Dolphin and The Shark’. This momentum for startups is only going to grow in Pune due to easy access to good talent, the presence of high-quality R&D infrastructure and the availability of a good ecosystem of mentors and incubators.
Elsewhere in Mint
In Opinion, Rajani Sinha explains five key trends that will impact India’s economy in 2023. Will ChatGPT replace Google? Jaspreet Bindra answers. Rajiv Gupta says surviving a ‘lala company’ is hard but not impossible. Long Story checks the lie of the land as the market booms.
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