STARTUP SPECIAL ...GenNext Rising

STARTUP..GenNext Rising





Why Reliance, which has been perpetually obsessed with size, scale and gargantuan asset creation, is playing mentor and investor to a bunch of fledgling tech ventures

At the recent annual general meeting of shareholders of Reliance Industries Ltd (RIL), at the very fag end of his speech enumerating the big strides made by his bread and-butter businesses -refinery and petrochemicals -and holding forth a little longer on Reliance Jio, Mukesh Ambani revealed his next dream project.

“It (RIL) will be known in the coming decade as an enterprise with lakhs of partners, supporting the small and young entrepreneurs and an enabler of a large ecosystem of entrepreneurs in India,“ he told shareholders at the fortieth AGM. He did not elaborate much.

As you read this, an ecosystem for entrepreneurs is taking shape on the outskirts of Mumbai, and the coming months might see it gain scale. In the 100-acre Reliance Corporate Park, the nerve centre of the `3,39,000 crore enterprise, a nondescript, two-storey structure called the MAB, or the main administrative building, is home to a batch of 20 entrepreneurs testing products and honing business plans. The accelerator for the startups is under the auspices of GenNext Hub.

Much of what RIL is betting on are businesses that have linkages with the telecom venture, but there are a few that may well open new frontiers. In less than four years, the 51 startups that have gone through GenNext have raised about `285 crore; about `100 crore was raised at the time of entering GenNext, which is a benchmark for investors.

In recent times, RIL has picked up stakes in six startups. In the public domain are investments it made in Netradyne, Videonetics and EdCast, startups in segments as diverse as artificial intelligence and video analytics. The GenNext project, though, goes way beyond just investing.

To be sure, RIL is not the only Indian company to nurture startups. Mahindra & Mahindra, Marico, the Tata Group are also mentoring young ventures. Banks such as ICICI Bank, Kotak Bank, Yes Bank and even a few NBFCs such as Edelweiss are mentoring fintech startups. What makes RIL stand apart is the sheer breadth of entrepreneurship it is backing.

In a recent interaction, a chairman of a leading conglomerate told this writer why corporates are backing startups. He explained that this is the fourth phase of entrepreneurship; it started with Edison inventing the bulb in his garage in the late 1800s. From those days, entrepreneurship and innovation have picked up speed. Companies born in garages like Hewlett-Packard spawned innovation back in the 1930s. Entrepreneurs were soon courted by venture capital firms, giving birth to companies like Google, Amazon and Facebook. The startup culture has now entered the fourth phase, where big corporates are facilitating their domain knowledge to nurture startups.Abroad, this trend is called the Corporate Garage.

Lightbulb Moments

At RIL, Amey Mashelkar, 38, is leading the initiative to identify the best of the startups via GenNext Hub. His father, the renowned academic Raghunath A Mashelkar, is spearheading innovation among employees (see Battleground of Ideas). The presence of the next-gen Mashekar sits well with the Ambani scions, Akash and Isha, on the board of Reliance Jio.Akash, who is chief of strategy at Reliance Jio, will get actively involved in the coming months, as the Reliance GenNext Hub brings in ventures that have synergies with the Reliance Jio platform.

This is GenNext's third year, in which it has received almost 1,000 applications from entrepreneurs keen to board the accelerator. The proposals have come even from non-metros like Kochi and Jaipur, other than the big cities.

This year's statement of purpose by the chairman of India's largest private-sector firm by revenues on partnering entrepreneurs follows up on his September 2016 address. Ambani had then declared that RIL will have a `5,000 crore corpus to invest in startups. The plan to play mentor and accelerator may also include setting up camps at Palo Alto, the world's startup capital, and in Tel Aviv in Israel, a hotbed for innovation.

One of the mentors for GenNext's chosen startups is serial entrepreneur Ravi Gururaj, his latest venture being QikPod, an ecommerce locker startup. “RIL is pushing on many fronts, Jio being the biggest new addition, and I think they need to be very nimble too. After all, despite being big, they do have competitors.“

What Gururaj is saying is that RIL will need to find innovative solutions to offer customers; mentoring startups is their way to experiment by building an ecosystem of tech ventures.

For entrepreneurs, feeding off the Jio ecosystem makes immense sense. With 100 million customers, RIL's telecom megaproject makes for an ideal testing ground and marketplace. “They (RIL) are pushing the barriers on the size of the device, reach, footprint, bandwidth. All of these can be catalysts for startup growth,“ says Gururaj. “RIL is a large industrial group and any opportunity to engage with them through an organised programme is a great opportunity. Otherwise, you can get lost in the mail.“

Mashelkar, while low-profile, becomes fervent when he rattles off the number of startups that have gone through the MAB. “This is the place to be in,“ he says. “If any of the startups grows into a unicorn, it will give us much satisfaction, and be a feather in our cap.“

RIL, which straddles sectors, recognises the need to keep innovating. “All large companies have realised that no one company can do it on its own. And that's because of the pace of innovation. By the time they do it on their own, it may be too late,“ explains Gururaj.

