Companies
Sink your teeth into five facts about Shark Tank and India's startups
Summary
- A Mint analysis of 320 startups pitched on the show examines to what extent they reflect the reality of India’s entrepreneurial landscape.
In its two seasons, the second of which ended last month, business reality TV show Shark Tank India has given audiences a glimpse into India’s thriving startup landscape. Some may find it heavy on drama, but the show has managed to enter dinner-table conversations and has become a primer to real-world fundraising for aspiring entrepreneurs. A Mint analysis of 320 startups pitched on the show examines to what extent they reflect the reality of India’s entrepreneurial landscape.
Over 40% of the pitches have been in the fast-moving consumer goods (FMCG) space, and 18% in beauty and fashion, the analysis showed. Together, the “sharks" on the show invested a total of ₹128 crore (including equity and debt) in 176 of the 320 startups, of which one-third went to food and beverage companies and personal care products, indicative of the direct-to-consumer (D2C) wave sweeping India. Venture capital (VC) funding in consumer-centric startups has been rising since the pandemic, with fashion and FMCG being major drivers.
“Sharks" are the panel of investors the startup teams need to woo to get money their way. Half of all pitches came from founders from just four cities—Mumbai, Delhi, Bengaluru and Pune. This is well in line with real-world truths: these cities are among the fastest growing startup hubs in the world, as per the 2022 Global Startup Ecosystem Index, a ranking by startup research centre StartupBlink. Large-city startups on the show focused more on building technology and education products and services, while those from smaller cities focused more on agriculture and handicraft.
Women in Business
A majority of Shark Tank India pitching teams (61%) were either all men, or had more men than women, the analysis showed. Startups with women-majority teams constituted less than 15% of all pitches.
Social media marketing and online advertising have enabled women, the largest segment of consumers of D2C brands, to start and run similar businesses from their homes. For instance, almost all the pitches made by women-majority teams on the show were for products in the beauty, clothing, and home furnishing categories, while men dominated technology, electronics, and media industries.
The lack of representation and limited opportunities to innovate in certain fields is reflective of other barriers, such as raising capital, that women face in starting their own ventures. These challenges are greater for women in smaller cities. Only nine of the 320 pitches analysed were made by all-women teams hailing from a tier-II or tier-III city.
Deal Size
ON AVERAGE, negotiations on a company’s valuation tilt in favour of sharks. Investments made by sharks ranged from less than ₹1 (DhruvVidyut, where 100 hours of mentoring was offered in exchange of 0.5% equity), to ₹2 crore (bagged by the healthcare company Medulance).
Sharks often manage to destroy the valuation anchors set by entrepreneurs by seeking higher equity in exchange for desired funding. Across sectors, the average valuation offered was less than half the valuation requested. The average deal size on the show was ₹60 lakh, in exchange for 10% equity. This compares with the typical sizes of angel investment deals in India.
The high-growth potential of early-stage startups makes them an attractive avenue for investors. The show has also become a platform for entrepreneurs to promote their brands, and gain access to a larger audience. Some startups that appeared on Season 1 have reportedly seen a surge in sales since.
Risk-averse Sharks
A PORTFOLIO analysis of investments made by the five sharks—Anupam Mittal (Shaadi.com), Vineeta Singh (Sugar), Peyush Bansal (Lenskart), Namita Thapar (Emcure Pharmaceuticals) and Aman Gupta (boAt)—reveals a low risk appetite.
No shark invested more than 10% of their net worth. One in five deals involved debt to keep the money secure. The sharks also largely stick to their expertise areas: Thapar’s portfolio had a higher presence of pharmaceuticals, Singh’s of beauty, and Bansal’s of technology. (This may not reflect the biggest investors in each sector, but only how much a sector dominated each shark’s portfolio; see chart.)
The show is a great stage for startups, but needs diverse pitches and more diversified sharks in the seasons to come.
Surbhi Bhatia is a Mumbai-based data journalist. The analysis is based on a data set compiled by Satya Thirumani, a Bengaluru-based software engineer.
