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November 21, 2017
Written By Sulekha Nair
Getting a celebrity investment in a startup spurs interest from investor/customer interest. At least in the initial days
The most popular way to start up would be to have an idea, funds and then the best heads to run it. Of course not necessarily in that order always. But even if you get the fundamentals right, that will not ensure your startup will be the talked about and known. Having a celebrity to not only endorse but also to put her money in the venture seems to work wonders in the overcrowded startup space.
The latest celebrity to invest in a startup is Bollywood star Alia Bhatt who has taken a minority stake in fashion tech startup StyleCracker. There have been several leading names from the film industry who have invested in startups. One of the bright stories would be Amitabh Bachchan’s investment in JustDial. Bachchan invested just Rs 6.27 lakh in JustDial in 2011. His investment at current market price, assuming his shareholding remains at the same level as earlier, is valued at Rs 3.42 crore. That is a whopping 5368 percent increase. And JustDial is not the only startup that he has invested in.
Not just Bachchan, other celebrities who have worn investors’ mantle include Yuvraj Singh, whose YouWeCan Ventures Technology LLP provides seed funding and angel funding capital ranging from Rs 10 lakh to Rs 25 lakh. Singh is an active investor in the startup sector. Other names that come to mind in the context are Shekhar Kapur and AR Rehman who have invested in Qyuki Digital. Not to mention Sachin Tendulkar, who has invested in several startups.
StyleCracker, in which Bhatt has invested, was founded in 2013 by Dhimaan Shah, a former investment banker and Archana Walavalkar – former fashion editor of Vogue magazine. The startup claims to use advancements in technology to develop The StyleCracker Box – a way to get styled and look great.
So, why are entrepreneurs looking for investment from celebrities?
Firstpost spoke to four startups to find out — Flickstree, in which Sourav Ganguly has invested; Happydemic, in which singer Shaan has a 50 percent stake; Beardo, in which actor Suniel Shetty has invested; and Bag Talk, in which TV star Anita Hassanandani has invested. The co-founders of these startups vouched for the importance a celebrity name lent to their company. Though a celebrity name is not a guarantee of success, there are obvious gains by way of publicity they pointed out.
A celebrity’s name makes the customers more than just curious. It may prompt them to buy the product or service of the startup. They believe successful celebrities don’t lend their name easily to anything unless they are convinced about it.
Paula Mariwala, an alumnus of Stanford University, with over 20 years of entrepreneurial and operational experience with technology companies in the US and in India and is currently partner, Seedfund, says the celebrity angle works initially for a startup provided it is the right fit. For instance, getting Alia Bhatt for a fashion startup or singer Shaan for an entertainment platform.
“The celebrities bring in a value with their association and that opens doors with investors. It works in a glamour-struck country like India irrespective of the celebrity association being financial or adding value as a brand ambassador, for people view these startups differently,” said Mariwala.
In a country like India, where starting up is the new craze (there are 5,200 startups in the country, according to a Nasscom report) and there is a huge crowd vying for investor and customer attention, a celebrity investment is a big bonus for a budding business.
Sourav Ganguly and Flickstree
Sourav Ganguly, cricket legend and former India captain, was piqued in the startup space enough to invest money in a Mumbai-based startup Flickstree, started in 2014. The startup enables people to view films on the go. It also has health and fitness shows, short films — a range of 22 categories at present.
Started by Saurabh Singh, Rahul Jain and Nagender Sangra, the trio approached Ganguly through a common friend and pitched the idea to him. Though it took him six months to be convinced, Ganguly joined the startup as a partner, investor and catalyst. His being associated with the startup led to traffic shooting up 3x to 5x, says Rahul Jain, co-founder. “Visitors to the site know that a celebrity will not lend his name casually to a site. What has worked for us is that in this age of startups where one is launched almost every day, we have been able to differentiate ourselves with Ganguly on our site. It gives credibility to our startup.”
Though the startup has not yet started monetising the venture, it has had investor interest about the business model. “From increasing traffic to even hiring people is not an issue since Ganguly has joined us. Not just that, he attends the monthly board meeting,” says Jain, emphasising Ganguly’s hands-on approach with the startup.
Singer Shaan and Happydemic
In 2016, singer Shaan and his wife, Radhika Mukherjee along with wealth advisor Amar Pandit launched Happydemic, an entertainment platform that connects music lovers and musicians. The platform went live in April 2016.
