ET POLL – Startup Culture isn’t Just a Fad, Signals CXO Money

GUNG HO A poll of 100 C-Suite occupiers across companies has revealed that 60% CXO-level executives in India invested a portion of their wealth in startups
As many as six in 10 CXO-level executives in India have invested a portion of their wealth in startups, an ET poll of 100 randomly selected C-Suite occupiers across companies in a range of industry sectors has revealed. This indicates that startup investing is more than just a fad and is here to stay for the top honchos of Indian industry.The poll, conducted with a promise of anonymity to the participating C-Suite executives because they were revealing personal investments, showed that 60 out of 100 CXOs had invested sums ranging from a few lakhs to several crores in startups. Among the ones that hadn’t, 25 planned to open their wallets to this asset class in the coming months.

As many as 79 CXOs said they would recommend investing in startups to others, although with an important caveat that these investments were risky and investors needed to make them with their eyes fully open. The poll, the first of its kind, covered executives in sectors as diverse as banking, finance & insurance to FMCG & retail and from manufacturing to technology & consulting, and its findings showed that startup investing was broad based. Executives in venture capital and private equity firms, whose day job is to make these investments on behalf of their firms, were excluded from the poll to avoid skewing its results. As many as 23 respondents were in the broadly defined retail and consumer sector, while nine were from infrastructure and 11 from finance and insurance.

However, in a sign that a formal fi i nancial architecture for such investments is still to evolve in the country like it exists in developed economies, a large number of the executives who have invested in startups said they had put in money in enterprises founded by friends and acquaintances. Some of them did it through angel investing networks of which they are members while a handful f said they had invested through financial intermediaries.

The reasons for investing in these firms ranged from a desire to staying ahead of the curve given the growing reputation of many startups as disrupters of traditional sectors to having an esoteric element in personal wealth management to plain gambling.

India is in the throes of an entrepreneurial boom with hundreds of startups mushrooming across sectors, many of them, especially web based ones, chased by a flood of risk capital.

Risk capital investments in India during the first half of this year have surpassed the money inflow in all of 2014, setting the stage for another record funding year. Venture capital nvestors funneled in Rs 15,600 crore, or $2.46 billion, into Indian startups this year till June 26, compared with Rs 14,850 crore, or $2.34 billion, in 2014, closing 197 deals during the period, according to data from financial research firm VCCEdge.

The flood of money has seen average deal sizes jump significantly as well as the emergence of several irms with billion-dollar valuations, commonly known in industry jargon as Unicorns.

Some respondents in the ET poll said heir investments were motivated by he desire to bet on what one called the “blue-chips of the future“, a testament to the galloping valuations of some of the posterboys of India’s star up scene such as Flipkart, Ola Cabs and Snapdeal. Flipkart, the country’s biggest internet retailer, has for instance seen its valuation rise from an estimated $2.6 billion in May last year o nearly $15 billion now.

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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