For Tata group patriarch Ratan Tata, who has invested in over a dozen startups since he hung up his boots from Bombay House, headquarters of Tatas, becoming an investor in upcoming new-age companies was "an accident."
The chairman emeritus of the USD 110-billion salt-to-software Tata group, arguably one of the most successful investors of all-time, was an early backer of the ride-hailing platform Ola, and Paytm since 2015 when he made these investments in his personal capacity.
He also has a small stake in One97 Communications that owns Paytm, and took on the role of an advisor to the firm. He made his maiden ecommerce investment in Snapdeal.
Tata's other top investments in the startup space include fitness startup CureFit; weather forecaster ClimaCell; auto portal CarDekho; online furniture mart UrbanLadder; eyewear e-tailer Lenskart; home rental platform NestAway; and online pet care platform Dogspot.
His investment in Dospot is not surprising given his avowed fondness for canines, of which he has many. Tata carries out these investments through his personal investment firm RNT Associates.
"I entered the startup investor space partly by accident. During the years that I was with the Tata group, I always looked at startups as a sector that is exciting but somewhat untouchable because somewhere or other there will be conflict of interest with Tata group," Tata told Chiratae Ventures chairman Sudhir Sethi in a talk on Tuesday evening.
"But when I retired I was free from it I started making small token investments from my own pocket in what I considered to be exciting companies. So, what I did was to take some more risks than I might have taken under different circumstances. With two-three years into this, it became a learning experience, as this sector is very active and have the best minds," said Tata who was quick to note that "contrary to common belief my pocket is not so deep."
Listing out his rationale for the companies he has invested in or advising on, Tata said the promoters' fire in the belly, ideas and the solutions they offer are the drivers for his investment decision.
"In my case it was selection from intuition, in fact I would say talking with the founders, drawing conclusions from their attitude, maturity and their seriousness meant more to me than any other thing or factor," the 81-year-old smiles.
Ratan Tata's investments in the startup space
As advice for entrepreneurs, the octogenarian says, "The drive to start something new, the fire in the belly, a better way to do something that is being done or a good opportunity to undertake all to make a difference... and above all the courage and tenacity to see it through, be it good or bad, and yet make it happen are the hallmarks I look forward in entrepreneurs."
Tata is not worried over the large cash-burn that startups report month-on-month, saying they are here to stay, indicating venture seed capital funds are the way forward.
"Look at other countries, startups have been there for much longer. It goes without saying that this sector will grow and it already has proven to be the case. It will continue to do that in the coming years," he was confident.
On what is the right time for a startup to go global, Tata, who has taken group companies on an overseas acquisition spree in the last two decades of his life as the chairman of the group, quipped, "I don't think there is a right time. It is for the founder to determine whether going global will give him/her an opportunity to expand the market."
Whether he will encourage other business families to emulate his investment proclivity, Sethi asks, to which Tata says, "I think it will come naturally. You cannot force them. It comes from the success the sector has."
Tata would like to see his presence grow in the sector based on the funds he has deployed.
"But the excitement of being in new areas, participating in something that has not been done is the most exciting and absorbing thing. This is something I am looking forward to in the coming years," he smiles again.
What are his areas for investments, Sethi probes further. "On technology side many breakthroughs are happening which is not confirmed to any one sector. There is opportunity in healthcare, medical treatment, online and manufacturing."
"I am glad the startup space is growing and becoming so prominent. Now more and more big companies will recognise that there is another way to do something and that something might be the better way to do it the cheaper and most cost-effective way," Tata smiles again.
"After all Indians are entrepreneurs at heart. What we need is opportunity to flourish. And I think startups are doing just that. I wish them all success," Tata concludes.
Chiarate Ventures has invested in over 75 startups spanning media, tech, software, health and fintech entities worth over USD 470 million under advisory and Tata is a senior advisor with it.