How startups are getting funds from Ratan Tata with just a mail

BENGALURU: For Nidhi Agarwal, founder of startup Kaaryah, the decision to seek investment from Ratan Tata happened quite serendipitously. In February, Agarwal's father pointed to a newspaper report about the business doyen's financial backing for an ecommerce startup, and said: "Yours is an ecommerce startup too, so why don't you ask him?"

Agarwal, 34, took the advice seriously, and started scouring around for Tata's email address. Three months on, her online fashion retail startup can count Chairman Emeritus of Tata Sons as an investor.

So what does investment by Tata mean for her? "To begin with, your newspaper is calling me," the former Bain & Company consultant said, referring to media attention.

Agarwal is among the ten entrepreneurs in India's fast growing startup ecosystem who have received backing from Tata. Since his first investment in March 2014 in Altaeros Energies, a wind energy startup founded by graduates of the Massachusetts Institute of Technology, Tata is fast becoming a force multiplier for startups.

While instant fame is one of the advantages of having the 77-year-old former chairman as an investor, the aura of the Tata name can rub off on startups that need to stand out from the crowd, said Rajiv Srivatsa, cofounder of online furniture retailer Urban Ladder.

"His involvement establishes trust the same way the Tata brand does," said Srivatsa, whose company received an investment last November. Since then, Tata has discussed everything from furniture design to supply chains and customer experience in three half-day sessions. "Strategic insights are really helpful," he said.

Indeed, as many investors and startup watchers have been pointing out, the country's fast growing startups are in desperate need of expert mentoring in scaling their business ideas and solving complex business problems, beyond the disruptive world of technology-enabled services. "His involvement is really inspiring when it comes to existing employees and even attracting top talent."

R Venkataramanan, a close associate of Tata who advises him with startup investments, did not reply to questions from ET for this story.

Unlike in the Silicon Valley, where the technology industry's biggest names such as Marc Andreessen have transformed into active investors backing the ideas they believe in, it's still early days in the Indian startup ecosystem. And it doesn't help that many of the first generation Indian IT entrepreneurs are still busy with their first companies.

Venture capital investor as Prashanth Prakash, a partner with Accel, said Tata's willingness to back entrepreneurs boldly stands out, and he is also able to fill the existing gaps in the industry. "It's really not about the money — he is willing to be upfront about associating with startups he picks, risking his own brand," said Prakash who is a coinvestor with Tata in online jewellery retailer Bluestone.

So, what does it feel like to be making a pitch to Tata? Proposals are vetted by Venkataraman before they reach Tata, who usually has two questions to ask startups seeking an investment, the risk, and the opportunity. Founders usually have 30 minutes to make a pitch and a successful one will be valued as per the last funding round.

One of those successful startups was Paytm, which is also backed by an affiliate of China's Alibaba.

"The mentoring he offers is invaluable for growing startups like us," said Vijay Shekhar Sharma, founder of the mobile commerce company.