Most of the startups come early in their life to GenNext Hub, getting seed-funded or Series A-funded while at the accelerator. Nobody is facilitating an accelerator like us, says Mashelkar, taking pains to describe how startups with nothing but bright ideas and a beta product have scaled up under GenNext Hub.

Jio and Reliance Retail will help startups test the proof of concept. Take, for instance, HeadSpin, a startup that helps developers test an app in different mobile networks and devices. Mashelkar says Jio enables that to happen, and app developers love this tool because they can test remotely in a 100-device lab set up in the MAB. Streaming plat form Hotstar, for one, is trying out their offerings through this lab.

Investments in these startups are strategic rather than for just financial gains. Mashelkar says: “Picking up stakes is not our core objective; our objective is to foster the ecosystem.“

Investing, of course, comes easy for RIL, a company with a net profit of `31,425 crore in 2016-17. “There are a range of possibilities. Ambani has planned to put together a fund; that in combination with GenNext Hub will be very powerful,“ says Gururaj. He knows a thing or two about investments and exits. In his 26-year career, Gururaj has founded six technology ventures, two of which have been acquired by Nasdaq-listed companies. One of the many hats he wears now is that of an angel investor. “If you look at funding as a matrix, we have three startups that have reached Series B level, typically a raise of $10-15 million. And about 15-16 startups, which are at the seed stage to Series A, will typically garner $5 million,“ says Mashelkar. “We have had a fair amount of success in advancing these goals.“

The Big Finds

Mashelkar gets passionate when he talks about Kochi-based startup RecipeBook, which was discovered during a workshop in the city. The artificial intelligence and image recognition venture firm, which is less than two years old, has scaled up so fast that it has now entered the Google launch pad accelerator in Silicon Valley, ready for its next phase of growth. “It came from our GenNext Hub,“ says Mashelkar, with pride. “We built the whole model from business to consumer and business to business. When they came in, they had eight lakh downloads; now they have crossed 4 million downloads, with 40,000 to 50,000 active users.“

Does Ambani track these startups? “He loves to hear the ideas coming out of this hub,“ says Mashelkar.

Sanjay Mehta, an angel investor who has been actively involved as a mentor at GenNext Hub, talks of how some of the firms that he has invested benefited from the GenNext Hub. One such venture is PayTunes, which replaces ringtones and caller tunes with ad jingles, allowing the user to get 10 paise for every incoming call. Mehta says this concept was tested by Jio. “Getting into Reliance would be very difficult for a startup, but GenNext gives us access without any hindrance.Amey has been instrumental in building that bridge,“ he adds.

Two apprehensions, from the angel investor perspective, were the prospect of a sustained deal flow, and whether the big corporation would take over sooner than later. “A lot of comfort was given by GenNext Hub (on these two fronts),“ says Mehta, who has a portfolio of about 60 ventures. There's also plenty of hand-holding, and Mehta cites the example of a drone startup, where RIL helped in wading through the policy framework.

Manisha Raisinghani and Dhruvil Sanghvi, cofounders of LogiNext, a logistics software startup, have Paytm as their investor. After growing from scratch out of the GenNext Hub, the firm, which has developed a software that can track anything that moves, is now present in 10 countries. Deal ticket sizes have surged five-fold from $20,000 in the initial years.“Reliance helped us scale up,“ says Raisinghani. Alumni of Carnegie Mellon University where they did their master's in big data analytics and optimisation, they returned to India and founded LogiNext.

Satish Kashyap is the cofounder of Algo Engines, which has conceived a product for improving the performance of wind turbine, solar and hydroelectric plants. “We take sensor data, ascertain which turbine is underperforming and prepare a body mass index report, which reveals the gear box fitness score and the effect on the turbine.“ After the programme with GenNext Hub, it forayed into international markets and saw its revenue doubling.

At the Nasscom 2017 summit, Ambani quoted his favourite professor from the University Department of Chemical Technology, Man Mohan Sharma: “You find a problem and then I will grade you on the quality of the problem that you find and then I will grade you on the quality of solution that you actually do.“ Ambani said the same rules apply to an entrepreneur; it is not about solving problems, it is about first finding problems.“Once you find the problem then you solve it.“ His GenNext Hub enables entrepreneurs to solve problems.

Satish John

TL 6AUG17