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Startup Ecosystem built by Mukesh Ambani

Saransh Pandey

Intern
  • September 27, 2020
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    Reliance Industries, India’s most successful company, is aiming to lead the digital revolution in India, thus the company is looking towards startups for technology, talent, and innovative solutions

As Reliance Industries, India’s most successful company is aiming to lead the digital revolution in India, thus the company is looking towards startups for technology, talent, and innovative solutions. In 2016 Mukesh Ambani’s Reliance Industries took a bold step regarding this and decided that its Reliance Jio arm, which was then the Reliance very own startup would set aside an Rs. 5,000 crore venture capital funds to encourage entrepreneurs to build businesses of the future. A year later, at the company's 40th annual general meeting, Mukesh Ambani again confirmed his commitment to entrepreneurs and startups and said that Reliance has become known in the past 40 years as a company that won the trust of millions of retailers. Mukesh Ambani aspires to make Reliance an enterprise with lakhs of partners and an enabler of a large ecosystem of entrepreneurs. Today Reliance Industries has established itself as India's most valuable company and is also an enabler of the Indian startup ecosystem. It has stepped up its engagement with startups through outright acquisitions, partnerships, or equity stake purchases. 

Last year, Reliance has acquired majority stakes in at least nine innovative, technology, and content startups all of which are aimed at strengthening the company’s ‘new commerce’ and digital revolution drive. Today Jio has become the biggest as well as most successful startups, and it has also reached the milestone of unicorn startup and even rake 0.1% of the capital raised by Jio in these last four months. In comparison, Reliance Jio has raised $20.2 Bn in 13 deals between April and July 2020 which is essentially about 35% of the total funding of the Indian startups in five years. In FY20, as against INR 2964 in FY19, Jio posted an 87.65% rise in standalone net profit at INR 5,562 Cr, driven by continued subscriber additions and partial impact of tariff hike undertaken in Q3 FY20. Jio acts like a kingmaker for startups and this is where Ambani wants to create Jio-startup connect. Mukesh Ambani is acting like a bridge that can help Indian startups scale-up, offer much-need exits to investors, and also at the same time it is clear from its recent acquisitions, the company aims at enabling entrepreneurs to access a pool of capital to keep up their innovation. 

Emphasizing the same, Ambani, addressing the shareholders and the public, said that the company is well-positioned to help Indian startups in a number of ways, whether it be in technology development, product development, distribution, market access, or even scale-up capital. According to Mukesh Ambani, he has planned to integrate startup into their roadmap and to help them reach their full potential. Mukesh Ambani believes that this would be the true measure to open up opportunities for many more companies from India to step successfully and to expand globally. 

Mukesh Ambani has been involved in big start-up investment, and in the last three years, he has invested in 23 companies. These firms belong to varied fields which include content production houses to music apps to cable networks to online medicine space. Here are the year wise investments made by the company. By reaching out to startups, Ambani is also taking direct competition with other large tech platforms as it looks to provide more services to its 388 million subscribers. One of the most popular Chinese company Tencent which owns the ubiquitous messaging platform WeChat has invested in over 800 startups, mostly in its home market. Some of these companies, like the food delivery platform Meituan Dianping and the social commerce platform Pinduoduo, have leveraged WeChat to now become China’s most valued companies. RIL’s move could potentially help M&A activity among startups, especially the deals of $100-200 million. One of the biggest problems that startups in India suffer from is that local corporates are not interested in acquiring or investing in local companies, but the size and scale of RIL’s ambition can change the mentality and start the flywheel of M&As. 

In order to boost product offerings of its subsidiaries, Reliance Industries Ltd (RIL) has made several acquisitions and investments in the past three years which involves Reliance Jio Infocomm Ltd and Reliance Retail Ltd, among others. The investments made by Reliance can be divided as follows: 

  • RIL has put in $566 million in media and education. 

  • $194 million in retail, $1.2 billion in telecom and internet firms. 

  • $100 million in digital and $391 in the chemicals and energy space. 

