Entrepreneurship

“Puna’s role as a startup hub will become greater in the coming years”

It can take several years for entrepreneurs to scale up and get on the road to profitability. So, it’s important to stay with them for the long term, says Namita Thapar, CEO of Emcure Pharmaceuticals and a Shark Tank India judge. She adds that startups are a small part of her investment portfolio, but she expects their share to be larger as she is increasingly bullish on the performance of her startups. In an interview, Thapar opened up about why she expects Pune to play an even bigger role as a startup hub in the coming years. Shark Tank India season 2 will air on Sony Liv from January 2. Modified excerpts:

What is the percentage of startups in your total investment portfolio?

Startups are currently a very small part of my portfolio. However, I may increase my stake given how well my portfolio has done. About half of my portfolio companies are in various stages of raising funds in their next round.

Any success stories from the first season of Shark Tank India?

My solo investment in Rare Planet is the biggest success story of the first season. When they were introduced in Season 1, they were in four stores with 70 lakh sales per month. Since then, their volume has increased by 8 times in the number of stores (now at 32 stores), and their sales have increased by 6 times, in 4 million per month. This business proves that social impact and profitability can coexist.

For the rest of your portfolio, how do you allocate money between assets – equity, debt, etc.?

A significant portion of my allocation is directed towards equity, and debt is about 10% of my total portfolio. I am a diligent investor with a long-term view of my equity investments.

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How do you monitor your portfolio companies? How often do you collaborate with them?

I wouldn’t call it follow up because I believe in empowering the founders and letting them know I’m available when they need me. That being said, I try to schedule meetings with the founders if I travel to the city they are in or if the 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, recruiting and fundraising.

What is a typical dating time frame for you? How long do you stay with the investee company?

I am one for the long haul when I invest. It takes several years for an entrepreneur to scale up and get on the path to profitability. I believe I will stay with my founders for the long term and help them succeed.

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Are you trying to diversify sectors or choose companies that are closer to your business domain?

I follow the 4F investment framework – Founder, Foundation, Finance and Fit. I elaborated on these concepts in my book, The Dolphin and the Shark. As long as the company fits these frameworks, I invest in them regardless of the sector they belong to. However, I especially get excited when I see healthcare ads and ads from women entrepreneurs.

How much time do you have to evaluate a proposal before it is presented to you on the show?

No one. We don’t know anything about companies in advance. Once founders walk through the door, we make a decision within an hour on average. This is of course accompanied by a structured due diligence process.

After you made an offer, were there any occasions when you backed out?

Most jobs go through. The only ones that don’t are those where the team discovers something during the due diligence, which reveals aspects of the business that weren’t clearly visible in the original text. Also, founders many times want to pursue deals that come to them after the show airs, where their business gets significantly more value than our offer on the show.

What is your IRR (Internal Rate of Return) on your initial investments over the past 5-10 years? How does this compare to your other investments?

It is too early to calculate IRR. So I 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 — FirstCri, XpressBees and GlobalBees — founded by my friend Supam Maheshwari, whom I interviewed in my book The Dolphin and the Shark. This momentum for startups will only grow in Pune due to easy access to good talent, presence of high-quality R&D infrastructure and availability of a good ecosystem of mentors and incubators.

Elsewhere in Mint

In Opinion, Rajani Sinha explains five key trends which will affect the Indian economy in 2023. Will ChatGPT replace Google? Jaspreet Bindra answers. Rajiv Gupta says surviving the ‘lala company’ is difficult, but not impossible. Long story the lie of the earth while the market is booming.

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