“I often wonder what happened to the scores of singers who take part in competition, lose out narrowly and have no career in singing to look forward to. Even the winners are remembered for a short period of one season until the next season throws up a new winner,” Radhika Mukherjee, Co-Founder and Chief Executive, Happydemic, had then said while talking about the reasons for entering the startup sector.
With Shaan’s name associated with the startup, traction for artistes from day one has been steady and growing, said Pandit. Shaan is associated with everything to do with the artists — cutting albums or getting them work in the industry. He even houses them in his apartment at times. So far, 800 artistes have signed up and the company expects to break even this year. Last year, revenues were Rs 1.5 crore and it expects to be profitable this year. “We are confident of having revenues of Rs 6 crores this year,” said Pandit.
Suniel Shetty and Beardo
Beardo, a male grooming brand founded in October 2015 by Ashutosh Valani and Priyank Shah, got the backing of actor-turned-entrepreneur Suniel Shetty in 2016. “We were successful earlier,” said Valani, co-founder, but roping in Shetty gave the brand a big boost. In September 2016, the company crossed a GMV of Rs 120 lakh per month, according to a report in the Hindu BusinessLine. “We are growing 60 percent quarter on quarter,” said Valani.
Anita Hassanandani and Bag Talk
In February 2017, television actress Anita Hassanandani co-founded Bag Talk with husband and investment banker Rohit Reddy and Tushar Jain — owner of High Spirit Commercial Ventures Pvt Ltd (HSCV). HSCV has been into manufacturing and retailing of bags for two decades. Jain and Reddy have invested $600,000 in the venture, besides leveraging office and manufacturing from HSCV.
The startup, which claims to be India’s first online marketplace for curated bags, has an exclusive line of bags made for celebrities available on its site. Besides Hassanandani’s line of handbags, it has roped in TV host, anchor and actor Rannvijay Singh for adventure and travel bags and South African cricketer Jhonty Rhodes for sports range of bags. Rhodes line of bags will be out on Bag Talk this month.
Hassanandani is involved right from the ideation of the bags — she is given the sketches by a design team on board which she goes through and at times tweaks to her choice. From approving samples to the manufacture of the product, she is hands-on, says Reddy.
So far Hassanandani has launched the largest number of bags in 14 designs while Rannvijay has 5 designs and Jhonty Rhodes will come out with two this month. Reddy says that the reason for Hassanandani’s bags being lapped up quickly is primarily because women’s fashion does well and the consumers want the latest accessory to match with their apparel. Around 2,000 of her bags have been sold so far. The startup has clocked over 10,000 orders since its launch, says Reddy.
The Bag Talk hopes to break even in a year’s time and come out with a showroom concept – where customers can look at its products offline and buy it online.
Celebrity connection
Clearly, the startup that ropes in a celebrity who is well-known gets traction unlike any other newbie in the field, says Paritosh Shrivastava, associate vice-president at Venture Catalysts who was briefly associated with a Delhi-based diagnostics and wellness healthcare marketplace, Healthians backed by cricketer Yuvraj Singh. When Singh invested in the startup, the orders increased. “Celebrities add a lot of value and startups associated with them usually do well,” said Shrivastava. When a celebrity gives money and an endorsement, the startup has to rev up on the product/service and development because at stake is the celebrity’s name.
Devangshu Dutta, chief executive of Third Eyesight, a consulting firm focused on retail and consumer products sector, says often a startup may already be well-placed and therefore gets interest from a high profile investor – media, film, music artistes, sports, etc. But there have been failures too despite a celebrity investment. These are not talked about, said Dutta.
The celebrity and the startup have to have a connect, else it may raise eyebrows. “If there is a connect with the celebrity by way of her relevance in the product or service, then it is a believable concept that may get just initial traction,” says Sanchit Vir Gogia, chief analyst, founder and CEO of Greyhound Knowledge Group, a global strategy and transformation research, advisory and consulting group.
“But nothing works beyond the initial hype that the startup will generate because of the celebrity endorsement or investment. As a venture capitalist I would look at the expertise of the company. For instance, if it is a Sequoia-backed venture that has huge experience, I would go for it instead of a celebrity-endorsed or invested startup,” Gogia said.
Source: firstpost