  

The acquisitions by Reliance Industries clearly project Mukesh Ambani’s aspiration to be among the top 20 companies in the world.  Within 2 years, Reliance acquired companies like Balaji Telefilms (TV content), EdCast (learning enabler), Embibe (edtech content), Saavn (music content), Radsys (5G architecture), Eros (TV content), Hathway (broadband), DEN (cable), Haptik (customer engagement), Reverie (language processing), Fynd (online shopping), Tesseract (AR/VR) and Grab (logistics). The startup acquired by Reliance is working on various technologies which include artificial intelligence (AI), internet of things (IoT), blockchain, online multiplayer gaming, multi-party videoconferencing, augmented reality (AR), virtual reality (VR), and mixed reality (MR).  

The details of the investments made by Mukesh Ambani are as follows: 

Embibe

In April 2018, Reliance Industries had invested $180 million in the Edtech startup Embibe over a period of three years. The investment helped Reliance acquire a stake of 72.69 % from Embibe's existing investors. In April 2020, Reliance again funded the Bengaluru-based startup with Rs 500 crore from Reliance Industries. Embibe is an education platform that uses data analytics to deliver personalized learning outcomes for students. It targets students across K-12, higher education, professional skilling, vernacular languages, and all curriculum categories across India and abroad. With AI stacks focussed on content intelligence and automation, behavioral recommendations, and student intelligence. 

Fynd

The fashion e-commerce platform Fynd was founded in 2012 by Farooq Adam, Harsh Shah, and Sreeraman MG. Fynd functions via an offline-to-onlineO2O model and directly sources products across various categories such as clothing, footwear, jewelry, and accessories from prominent brands in India. Fynd focuses on sourcing products from the outlets nearest to the customer to optimize delivery time. It has about 8,000 outlets on board for about 500 clients. RIL acquired a majority stake in Shopsense Retail Technologies Pvt. Ltd which runs fashion portal Fynd for Rs 295.25 crore ($41.9 million). 

Grab

In February 2019, RIL’s completely acquired subsidiary Reliance Industrial Investments and Holdings Limited (RIIHL) acquired equity shares of Grab A Grub Services Private Limited (Grab) in a cash deal worth $14.9 Mn or Rs. 106 Cr. At a later stage, the company will also invest up to $5.63 Mn (INR 40 Cr) to complete the acquisition deal by March 2021. The investment was aimed at supporting Reliance Group’s “digital commerce initiatives and strengthen its logistics services, which will in turn strengthen both the B2B (business-to-business) and B2C (Business-to-consumer) segments. The deal would help the company boost its e-commerce model to take on its rival Amazon India and Flipkart in the country. 

Haptik

On April 3, 2019, RIL announced that Reliance Jio Digital Services Limited has acquired artificial intelligence (AI) firm Haptik for Rs 700 crore. Founded in 2013, Haptik is one of the world's largest conversational AI platforms that lets customers chat with their voice assistants to complete daily tasks such as online shopping, travel bookings, food delivery among others. The company has worked with over 50 brands such as Samsung, Coca-Cola, Future Retail, KFC, Tata Group, Oyo Rooms, Mahindra Group, etc. The company expanded to the US in 2018 and the UK in 2019. 

Reverie

In April 2019, Reliance invested Rs 190 crores ($27.3 Mn) in Reverie and will invest Rs 77 crores (almost $10 million) by March 2021. As part of the acquisition, Reliance will hold 83.3 % equity capital in Reverie on a fully diluted basis, with the total investment of Rs 267 crore likely to be completed by March 2021. Reverie provides a voice suite (called Gopal) in 12 Indian languages like Hindi, Telugu, Tamil, Bengali, Marathi, Gujarati, Indian English, etc. which can be integrated with both chatbots and Interactive Voice Response (IVR) solutions which companies can use to engage with non-English speaking customers. 

Saavn

On March 23, 2018, RIL announced a strategic merger of its digital music service JioMusic with the music platform Saavn. RIL acquired a 75-80 % stake in the merged entity. The combined entity is valued at over $1 billion, with JioMusic’s implied valuation at $670 Mn and Saavn with a valuation of $330 Mn. RIL stated that the integrated business will be developed into a media platform of the future with global reach, cross-border original content, an independent artist marketplace, consolidated data, and one of the largest mobile advertising mediums in India. 

