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Ratan Tata and the Indian Startup Ecosystem

ET Cases, 20 Pages
AUTHOR(S) : Vandana Jayakumar and Dr. Nagendra V. Chowdary

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Ratan Tata and the Indian Startup Ecosystem


“I am absolutely thrilled to be the part of the start-up ecosystem.”

- Ratan Tata, Chairman Emeritus, Tata Sons

“Yours is an ecommerce startup too, so why don’t you ask him?” said Nidhi Agarwal’s (Nidhi) father to her in February 2015. Nidhi, Founder of the online clothing startup Kaaryah, was looking for an investor to fund her startup when her father suggested that she should approach Ratan Tata (Tata). Nidhi’s father had read in the newspaper that Tata had provided financial backing to an e-commerce startup. Nidhi wrote to Tata and within months, Tata was one of the investors in her startup.

Tata was on a startup-funding spree since 2014, having invested in more than 20 companies – mostly e-commerce startups. Amidst the booming Indian startup activity and an enabling ecosystem, while several other Indian business icons showed interest in Indian startups, Tata stood out for trying to support Indian startups in an individual capacity.

How will these investments from Tata affect the Indian startup ecosystem? While entrepreneurs who were able to get funding from Tata were quite upbeat about associating with him, it was debatable if his association would be a blessing or a burden for the startups. Moreover, will Tata end up being only a celebrity investor for the investee companies?

Indian Startups and the Startup Ecosystem

During the last decade, India witnessed an exponential increase in entrepreneurial activity to become the world’s fastest growing startup ecosystem. While Just Dial (Search Engine Company started in 1996), Bharat Matrimony (a Matrimonial website started in 1997) and MakeMyTrip (an online travel company started in 2000) were some of the early startup successes, Flipkart (e-commerce megastore started in 2007), InMobi (a mobile ads company stared in 2007) and Quikr (an online classifieds advertising company started in 2008) were representatives of successful startups started about 10 years ago..............

Indian Startup Ecosystem: An “Inclusive” Mandate

A growing digital consumer base, mobile penetration, technological developments and a fast-growing domestic market fueled the growth of the Indian startup ecosystem. As of 2015, the new age digital India had nearly 300 million internet users, $20 million digital spend and nearly 40 million consumers.

Simultaneously, India witnessed a transition from brain drain to brain gain. Due to the exciting work environment, monetary benefits and better career prospects at startups, several executives from Indian and international companies joined the startups at senior positions, while several others started their own startup firms...............

Indian Startups: A Global Hotspot for Investments

According to a report by Microsoft Ventures and Venture Intelligence, Indian startups were expected to raise $3.5 billion in the first six months of 2015 (Exhibit II). As per a later report by NASSCOM and Zinnov, funding in Indian startups was expected to increase from $2.2 billion in 2014 to $4.9 billion in 2015, registering a growth of 125%. Significantly, the funding in 2015 alone was much higher than the total funding of about $3.2 billion for 2010-2014 period...............

Indian Startup Ecosystem: Challenges Galore

“In India it takes 29 days to start a business; it takes half a day in New Zealand! When it comes to bankruptcy, the complete filing process takes approximately 4.3 years in India as compared to only 0.8 years in Singapore… India needs more entrepreneurs and less policy,” commented Kunal Bahl (Kunal), Founder CEO,, while discussing the issue of ease of doing business in India. Kunal’s words gave a glimpse of the hurdles in starting a business in India (Exhibit III)............

Helping Hand of the Central and State Governments

On January 16th 2016, Prime Minister Narendra Modi launched the Startup Action Plan at a glittering event in New Delhi where more than 1,500 startups participated. With the aim of creating an encouraging ecosystem for startups, the Startup Action Plan rolled out several benefits (Annexure I). The plan also outlined the criteria for businesses to be eligible for availing the startup benefits (Exhibit V)............

Corporate Houses and Business Icons’ Support

The interest of Corporate Houses in Indian startups could be seen in their pro-startup policies. While Dell planned to make huge investments in the Indian startups in the coming years, HPCL took up the task of supporting Dalit entrepreneurs. HUL supported select startups by allowing them access to its business, resources and mentoring support............

Ratan Tata: Star of the Indian Startup Story

Ratan Tata, the great-grandson of Jamsetji Nusserwanji Tata (Founder of the Tata Group), is one of the most admired businessmen of India. After a career spanning more than six decades, where he led the Tata Group (more than $100 billion conglomerate)30, Ratan Tata relieved himself from all official responsibilities in December 2012 at the age of 75. Thereafter, he continued to be the Chairman Emeritus of the Tata Group..................

Changing India: The Biggest Motivator

On November 5th 2015, while inaugurating country’s largest startup incubator T-Hub in Hyderabad, Telangana, Ratan Tata said that, “India was not recognized as an enterprising country in technology. It is time we unleashed the Indian tiger. We need to support start-ups with all our resources. I will be there to support the young engineers and scientists.”  Ratan Tata’s statement was coherent with the support for startups he extended through his investments in various Indian startups since 2014 (Exhibit X)............

To Invest or Not to Invest?

While Tata was willing to support Indian startups, he did not support just any startup and did not make investments in a hurry. For instance, before investing in Snapdeal, he discussed the investment with Kalaari Capital. Commenting on his support for startups, Tata said that “It is important to nurture them; it’s important to support them. Not all start-ups are going to be successful. The creative ones usually face the greatest problems in finding support, because they are doing things others have not done before.........

