India’s billion-dollar startup factory

It’s been nearly eight years but the memory of that flight home is still burnt in K. Ganesh’s mind. The turbulence was severe even at a cruising altitude of above 30,000 feet and the Bengaluru entrepreneur turned to his co-passenger for a chat to take his mind off the bumpy ride. His co-passenger turned out to be Raja Kumar, founder-CEO of private equity firm Ascent Capital—and for Ganesh, promoter of online grocery store BigBasket, it was the perfect opportunity to present his newly-floated venture to an investor. He showed a company presentation to Kumar and by the time the flight landed in Bengaluru, Ganesh had convinced Kumar about the potential of the online grocery business in India. Ganesh, along with the BigBasket team, had three meetings with Ascent Capital after the flight and by the end of it they’d sealed a deal. BigBasket raised $10 million (Rs 63 crore approximately at current exchange rate) in its first round of institutional funding from the private equity firm a few weeks later.

Ganesh’s bet on the online grocery business is definitely paying off. In February, BigBasket raised $300 million in a funding round led by Chinese e-commerce giant Alibaba that valued the online grocer at $950 million amid media reports that billionaire Jeff Bezos’s Amazon was interested in acquiring the Bengaluru based firm. Dubai-based private equity firm Abraaj Capital, Sands Capital, and International Finance Corporation—the World Bank’s private sector investment arm—were the other investors who participated in the round. Big - Basket, which started in 2011, has so far raised $556 million across multiple rounds.

BigBasket isn’t Ganesh’s only success story. He and his wife, Meena, sold their five-year old online education venture, TutorVista, to U.K.-based education company Pearson Group for a neat $213 million in 2011. They could have easily retired then, but instead they then established GrowthStory, one of India’s largest entrepreneurship platforms based in Bengaluru, which promotes and runs startups. The rationale: to build multiple businesses at once that could solve Indiaspecific issues by combining technology with Indian cost advantages and resources. Today GrowthStory promotes and runs 13 companies mostly in the consumer Internet space, including the platform’s notable venture such as BigBasket, home healthcare service provider Portea Medical, online jewellery store BlueStone, food startup FreshMenu, and education-technology startup Aeon Learning. “This is our business. As promoters, we put in the initial capital till funding ensues from exter - nal investors. So far, our maximum investment in any GrowthStory company has been $1.2 million, while the minimum was approximately $20,000,” says 56-year-old Ganesh, partner, GrowthStory, the promoter behind BigBasket.

GrowthStory has a simple structure: The promoters, Ganesh and Meena (54), have a 50% stake (through various entities: individual names or family trusts) in all GrowthStory companies, while the founding teams who run the businesses own the rest in each of their respective companies. The numbers are telling. GrowthStory-promoted companies have an estimated total valuation of about $1.6 billion, while total funds raised so far by them are in excess of $850 million .

The couple manages the whole show, from ideas to business plans, recruiting the founding team, corporate strategy and overseeing critical aspects of business such as marketing, finance, operations, and fund raising. “What they do differently from other venture capital (VC) firms is not just bringing in investment, but also putting in place a founding team for their businesses to work as co-founders. They are a combination of an incubator and a VC firm,” says K.P. Balaraj, co-founder and managing director, WestBridge Capital India Advisors, and a long-time friend of the couple.

While Anil Joshi, managing partner at Unicorn India Ventures, a venture capital firm, believes that Ganesh’s biggest strength lies in identifying real problems and creating solutions around them, he cautions there are several aspects to a GrowthStory kind of model that one needs to recognise. “In such a model, Ganesh and Meena are not involved in the day-to-day running of all the businesses, so if they can’t bring the same passion out in the CEO-founder picked for running the business, then chances of getting the expected scale gets diminished,” says Joshi. “Also, in such models one can do only a few limited number of ideas. These are not carbon copy ideas, and need high involvement, at least in the beginning.”

So far, there have been no exits in Growth - Story except for a partial exit in BigBasket. Ganesh declines to share financial details, but industry sources say it was about 25% of his total undisclosed stake in BigBasket which fetched hefty returns. “I am happy to consider exits. At some price I am a buyer and at some price I am a seller,” says Ganesh pragmatically .

But exits aren’t a priority for the couple. They are currently focussed on scaling the companies, which are at different stages of growth. “We focussed on scale from day one: whether it is process, technology, logistics or vehicle capability to reach multiple locations faster. Raising the right amount of capital up front helped us scale faster than competition,” says Meena, who is also the CEO and managing director, Portea Medical.

For Meena, the main focus is to build five-year-old Portea, which she describes as a “go-to brand for home healthcare in India”. Bengaluru-based Portea has raised venture capital funding of $72.5 million across three rounds so far. Started in 2013, Portea does 120,000 home visits a month, offering services such as chronic disease management, post-operative care, cancer care, geriatric as well as orthopaedic care at home. It has a workforce of 4,500 people and a presence across 16 cities. Portea is yet to make a profit. According to financial documents filed with the Registrar of Companies (RoC), the firm recorded a loss of about Rs 123 crore, while its revenue stood at approximately Rs 47 crore in FY16. Meena expects it to be a profitable venture in the next 18 months .

“I have known Ganesh and Meena for over a decade. I like the passion and dedication they bring to each of their ventures. GrowthStory has got great potential because they are able to attract good young entrepreneurs to join them and scale up the businesses. It’s probably the only one of its kind in India,” says Ranjan Pai, chief executive and MD, Manipal Education and Medical Group. The billionaire entrepreneur has backed multiple GrowthStory ventures such as Portea Medical, mobile health company Grow Fit, and Aeon Learning.