Tesseract: 

In August, 2019, Reliance acquired a stake of 80-85% in Tesseract post the deal that would be valued between INR 150 Cr and INR 500 Cr, the source added. Reliance also announced its mixed reality (MR) platform Holoboard that combines augmented reality and virtual reality. Holoboard would the first made-in-India AR headset and works with smartphones. Interestingly, the device is developed by Tesseract. Tesseract is a Mumbai-based VR  startup founded in 2015 by Kshitij Marwah. Tesseract has launched three hardware and two software products in the MR, AR, and VR spaces. The founder claims to have seven patents: one US, three international (130 countries), and three India patents. 

Den Networks, Hathway Cable and Datacom

Apart from getting bigger in the digital entertainment market, Reliance Jio in bought a majority stake in Den Networks and Hathway Cable and Datacom in October 2018.  Jio acquired a 66 % stake in Den Networks with a primary investment of Rs. 2,045 crores and a 51.3 % stake in Hathway Cable and Datacom with an initial investment of Rs. 2,940 crores. 

Hamleys

Reliance Industries completed the acquisition of British toy retailer Hamleys for about Rs 620 crore (GBP 67.96 million) in an all-cash deal in July 2019 as Reliance Brands had signed an agreement to acquire 100% stake in Hamleys Global Holdings from Hong Kong-based C.banner International. RIL stated that Reliance Brands has completed the acquisition of 100 % stake of Hamleys Global Holdings (HGHL) through a special purpose vehicle company set up in the United Kingdom. This acquisition will help Reliance Brands to become a dominant player in the global toy retail industry. 

Netmeds:

On August 19, 2020, Reliance Industries Ltd has acquired a majority stake in online pharmacy Netmeds for about $83 million (Rs. 620 Crore) in cash, days after e-commerce giant Amazon.com Inc launched an online drug sales service in India. The investment represents 60% holding in the equity share capital of Vitalic Health and 100% direct equity ownership of its subsidiaries - Tresara Health Private Limited, Netmeds Market Place Limited, and Dadha Pharma Distribution Pvt Limited. 

Asteria Aerospace: 

In the last December, RIL owned subsidiary Reliance Strategic Business Ventures Ltd (RSBVL) acquired a 51.78% stake in robotics and artificial intelligence company Asteria Aerospace Pvt. Ltd for ₹23.12 crore. Asteria develops drone-based solutions to provide intelligence from aerial data for military and industrial applications. 

NowFloats Technologies

In December, RSBVL also acquired an 85% stake in NowFloats Technologies Pvt. Ltd for ₹141.63 crores with a proposal to make further investments of up to ₹75 crores. Nowfloats offers SaaS solutions to small and medium enterprises (SMEs) that enable them to get a digital presence. The investment will further enable the group's digital and new commerce initiatives. 

Radisys

RIL also acquired open telecom solution provider Radisys in June last year for $74 million (Rs. 511 crores). That deal was majorly focused on enhancing Reliance Jio's presence in the areas of 5G, Internet of Things (IoT), and open-source architecture adoption. In addition to this, RIL made deals specifically to amplify the occupancy of Reliance Jio by acquiring software companies namely Surajya Services (EasyGov), and SankhyaSutra. Surajya Services(EasyGov) is a data solution company that is popular in its EasyGov online portal that details government schemes and services to citizens. While SankhyaSutra Labs offers high-performance computing software simulation services. 

Balaji Telefilms and Eros International

Apart from this, RIL also invested in the entertainment industry. acquired a 25% stake in film and television production house Balaji Telefilms Ltd aka ALTBalaji in a deal worth Rs 413.28 crore. The stake purchase will give Reliance Jio Infocomm Ltd. access to content generated by Balaji Telefilms. RIL also acquired a 5% stake in film entertainment company Eros International for $48.75 million, as video content becomes a key driver to drive data consumption for its telecom venture Reliance Jio. 

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