From toothbrush to sanitary pads, a search for sustainability

He says his investments in Spandan (portable ECG monitoring with Android smartphones) and Proxgy (smart helmets for safety, warehousing, other use-cases) from last season seem to be doing well and expects Jugadu Kamlesh (farmer entrepreneur) to clock a crore rupees of revenue in the coming year from zero. Season 2 of Shark Tank India will be streamed on Sony Liv from 2 January, 2023. Edited excerpts from an interview:

Please tell us about the broad asset allocation that you have between various asset classes?

I don’t have that much wealth in liquid assets. My investment is largely in Lenskart.

I don’t personally manage my portfolio as much. My dad looks after it. And he is quite a conservative investor. If I was handling it, I would have made it fully equity (laughs) because I am always optimistic.

So, what’s the split between equity and debt in your investment portfolio (excluding Lenskart)?

It would be roughly 50% equity and 50% debt.

And does your dad maintain an emergency fund for you because your net-worth would largely be illiquid right now due to Lenskart equity?

No, not really. So, whatever is in debt, that can be treated like an emergency fund. Since this is in public markets, it is all liquid.

Do you have life and health insurance?

Yes, I have both life and health insurance.

How many startups have you invested in this season of Shark Tank India?

I think it will be around 25. It is more than what I had invested in Season 1. The investment asks were higher this time around; so ticket size was also higher. I would say the ticket size was at least 50% more than Season 1.

What will be your largest ticket size in Season 2?

I am not allowed to disclose deals, but ₹1 crore would be the largest ticket size.

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How do you pick start-ups? What are your three-four criteria?

Largely, it is the entrepreneur. That is the bare minimum. If the entrepreneur is right, then one can look at the idea and the problem they are trying to solve. But I do have a preference for tech companies, because I do feel that big revolutionary changes will come from there. Few tech companies come on Shark Tank, but those that come become a top priority. I think they also want to get me as an investor and I also want to invest in them. So, it is a good equation.

It is a win-win situation for both sides. Otherwise, I have not really done food-related investments in the past. This time I have done that.

Earlier, I was opposed to the idea as I thought I would not be able to add much value to a food company. But this time, I did little bit of food and those were largely driven by entrepreneur.

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I found entrepreneurs so good that I felt I had to invest. A lot of these entrepreneurs were into manufacturing. And overall, I am quite bullish on manufacturing because I have experienced manufacturing in Lenskart. India has a lot of advantages in manufacturing. If India can become sort of a manufacturing superpower like China, our GDP could grow even bigger as we will be able to do very advanced engineering-based manufacturing. We will not be just doing basic manufacturing.

Your focus has been a lot on purpose-driven businesses; why is that?

One can either give away wealth as part of charity after passing away or we can start the work today and put the capital to better use. In my mind, I could give this to charity to fund entrepreneurs, who can probably create a bigger game. So, a lot of times, the deal is – Let’s assume if anyways I have just given this to charity, not in terms of just giving it to charity, but yeah, if the capital is going and there is a possibility it could change the game and make a large impact. Then ,this in some sense is not charity, but putting the capital to better use.

Any new investment themes you are excited about?

Sustainability theme is quite futuristic. It will take time, but if you look at schools, this is all that they are taught in schools today in their classrooms. I think there would not be a day in a school or an hour where they are not surrounded by sustainability as a topic.

For example, now kids have become so conscious, they don’t burst crackers in Diwali. Parents don’t have to tell them.

So, I think if you have five-ten-year view, then a lot of businesses would have no choice, but to get disrupted. From toothbrush to plastic bags to packaging, there will be disruption across businesses. So, if the entrepreneur is good and the topic is sustainability, there is a good opportunity to learn there.

If the entrepreneurs are good, they will be able to figure out even if they have not cracked their business model today, or the problem is not that big today, but because they are early starters in the industry, they will be at the forefront of this.

It is not necessary what they are doing today, they will do in future. For example, Myntra started with the business of labelling pictures on cups; today, it is a fashion brand.

So, it is important that entrepreneur is passionate about his business. This season, there were some great sustainability businesses. There was one on sanitary pads, for example, which is a big recycling issue. And then, we had these entrepreneurs that were working on that. So, I think those are areas that I definitely find interesting.

What was your most successful pick from Season 1 and what percentage would have failed?

It is too early. In early-stage investments, if you keep your horizon to just a year or two, you end up making a lot of mistakes. You don’t even know who is winning and who is not.