Playing by the Rules – Tata’s Working Style

As shared by some of the startup owners, it was not difficult to approach Tata for investments. However, the proposals were first vetted by R. Venkataramanan (Tata’s former Executive Assistant) and then forwarded to Tata, who usually asked two questions – risk and opportunity. The startup founders were given 30 minutes to present their case and those who were successful were valued based on the last funding received...........

Association with Ratan Tata, More Than Just the Name?

With Ratan Tata by their side, the startups were sure to benefit on more counts than one as it wasn’t investments alone that the startups received. By virtue of investing in startups, Ratan Tata also lent his name to the startups. “It’s really not about the money — he is willing to be upfront about associating with start-ups he picks, risking his own brand,” said Prashanth Prakash, a partner with Accel (a venture and growth equity firm)..............


Exhibit I: Main Business Segments of Startups in India

Exhibit II: Periodic Table of the Indian Startup Ecosystem (2014–2015)

Exhibit III: Hurdles Faced by the Startups and their Expectations

Exhibit IV: Startup India, End up Abroad!

Exhibit V: Criteria for Startups to get Government Incentives under Startup India Action Plan

Exhibit VI: Highlights of Incentives for Startups in Union Budget 2016

Exhibit VII: Initiatives of Select State Governments to Encourage Entrepreneurship

Exhibit VIII: Top Angel Investors in 2015

Exhibit IX: Snapshots of Investment for H12016

Exhibit X: Ratan Tata’s investments in Various Indian Startups (2014 onwards)

Exhibit XI: Mentoring Relationships

Exhibit XII: Statements From Heads Of Startups and Others

Teaching Note Preview

Ratan Tata and the Indian Startup Ecosystem



This case study helps understand the booming Indian startup ecosystem and factors that have enabled India to become a startup nation. With around 4,200 startups in India as of 2015, the Indian startup ecosystem has been showing tremendous growth, becoming the world’s fastest growing startup ecosystem. What has led to the emergence of the Indian startup ecosystem? How significant has been the role of technology in boosting the entrepreneurial scene in India? In the backdrop of the booming startup activity, the case study highlights the significant role of Ratan Tata – one of India’s most iconic business leaders – in supporting the Indian startups. What has motivated Ratan Tata to invest in Indian startups? Having invested in nearly 20 startups since 2014, Ratan Tata is not just advising and mentoring the startups but he has also lent his name. However, will the startups be able to carry Ratan Tata’s legacy forward or will he end up being a celebrity investor for startups?

Prerequisite Conceptual Understanding/Before the Classroom Discussion

  • • “Startup India – Momentous Rise of the Indian Start-up Ecosystem”, NASSCOM, 2015 – To get a glimpse of the Indian startup ecosystem


Case Positioning and Setting

This case study can be used in Management Program in Entrepreneurship to understand the role of an enabling ecosystem and an investor-mentor

Suggested Reading for the Faculty

  • • Jeanne C. Meister and Karie Willyerd, “Mentoring Millennials”, Harvard Business Review, May 2010 – To understand the nuances of mentoring for millennial employees/startup founders


Assignment Questions

  • I. Identify and analyze the factors that have cumulatively led to the emergence of a favorable startup ecosystem in India. Discuss the challenges faced by the startups in India and to what extent were the challenges addressed by initiatives of the central and state governments.
  • II. Analyze Ratan Tata’s contribution in supporting Indian startups in individual capacity and in playing the role of a mentor.


Preamble to the Case Analysis

The discussion in this case study mainly tries to understand the Indian startup ecosystem and the factors that have led to the emergence of the same. Having understood the Indian startup ecosystem, the case study then focuses on significant role that Ratan Tata has played in supporting the Indian startup ecosystem by investing in some of the select Indian startups and also mentoring the startup founders/owners. It helps debate on the impact of Ratan Tata’s investments on all the stakeholders – Ratan Tata himself, the Indian startup ecosystem, the investee companies, the investment community and potential entrepreneurs. The main discussion points have been captured in Exhibit (TN)-I...............

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The case study highlights the main elements of the Indian startup ecosystem – the fastest growing and the third largest startup ecosystem globally. While on the one hand, it analyzes the factors that led to the emergence of the Indian startup ecosystem, it lists the challenges involved in starting-up in India, on the other. In the backdrop of the booming entrepreneurial activity in India, the case study focuses on the role of Ratan Tata – who invested in more than 20 startups since 2014 – as an investor-mentor. Ratan Tata’s investments stand out prominently as he has invested in individual capacity in an attempt to help bring out a change in India. However, will the startups that he has invested in be able to carry forward his legacy or will he just end up being a celebrity investor for the investee companies?

Pedagogical Objectives

  • To understand India’s emerging and engulfing startup ecosystem in the light of Government of India’s, several State Governments’, many other public initiatives (especially from trade bodies like NASSCOM, Indian Angel Network, etc.) and quite a few personal initiatives from several Indian corporate czars (like Ratan Tata, Nandan Nilekani, Mohandas Pai, etc.)
  • To analyze the role of Ratan Tata in widening the horizons of India’s startup ecosystem in general and the investee companies in particular and debate on how Ratan Tata’s investments in Indian startups have deepened Indian startups’ financial reach
  • To discuss and debate on the pros and cons of having Ratan Tata as an investor at the fledgling stage of an Indian startup

Case Positioning and Setting

This case study can be used in Management Program in Entrepreneurship to understand the role of an enabling ecosystem and an investor-mentor

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