For the Ganeshs, the key lies in identifying and scaling up the best idea. So, they start with small pilots and scale them into full fledged businesses if they work and drop them if they don’t. In 2015, Ganesh identified that last mile connectivity for commuters was a huge challenge in Bengaluru, a city where public transport options are scarce. GrowthStory spent more than Rs 50 lakh on a bike-taxi service, Get Set Ride, for nearly four months but eventually dropped the idea as the state regulatory environment wasn’t conducive and deep-pocketed players such as Ola and Uber were planning to enter the space. In early 2016, the couple zeroed in on the online retail market for natural, organic, and handmade products. The result? Qtrove, an online marketplace for curated organic food, personal care, and home décor products, was piloted in June that year. Today, Bengaluru-based Qtrove is a full-grown business with 500 sellers across the country and about 6,000 products on the platform, clocking about 400 orders a day.

Ganesh believes the biggest factor for success is not the idea, but working with the right team. “Each co-founder is different both in terms of experience and background. While some are very young, others are well experienced,” he says. Hari Menon, co-founder and CEO, BigBasket concurs. “Ganesh and I are the same age, born just three days apart,” says the 56-year-old. “His dealings with me differ vastly from a younger co-founder. Given his incredible ability to adapt, he switches modes from colleague to friend to mentor with ease. It’s definitely one of his strongest assets.”

Another important aspect is clarity in the working relationship. “We are very clear that we are promoters and not operating founders. There are challenges in terms of expectation on both sides as in every relationship. To avoid such confusion we state our expectations up front very clearly,” explains Ganesh. Portea, which Meena heads, is an exception.

Vinamra Pandiya, founder-CEO, Qtrove, says GrowthStory is unlike other funds. “What you find here are people who are practical, on the ground and want to build sustainable businesses.”

One might say Ganesh and Meena could not have found a better founding team for BigBasket, the first venture under GrowthStory. All the co-founders—Hari Menon along with V.S. Sudhakar (58), Vipul Parekh (53), Abhinay Choudhari (47), and V.S. Ramesh (62)—had together launched Fabmart.com, one of India’s first online retail and grocery businesses in 1999. They went on to start a chain of physical grocery stores, Fabmall, across the four southern states, which was sold to Aditya Birla Group in 2006.

Before BigBasket began operations in 2011, Ganesh had doubts about the success of such a service in India. “When I was doing my research on the online grocery business, among the top searches, the Internet pulled up U.S.’s Webvan, the online grocery store that filed for bankruptcy after operating for three years in 2001. It was among the biggest failures during the dotcom bust,” says Ganesh. “The cofounders of BigBasket had a very strong grocery background due to their earlier venture Fabmart and Fabmall.

Despite operating in a highly competitive market, BigBasket’s first-mover advantage, access to large funds, and a strong panIndia presence have helped it compete against e-commerce giants such as Amazon India, which launched its grocery business last year, and Flipkart, which piloted its online grocery late last year in Bengaluru. BigBasket does over 50,000 orders a day, with a presence across 25 cities. The company says it posted revenue of Rs 1,400 crore in the year ended March 2017 and is aiming for around Rs 2,000 crore by the end of March 2018. According to regulatory filings with RoC, Innovative Retail, which runs BigBasket, posted a loss of Rs 191 crore in FY17 compared with Rs 103.4 crore a year ago .

The Ganeshs aren’t just successful entrepreneurs. They have also made angel investments in close to 25 startups, mostly across consumer Internet and software companies, outside the GrowthStory portfolio. Prior to their entrepreneurial stint, the Ganeshs played key roles in the corporate sector. They met as students at the Indian Institute of Management (IIM), Calcutta, in 1983 and got married soon after graduating in 1985. Meena spent the first decade after B-school in the corporate sector with companies such as Tesco Hindustan Service Centre and Microsoft India, while Ganesh was CEO of the erstwhile Bharti British Telecom, and executive assistant to Shiv Nadar, founder of software-services firm HCL.

The entrepreneurial bug bit him after a few years. In 1990, Ganesh, then 29, started his first venture, IT & T, a hardware maintenance company, which was sold to U.S.-based software-services firm iGate in 2000 for around $4.6 million. In the same year, both Ganesh and Meena set up CustomerAsset, a call-centre which was acquired by ICICI Group for $20 million in 2003. Ganesh then co-founded Marketics, a data analytics firm, which was sold to business process outsourcing firm WNS for $63.5 million in 2007. Their entrepreneurial journey hasn’t been without its share of hiccups. When Ganesh launched InstaGenie, an online marketplace for service providers such as plumbers, cleaners, and carpenters in the U.S., in 2014, he had a tough time sustaining the business. A year into its existence and after $160,000 in startup costs, the business was shut down .

So, are they tempted to retire? Meena sums it up succinctly. “There are still so many problems to be solved in this country. There’s nearly no reason to retire.” Being around each other all day long has only helped strengthen the bond between the spouses-business partners. “I don’t remember life before marriage because I was just 21 when I got married and he was 23. It’s been a long journey. We have sort of grown together and understand each other very well. We know how to manage conflict of any kind,” says Meena.

Clearly, bringing the office home has worked well for the Ganeshs, now seen as one of India’s biggest power couples in the sunrise startup space.

( The article was originally published in the April 2018 issue of the magazine. )