Bhaskar Majumdar has donned many hats in his illustrious career; from being a seasoned media & technology executive to a successful entrepreneur and finally a prolific investor/advisor. He is passionate about building new businesses especially in the areas of media & technology.
An alumnus of IIT Kharagpur and Harvard Business School, Bhaskar, started his career as a chief manager with BCCL (The Times Group). He continued his journey in the media industry and created many disruptions in this sector. At an early age of 27, he was appointed as the brand manager of Economic Times. He then moved onto Zee and as the MD of the Zee International, he was responsible for launching Zee overseas. He even launched the first Indian language broadcaster in UK, US, South Africa and West Indies, delivering over 50% of the profits of the listed Zee Telefilms.
In 2000, he decided to strike it on my own launched Recreate Solutions – a digital media services company with backing from Insight Partners. Within six years the company grew over 800 people and established offices around the world. The company was acquired by a division of Verizon in 2007 that delivered substantial return on shareholders’ investment. He then donned the role of an early stage investor/advisor for startups in the media and technology space through his propriety fund Health Ventures and has invested his prop funds in seven startups in UK and India across media technologies, PAAS and social. Bhaskar has exited businesses as an entrepreneur and as an investor. He therefore has a strong knowledge of positioning businesses for exit.
Bhaskar also serves as an advisor to the UK Government and Start Up Britain – as well as Tech London Advocate. He is on the Advisory board of FICCI for the media and entertainment sector as well as TRAI (Telecom Regulatory Board of India) on the Digital Addressable System Roll-out in India.
We caught up with him to understand his journey, his experiences, the differences between the UK and Indian startups ecosystem, the startup bubble and his take on the unpredictable investment scenario in the country.
Here are the edited excerpts:
Inc42: Tell us about your journey from being a seasoned media & technology executive to a successful entrepreneur and finally an investor/advisor.
Bhaskar: I have been a media technology executive for close to two decades in various avatars – as a professional, entrepreneur, prop investors and now institutional investor. I have worked in senior management roles in various media organisations across publishing, broadcasting and Internet companies. I spearheaded Zee’s international roll out in markets like the US and UK. However, more than the content side of media, it is the tech enablement of this segment which fascinated me more and turned me into an entrepreneur when I launched venture Recreate Solutions 15 years ago. Investors in the US backed it and later I sold the company to an American system integrator. Around the same time, I started investing in tech businesses as a prop investor. As a prop investor, I exited some of the business after a 3x-4x return on my investment to large PEs like Providence and Amazon.
Inc42: Which role suited you the most?
Bhaskar: It’s tough to pick one because each stint of mine has taught me a lot. I have implemented those learning in my new roles from time and time. It has shaped me as a professional that I’m today. As an entrepreneur, I learnt the challenges of building a business from ground up; this helps me to understand the mindset and challenges of Unicorn’s investee companies. As a former entrepreneur, I connect with the founders, understand their apprehensions and able to suggest them options to grow their businesses because I have been through the same cycle of excitement, anxiety, fear and success.
Inc42: When and why did you decide to become an institutional investor?
Bhaskar: I think it’s more relevant to share when I decided to turn an investor. That happened three years ago when I was already a prop investor for three years. Early stage investment scene started gathering momentum in India and globally. Different kinds of funds for startups were being launched, and early stage investors were soon becoming important in cycle of startup businesses. After all, they are the 1st investors who place a bet on startups much before big VCs spot them and sign a bigger cheque to help these companies grow.
Fewer deals mean higher risks of losing one’s money
Also, being a prop investor comes with own set of limitations. While on the one hand, you get higher returns, but since it is one person’s money, ability to do more deals is not an option. Fewer deals mean higher risks of losing one’s money. A prop investor finds it difficult to scale up his investment. At the time, I felt that there is a need to become an institutional investor, since I can bring my learning as an entrepreneur and investor on the table for a portfolio of companies rather a few of them.
Inc42: What is the modus operandi of Unicorn?
Bhaskar: At Unicorn, our philosophy is business first, funding later. Thus both Anil and I spend a long time with entrepreneurs who come to us for funding. We spend 3-5 months in understanding their business model, the team at work, revenue streams. This mentoring is provided to them without any discussion of signing a cheque. In many cases, we tell entrepreneurs to tap into new revenue streams which may have been in their blind spot or they may know about, but don’t know how to go about it. After spending considerable time with businesses, then we discuss funding with them.
Inc42: Who are the investors of Unicorn?
Bhaskar: With Unicorn, we have aimed to do things differently in every sphere; whether it’s about adopting a different strategy of evaluating startups or reaching out investors. Unicorn has done the first close of INR 40 Cr. and will be announcing our investments shortly. This amount has been raised from local institutional investors, tech entrepreneurs, HNIs. In addition to this, we have been able to bring in a new class of investors into our fund for the first time. These new class consists of traditional business family houses, wealthy individuals, professionals and wealth managers.
Inc42: Which are the startups Unicorn that will invest in this year?
