Inside the minds of young titans of family offices and their approach to startup investment

Jai Rupani is scrupulous with his family office investments. When the Dinesh Hinduja Family Office had a liquidity event, he pondered on their ‘right to win’ in the private market despite being well-acquainted with the market through an illustrious career in private equity at True North. 

“When you work with an institution like TrueNorth and look at the ferocity at which you operate to get one deal. You look at about 1000 transactions a year as someone on the investment team, dive deeper into 80 or so, and you do one,” he said at the ninth annual edition of LetsIgnite, India’s largest conclave for startup investors. 

After a good break he recommends to anybody who’s had a liquidity event, Jai decided to invest through funds. 

The way family offices operate and enter India’s private market speaks volumes about the interestingly dynamic nature of the Indian startup ecosystem. At LetsIgnite 2023, an audience of over 200 investors heard four leaders and principals of family offices on their approach to allocating capital in the private market. 

For Adrija Agarwal, Partner at Sattva Ventures, diversification of investment was a major aspect of investing in startups, with 25 to 30 percent of their investment in private markets. 

She said the family office is treated as a business and that there’s an opportunity cost to the capital which needs to be deployed in a certain way to generate an X amount of return. Therefore, Sattva Ventures does not look at asset classes like debt as the returns are not enough to justify. 

On the other hand, Rishabh Mariwala of Marico and Ankit Kedia of Capital-A started investing in private markets after having a liquidity event. Both Rishabh and Ankit manage their family offices’ startup investments separately through Sharrp Ventures and Capital-A, respectively. 

Ankit’s family had the first tranche of capital when homegrown private equity fund Kedaara Capital bought 40 percent stake in Manjushree Technopack, followed by complete exit when US-based PE firm Advent bought them out. 

That is when he decided not to mingle the private market as an asset class with the family office business and to completely formalise private market investment through Capital-A, which is a Rs 250 Cr fund today. 

Rishabh was introduced to the world of venture capital and startup investment through his father and Marico’s chairman Harsh Mariwala’s investment Blume Ventures. He was also starting his own skincare business when the family had a liquidity event, allowing Rishabh to explore startup investing through funds. “When you see one family office, you see one family office. All the journeys of family offices are different,” he said.

However, all of them unanimously agree that every day is a good learning journey as far as startup investing is concerned. 

“I think Indian entrepreneurial spirit and the kind of people that you get to meet in the process of investing whether it's through funds or directly into startups, has been phenomenal,” Adrija added.  

The motivation to invest in startups

At the same time, Ankit highlighted that the primary objective of the family office was wealth conservation versus wealth creation. Adrija believes that family offices bring a different perspective to the captable, network access of a different kind and enables synergies with different companies.

“Family offices, as an investor class, is one to reckon with. I do believe that we have long-termism whereas VC funds have a shelf life of five to eight years. The holding power family offices have is phenomenal,” Rishabh added. 

With Sharrp Ventures, Rishabh aspires to grow into the best consumer investor in the country and give back to the ecosystem with scale. When it comes to investing via funds, Jai commented that engagement from fund managers is extremely important which increased significantly in the last decade.   

Rishabh also called out the fact that investors should not flog a dead horse. “When the deal is on the table and it's not working out, it's okay. Let it go, don't try to pitch it and upsell it. I think that's critical. Call a spade a spade,” he explained, adding that it is critical not to rely on borrowed conviction.