Why are more and more Indian celebrities investing in start-ups?

A growing number of celebrities are eyeing start-ups and young brands to diversify their investment portfolio and, in several cases, are also keeping their association low-key without any brand endorsements

India’s thriving start-up ecosystem seems to be the next big thing for celebrities looking to expand their investment portfolios. A quick glance through the investments made by them in the recent past, shows just why. Armed with wealth, which many cash-strapped start-ups are looking for—not to mention, the decline in start-up funding over the past few quarters via traditional venture capital and private equity firms—it’s turning out to be quite the draw for brand and celebrity both, looking at mutually benefiting from such associations. 

The last couple of years have seen a string of celebrities invest in an array of brands across sectors. For instance, Anushka Sharma and Virat Kohli’s interests range from investing in insurance firm Digit Insurance, to a plant-based meat brand called BlueTribe Foods. Alia Bhatt is an investor in Phool, a company which upcycles temple flowers and floral waste into incense sticks and cones. Deepika Padukone has invested in an electric taxi start-up, Blu Smart. Earlier this year, Malaika Arora announced her investment in healthy dessert company, Get-A-Way Desserts, and is also the face of the brand. 

Cricketer Shikhar Dhawan has just invested in D2C snacking brand, TagZ Foods and is their brand ambassador; KL Rahul in men’s innerwear and loungewear brand XYXX; Hardik Pandya in Yu Foods, a ready-to-eat food start-up; Shradha Kapoor in a health supplement brand, Power Gummies; Shilpa Shetty in D2C snacking brand, WickedGud; Bhumi Pednekar in a hospitality firm for a boutique hotel in Goa, and most recently Sanjay Dutt in an AlcoBev startup, Cartel and Bros, which is retailing Scotch whisky brand, The Glenwalk. The list goes on.

“More and more celebrities are turning investors or, as we like to call them, ‘#starvestors’ (i.e. not just celebrity endorsements), which has become the new buzzword,” offers Aviral Jain, managing director and India co-leader of valuation advisory services at Kroll, a risk and financial advisory firm. “Earlier, celebrities have looked at mature businesses for investments that could outrun their careers. However, they are now increasingly investing in new-age companies and start-ups.”

What’s interesting to note, is that many start-ups are offering equity in lieu of cash to celebrities, as they may not always be able to afford an endorsement fee or partnership. It seems to work for celebs who are looking at potentially cashing in on these investments over time. Several are becoming angel investors as well. So, what’s led to this quick shift? 

More than just an investment

Jain points out that celebrities gain in various ways by investing in such start-ups and are often rewarded with a stake in the company, in kind or with cash, or they may even choose to have a hybrid structure. “If a start-up is facing challenges in raising funds through conventional channels, an investment from a celebrity brings in more than just cash infusion—it also comes with that glam quotient. It reflects the celebrity’s confidence in the brand and as a result the brand stands to gain from the celebrity's popularity and fan following,” says Jain. 

Anish Basu Roy, co-founder and CEO of TagZ Foods (offering products like popped potato chips), which recently brought Shikhar Dhawan onboard as an investor for an undisclosed amount, believes this trend is an outcome of two significant developments in the country. “On the one hand, influencers and celebrities have truly realised their reach and influence on consumers. They understand what they stand for and like to invest in brands whose purpose or mission aligns with their own values and beliefs. This also means not necessarily taking up paid assignments, which may dilute their brand image”

Basu Roy adds that secondly, consumer-forward start-ups have emerged as a promising asset class over the last five years. “Several celebrities realise this as a potential wealth creation opportunity.”

Dhawan is also brand ambassador for TagZ, which has just rolled out its latest campaign featuring the cricketer. “TagZ is present in a relatively competitive category, so having Shikhar as the face of our brand helps create a distinct identity in the minds of consumers,” offers Basu Roy. He points out that this partnership was a natural coming together of a brand and sportsperson, cemented by the common idea of helping consumers eat better and lead an active lifestyle. Instagram

Going beyond traditional endorsements

With the prospect of making gains on their investments, celebrities are increasingly choosing to align themselves with brands that speak to their own lifestyle philosophies. For Malaika Arora, who has a range of investments in wellness- and lifestyle-focused brands through Malaika Arora Ventures, Get-A-Way Desserts offered the right opportunity.

“I believe if you have the power to influence, it should be used for making a difference. So, this means meaningful partnerships with a business and to be a part of their journey in more ways than one—creating categories, products, awareness and, in some cases, even creating markets. This is all so exciting and stimulating that it has become a very natural way of working for Malaika Arora Ventures,” the actor says. 

Pashmi Agarwal, co-founder and CMO, Get-A-Way Desserts, weighs in, saying that their initial idea was to collaborate with a fitness icon who embodied their values and the products offered. “We approached Malaika to be our brand ambassador, but she expressed her interest in also becoming an investor,” notes Agarwal, adding that the actor was a regular customer who enjoyed their products and the idea of investing in a brand that would not compromise on taste or health, resonated with her. 

Apart from an online presence, the brand is now rolling out stores/dessert cafes in select cities across the country as well as expanding its product range including keto-friendly cheesecakes, vegan ice pops, and ice cream pastries, with the help of the funds raised. 

 Jain points out that most successful celebrities have an evolved family office set-up with professional investment management. “Accordingly, they periodically invest in start-ups as a financial plan and build an investment portfolio over time.”

Making swift strides

It’s not just categories such as F&B, retail, and beauty that have caught the interest of celebrities. Actor Bhumi Pednekar who recently joined hands with Mumbai-based Chrome Hospitality for the launch of KAIA, a boutique hotel in Goa’s Ashvem, says that one of the criterias for her when it comes to making an investment is that it should be aligned with her personal ethos. 

“I follow a sustainable lifestyle as much as I can, hence, I look for companies that are green and follow a similar ethos,” says Pednekar, adding that responsible hospitality has always been an area of interest. “KAIA’s slow-living philosophy along with the fact that it’s located in Goa, seemed exciting and this just made a good fit as an investment.”

When asked on how these associations help leverage brand awareness, Dhaval Udeshi, co-founder, Chrome Hospitality, says that the idea wasn’t to offer just another boutique hotel but a space that showcases a new-age way of slow living, communal experiences and the like. “Bhumi isn’t just an investor, she also gave us valuable suggestions throughout the entire process, such as sustainable practices to planning our menus.”

This sentiment is echoed by Mokksh Sani, managing director of Living Liquidz which has brought Sanjay Dutt on board as an investor and to promote Scotch whiskey label, The Glenwalk. “We wanted the power of a celebrity to take the brand forward. Internationally, liquor brands have seen a great run with celebrities coming on board and this just made sense for us.”

Media veteran, author and entrepreneur, Sandeep Goyal, who is also founder of Mogae Group, is cautiously optimistic about the growing tribe of celebrities that are investing in young start-ups and brands. He points out that a typical sweat equity arrangement makes celebs more affordable to a start-up. It offers a reasonable amount of exposure, but the long-term gains are yet to be seen, given that not all start-ups are successful. However, he adds that the upside can be tremendous if the brand takes off, with celebs then making a windfall. 

He gives an example of actor Jackie Shroff who bought a stake in Sony TV back when it launched, successfully cashing in when he sold his 10 per cent stake in 2012. Similarly, actors who invested in the Indian Premier League (IPL) and Pro Kabaddi League teams have not only seen monetary gains but also enhanced the brand value of these teams with their association. 

From the looks of it, investing in start-ups is not only becoming more mainstream but also a suitable route for celebrities to bet on brands and diversify their income.

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