You Can’t Create Anything New By Being Risk-Averse, Believes Anup Jain, Who’s Leading FMCG And Retail Investments For Orios Ventures
Anup Jain, the newly appointed managing partner at Mumbai-based venture capital firm Orios Venture Partners, likes taking risks. If you don’t take risks, you can’t really come up with an innovation or idea that is perceptibly new and not just incremental, he believes.
This is true — the biggest risks result in the biggest payoffs. For instance, Benchmark Capital’s early bet on Snapchat in 2013 when it wasn’t clear whether it would be a serious social media company paid off beautifully. The VC firm, which led the Series A round that raised $13.5 Mn for the company, raked in a neat $3.2 Bn when Snapchat went public in 2017!
Going by Anup Jain’s previous career roles — he’s led big teams and handled large-scale finances at companies such as Bata, the family-owned global footwear maker — one wouldn’t imagine he had such a risk-taking appetite. He concurs that the propensity of most big companies and legacy enterprises for taking risks is subdued.
But Jain explains that notwithstanding the companies he’s worked with, he as an individual is not averse to risks at all. In fact, the thought of fuelling an innovative idea to make something of it excites him and he always had the desire to mentor and scale startups. So, in 2015, he acted on his passion and became an angel investor with his own company Redback Advisory Services, which provided startups access to growth opportunities, networks for partnerships, and growth capital through strategy advisory.
With Anup Jain joining Orios last year as a venture partner and with his new role, we can expect some exciting deals in the FMCG and retail space, where he will be leading investments.
Inc42 spoke to Jain about his focus areas at Orios Venture Partners, his journey, his risk-taking appetite, and wherein FMCG and retail he sees the next opportunities.
Inc42: What do you make of the market today and what does it mean for Indian startups?
Anup Jain: The first wave of the Internet was about a handful of consumers, now it’s becoming more inclusive. This has given birth to a whole generation of digital-first brands that don’t need to depend on the past methods of a classic FMCG company, which used to launch products through a web of distributors, wholesalers, and kirana shops and promoted products to consumers via an expensive television-led media plan. Today, because of the Internet, young founders and startups can disrupt larger players by catering to the needs of large clusters and groups of consumers.
Inc42: But what does this mean in terms of opportunities?
Anup Jain: After the retail slowdown of 2013-14, the economy is showing really healthy signs. The number of digitally transacting customers over a period of three years has doubled in India.
Today, every sphere of FMCG consumption is open to disruption, with products that are tilted around certain axils.
We have the fourth-largest population of millionaires in the Asia-Pacific region, growing at 34%, which means that there are large clusters of Indian consumers who in the past had no choice but to purchase sub-standard premium products or mass-market goods. Let’s take the example of sports shoes: There is a large gap that’s waiting to be met between premium and affordable shoes — some are priced at over INR 5,000 and the affordable ones at around INR 1,000. Today, whether it’s beauty and wellness, beverages, snacks, biscuits, or oils, literally every sphere of FMCG consumption is open to disruption, with products that are tilted around certain axils.
Inc42: Could you clarify what are the factors influencing this tilt?
Anup Jain: With the advent of more and more awareness around ingredients and what they mean for you, consumers are becoming very conscious about what goes into the products they’re buying. Healthier and more natural products are finding their way to the shelves and when I say shelves, I mean e-shelves. Consumers are getting to know these products not on a supermarket shelf first but on a virtual shelf.
Today, consumers are actively involved in their health planning and are able to reach these brands directly, which means that younger startups which are short on capital no longer need to go through the expensive supply chain and can become popular overnight. The celebrity endorsement era is no longer a mantra for success.
A rising tide of consumers — I would peg them at least 20 Mn — out of a total of 50 Mn make their own choices and make purchases on an informed basis rather than blindly.
Inc42: Where do you think this desire to mentor startups come to you from?
Anup Jain: While I’ve spent almost all my career in the corporate sector, I have always been an entrepreneur at heart. I like taking risks and I respect those who take risks because without risk anything new never really comes out which is perceptibly new and not incremental. Investing and mentoring startups was a perfect option to stimulate me. Orios, which I joined in October last year, is a move intended at further strengthening these goals.
Inc42: Can you talk about your investments in startups prior to joining Orios?