Bhaskar: We are currently evaluating startups in segments like Fintech, app-based services, B2B cloud-based business ventures and media tech. Since our first close is done, we will be announcing Unicorn’s investment next month.
Inc42: Unicorn’s advisory team comprises of?
Bhaskar: Composition of our advisory team is of professionals who have worked and are working in senior management roles across the business segments we are looking to invest. We are in the process of putting together an advisory board to mentor our portfolio companies.
Inc42: What do you generally look for in a startup, before investing in it?
Bhaskar: There are number of parameters which help us decide which company to invest in. We usually like to invest in a startup, which has two to three co-founders. The quality of the team at work is extremely important, their working relationship, co-founders’ working understanding with each other is given high importance in our criteria list. As a fund, we are clear that we won’t be investing in just a business idea. We will be investing in companies which are either generating revenues or have moved beyond proof of concept stage. Last but not the least, for us, it is extremely important to see some initial investment in the business by the founder himself. Once these criteria are met, we start evaluating their business model. We compare it to the size of the market they are in and explore their possibility of scaling up not only within the country but globally too. We don’t prefer investing in too niche startup because the possibility of scaling up poses a challenge.
We usually like to invest in a startup, which has two to three co-founders.
Inc42: Do you agree with Nikesh Arora’s view that startup valuations have jumped far ahead of what they should be? Do you think angel investors and VC firms, in general are holding their horses before making big bets?
Bhaskar: Like in every business cycle, angel investment cycle has undergone a metamorphosis in the last six to nine months. The first half of the year saw big bang investment announcements into consumer internet companies, app based startups, food tech, hyperlocal et al. But with the recent turn of events, investors are now more cautious before writing a cheque. As a result, they are now keen to work with experienced professionals turned entrepreneurs, and investment focus is slowly shifting to B2B startups too, which was earlier missing. I would like to emphasis on the fact that though we have raised a corpus and are ready to invest, but we won’t be in any hurry to write a cheque as we will be carefully studying the businesses we want to be associated with. I don’t believe in FOMO.
Inc42: Of late, there have been a lot of voices raising concerns about the startup bubble finally bursting. What’s your take on the same? Do you think funds are drying up for startups as investors are getting more cautious?
I don’t believe in FOMO.
Bhaskar: It will be correct to say that valuation in certain business segments is seeing a level of correction. However, we should remember that consumer Internet or ecommerce are not the only startups. Sure, their valuations are seeing a correction but if an investor is looking to park their funds, they should look beyond the usual suspects.
Inc42: What will the startup fundraising scenario be like in 2016?
Bhaskar: We will see increased funding focus in B2B businesses, fintech, mediatech, Cloud tech and ventures led by experienced professionals, are likely to get attention from the right quarters.
Inc42: How different is the UK startup ecosystem from the startup ecosystem in India?
Bhaskar: UK, as a country was not known for fostering startups. But that is changing rapidly. In the UK, top universities are forming backbone of the startup ecosystem. Unlike in India, where bright minds graduating from IITs and IIMs are increasingly turning entrepreneurs, in the UK, most ventures start from universities, grow from there long before they take shape of a startup. Universities help their students set up the initial business, fund them if needed, mentor them before they are ready to break out on their own. That’s a healthy way of nurturing a startup. In the UK, most of the startups that get launched are in research driven fields like biotech, genetic engineering, plastic tech etc. while in India, most startups are focused on addressing need gap faced by end-users in their day to day lives. It could be a cab, beauty or a home delivery business model. Also, the average age of a founder of a startup in the UK is much higher than an Indian entrepreneur.
Inc42: How different or similar is the VC/angel investment scenario like in the UK, from India?
Bhaskar: Angel investors’ community in the UK has got a fillip because of tax breaks being introduced for them. Under the ‘Enterprise Investment Scheme’, an angel can get between 50-80% tax break on their investments in startups. As I mentioned earlier, UK was never known as a startup hub. The US has been known to churn out some of most successful startups, but in the last four years, UK has transformed itself and is getting evolved as a startup nation. Interestingly, the Indian government is currently studying UK’s startup policies actively. They are likely to introduce some of them for the angel investment community in India. If that happens, it may be a game changer for startups and investors alike.
Inc42: Please share some words of advice for entrepreneurs and investors looking to exit; some smart exit strategies.
Bhaskar: Entrepreneurs who are building a business from ground up, should not lose focus on the need gap they are aiming to address but at the same time, if you have plans to exit the business a few years down the line, then align your business strategy and planning according to the investors’ community you would be willing to sell the business to. This will fetch you good valuation.
For investors, there is one golden mantra that all of us should follow: Time you exit right.
Bhaskar’s experiences and learnings span two countries and multiple roles. He has gracefully exited many businesses as an entrepreneur and as an investor; making him a treasure trove of smart exit strategies. He is not just a prolific investor, but his knowledge and deep domain knowledge also makes a strong mentor and advisor for young entrepreneurs and investors alike.