It is possible that the companies, which have raised the most money, may be they have done a series B, series C, after we put in the money, don’t turn out to be as big as the companies that are the underdogs. They might emerge as bigger businesses.

Some of the companies like Spandan, the ECG device company we invested in — they are doing very well.

At least in the short term, they are seeing a lot of demand. And they pivoted a little bit to look at the whole hospital ecosystem and doctor ecosystem. The ECG monitor that is there in hospitals, that is not there in 90%-plus beds. For that, patients need to go to ICUs. And these beds are only available in expensive hospitals.

So, they have developed this Android-based monitor and it is gone beyond ECG — it can capture blood-pressure, pulse using the Android phone. So, that can be a game-changer.

Tech has played out well for us. We invested in another business called Proxgy. When my team was doing due diligence (DD), they told me that its DD is not getting through as they are not clear on their own business, but the company has raised multiple rounds of investments after that and it has even gone global.

So, they came up with a product that had camera installations on caps, and thought that they would use this to facilitate retail shopping from home. So, I told them on Shark Tank that this didn’t seem viable, but the product can have use cases in warehousing.

Now that company has pivoted into developing safety helmets and they have orders from Amazon and companies from all over the world, for warehousing, as well as for their safety helmets, etc.

I think Kamlesh (Kamlesh Nanasaheb Ghumare, a.k.a Jugadu Kamlesh) would end up doing more than a crore of revenue in the coming year from zero. My investment is not significant there in terms of monetary value, but outcome would be quite significant.

Any reason why not many fintech startups have come on the show?

Yes; that is an interesting space. But not many fintechs have come. Fintech is an interesting space. I actually am quite optimistic about tech and financial services. There is a gap. We can get some financial services businesses in Shark Tank.

Who is your favourite co-shark to invest with?

My personal preference, is lesser the better. No offence to the other sharks. They all bring great value, but for entrepreneurs, it can be confusing if there are too many sharks with their own viewpoints. So, you have to be careful. Usually, I look at complementing skill sets.

If I think for this deal, I need some expertise on pharmaceutical side and I can help with tech and D2C (direct-to-consumer), then I look at it from that angle for the entrepreneur.

This year, I have done a lot of deals with Aman (Aman Gupta, co-founder and chief marketing officer, boAt). I think lot of D2C companies end up coming, and need to build the business on Instagram and digital platforms.

And all D2C companies have one weak area and that is tech. They are all super marketing dependent, and for customer experience, they largely depend on Amazon and marketplaces. But the need is to sell on their own platform, and improve the experience to take it beyond just marketing.

So, that combination really works well for the entrepreneurs. To get the marketing side and to get the tech side. And manufacturing is becoming a big moat, like I said. So, manufacturing, tech organization building are areas where I have a very strong viewpoint.

But if the co-shark also has a strong viewpoint on these same areas, then that can be a problem for the entrepreneur, as he or she will have to handle strong and sometimes differing views on the same issues.

What were some of the inspiring stories from this season?

I think the sanitary pad recycling business was quite inspiring. Lot of people have come from very humble backgrounds and are still trying to figure it out. I am talking about a story, which has really figured it out in a lot of ways. They have taken up a topic like this and have gone quite deep into it, using tech to transform it. They have gone multi-layers deep into it.

What percent of companies in due diligence get eliminated?

So, it was almost 30% for us on Shark Tank India. For Shark Tank US, it is around 40%. Maybe in Shark Tank India, we are little more generous in our due diligence, but then maybe we will learn from our mistakes.

How long would you stay invested in the startups?

These startups would need a minimum of five years. Some of these may even take 10 years. One can do partial exits in the middle to rotate capital.

But, now with the funding winter setting in, startups that lack clarity of purpose, or clarity of vision, these businesses will start to fold. These businesses are just running from one funding to another. They are not clear on the problem they want to solve. I am already feeling that I may have made such mistakes in Season 1 of Shark Tank, where I should have refrained.

Entrepreneur and clarity of problem is important. It is okay if the solution is not clear. But you should be clear on what you are trying to solve, where is the gap.TAM (target addressable market) is not very important for me. For some sharks here, TAM is super important. Even among VCs (venture capital investors), I have seen people talk a lot about TAM.

It is very tricky to estimate TAM for a solution, when its market is yet to be created. In India, the markets are so unorganized, which makes it all the more difficult to gauge the TAM of any business. For example, India has seen an underwear business becoming large with Jockey. Who would have thought of its TAM when it came to the market?

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