Anup Jain: Yes, I have worked in four different spaces — agritech, HRTech, B2B tech, and digital media startup. I don’t invest in them anymore since I joined Orios. My agritech startup, Junga FreshnGreen is going to produce premium vegetables via soil-less farming. The B2B startup, Letzgain is a Linkedin for small business owners.
The media company, Wittyfeed, is a user-generated publishing platform — is already one of the largest online companies in India. The HRTech startup, XecuteHR, was struggling with stagnant growth earlier, but after a period of transformation, which I helped with, the startup is growing at 40%; it should end this year with revenues touching INR 100 Cr versus INR 50 Cr three years ago. Orios was the next logical step for me to widen the horizon and deepen my participation and ties in the Indian startup ecosystem.
I like taking risks and I respect those who take risks because without risk anything new never really comes out which is perceptibly new and not incremental.
Inc42: What is Orios’ approach to startups?
Anup Jain: We have always been known for being good at finding misfits and backing them. We continuously throng our internal team to reach out to founders in various ecosystems. Whether it be incubators, college networks, or social media, we have a special process of finding these misfits, and our own personal network as well. The magic formula lies in providing right mentorships to these companies, with R&D, consumer-testing, and digital marketing being our experienced skill sets. For instance, Country Delight is a fresh milk company which processes fresh milk from the farms and ensures its supply to your home in three days. The other existing brands are not able to reach you in three times that duration.
The tea and coffee business is on our radar and we find that consumers of conventional popular brands pick up tea and coffee six months after production, so the products can’t retain their fresh aroma. These are the kind of benefits consumers are looking for in products and, thus, the era of artisanal products has begun.
Inc42: Can you give us some metrics of your investment approach?
Anup Jain: We take a minimum of 15% in the seed stage and our typical seed fund invests in the sub-$1 Mn mark. The startups are given time to blossom into their full potential — we look at an at least five-year horizon before we start exploring any kind of exit.
At Orios, we look at an at least five-year horizon before we start exploring any kind of exit.
Inc42: What challenges do you face in the FMCG space?
Anup Jain: To be able to find the right set of entrepreneurs who can create value and stay motivated through the journey — this is half the battle. In the FMCG industry, the presence of supply chain is extremely complex when it comes to distributing the product. A lot of convincing goes into getting the trade layers in place and in getting mom-pop or kirana stores to stock your products and try them out.
Many people earlier didn’t take the entrepreneur route in FMCG — IT was the preferred choice for entrepreneurship. But this is changing.
Inc42: The products you talk about seem a bit niche at the moment. Don’t you face any problems in scaling them?
Anup Jain: It is difficult when you are catering to small demands and managing the margins in terms of cost at this stage. That’s where we come in; with our resources and experience, these startups get more runway and information to test their products and to find that sweet spot in pricing.
Inc42: Your tips for people looking to pitch?
Anup Jain: Be clear on what problem you are looking to solve, the market size in which you’re operating, put a good team together, and have a good plan for executing and testing it. Be ready to tell a good story well.
Inc42: What does a typical week look like for you?
Anup Jain: I travel 10-15 days in a month, typically between Delhi, Mumbai, and Bengaluru. I watch a lot of my favourite TV shows on the phone and watch it while traveling on the flight.
Inc42: What are you reading/watching at the moment?
Anup Jain: I read content, both of personal and professional interest, on social media. I am currently watching the Netflix series Line of Duty, which has a story with a very thorough line of enquiry in how they go about finding their way to the bottom of the crime, which really appeals to my analytical and problem-solving mind.
A New-Age Solution Keeping In Mind Changing Consumption Behaviour
While talking to Jain a unique pattern emerges — he is no traditionalist by any means. The startups he has previously invested in and the solutions he seeks to explore are what could be termed, from a millennial point of view, wherein consumers are more ingredient conscious, they seek natural products, and want more control over what and how they buy. An early riser, he is up by 6- 6:30 and works out three days in a week.
As an indication to how he is personally driven by this desire, Jain also mentions that he recently cut the cord earlier on the day of this interview (the term cord cutting refers to the global trend of consumers cancelling television subscriptions). “I am personally ready to redefine the way I live and work.”
This article is part of Inc42’s latest series, MoneyBall – Get up close and personal with the pioneers of the investment world. Dive in to find out about what excites them, their views on the latest technology & investment trends and what the future looks like from their viewpoint, explore more such stories here.