Executives at some of these start-ups said they would rather work with the group as partners for mutual gain from their customer base and network
Mumbai: As many as 1,200 start-ups have applied to the Aditya Birla Group for its incubation programme, of which 25 have been shortlisted for now. But, are they really keen to be acquired by India’s third-largest conglomerate?
Executives at some of these start-ups said they would rather work with the group as partners for mutual gain from their customer base and network than have the conglomerate fund them in any big way, involving a stake purchase.
The reason is that the start-ups want to keep their independence and grow on their own might. Moreover, they already have plenty of funds from angel investors, venture capital funds and private equity firms.
“There are no talks of strategic investment as of now and we aren’t looking at getting acquired," says Nitesh Aggarwala, director with Easypolicy.com, a platform for comparing different insurance products and one of the start-ups in Aditya Birla’s shortlist. “We may work closely with the group, but the terms have not been laid out clearly."
Nanobi Analytics, a data and analysis platform on remote servers, which is also in the shortlist, is also looking to do business with Aditya Birla Group but not eyeing funding.
“We will be helping the group in its analytics for a few service lines. We are not looking to be acquired and there are no talks of any kind of investment made by them as of now," said Vinod C.V., co-founder with Nanobi Analytics.
“Startups are better-off taking funds from VCs as they offer different ways and means of an exit," says Mahesh Subramanian, founder of Touchfone, which offers a video streaming platform to work on low bandwidths and has been shortlisted. “We have preferred to remain bootstrapped. It keeps us in control of our direction."
Moreover, these start-ups prefer VCs and PEs because they have designed themselves to impart regular feedback, handholding, help with product development and networking.
Among the conglomerates, the Aditya Birla group and Reliance Industries are some who have special incubation and acceleration programmes for star-tups and Birla’s shortlist has come after Reliance’s second batch of start-ups was announced in September. The Tata group does not have a similar incubator or an accelerator.
Naturally, Aditya Birla’s Bizlabs is like a test case of how India’s large traditional manufacturing businesses are interfacing with the young upstarts that are turning a lot of traditional business notions on their heads.
For instance, online music streaming app Saavn competes with any music product Idea Cellular can offer. Myntra and Jabong have challenged the retail stores of Birla’s apparel brands such as Pantaloon and Allen Solly. And there are plenty of apps in the making to push sales of retail financial products that the Birla group also wants to get into.
But when the very grain of start-ups is to disrupt the businesses of the large established firms and fuel their own ambitions so that they become the large companies of tomorrow, how far can the Birla group go with these companies in tow?
An executive at Aditya Birla Bizlabs says these associations, that were made with the intention of “nurturing entrepreneurship" will help them come to speed with the digital platforms and give them a win-win boost in their various businesses. He declined to be named.
Besides, the investors in the Aditya Birla group have been hedged from any downside as Bizlabs is chairman Kumar Mangalam Birla’s personal venture, until the group companies are ready for acquiring any of them.