 Hello everyone and thank you for joining us for the 17th edition today for Capital Insider series. And today we are actually taking up a very interesting subject is that today how family offices are going to be an increasing source of funding for startups where they will come and support startups and where they'll help startups to grow. Like we've seen venture capital, we've seen angel investors. Similarly probably in the coming years we will see an active participation by family offices wherein they will come forward and invest in startups. You know so I was reading some data regarding this and I came across that in 2018 in India about only 1% of the total funding came from family offices but in coming into almost by 2020 it had reached down to a 2% situation. And of course while the pandemic has slowed us down but essentially we will see a lot more participation coming from family offices as India goes digital and more lot more startups will be coming out there particularly on the tech side of things. Now we will see far more funding coming probably from the family offices in the times to come. So today we have a stellar panel with whom we are going to discuss about what are the synergies that family businesses and startups can have with each other over the next 40 to 45 minutes. So we have as I said Rishabh Mariwana who's the co-founder and director of Sharp Ventures and of course he's part of the Mariko group, the family and Sharp Ventures itself goes out and does a lot of investing in startups themselves. So welcome Rishabh and let me start with you and of course but very quickly before that let me also introduce Biniyafir who's joined us as from Ray Patni family office. Manishra Dev who's the founder and CEO of Serban family office and of Raj Mohan Krishna who's the principal founder and director for the interest family office. And so welcome to all of you and we're looking forward to this wonderful talk and I would request all of you us to keep on asking their questions as we will also ask our panelists to answer it for you and explain to you things which you think you still would like to know more about family office and funding for startups. So Rishabh let me start with you you know as a as a family when there was a time when Mariwala group thought about what what was the time when you thought about investing in a family office and startups particularly and given the fact that you know the asset class of startups is very different from all the other asset classes that exist for a family trust today to put their monies in. So what what was it that triggered you to do it or invest in startups and what kind of startups do you look forward to investing? Oh sure thanks Situ pleasure to be here and pleasure to connect with everybody. So I'll just share a little bit about our journey. So we started this entire journey in 2014 you know our parent company as you know Mariko the dividend payout ratio of Mariko increased. So with that we had a constant liquidity event every year. So we had we had a perspective in terms of steady state of flows coming into Mariko and and before this though we would get dividend you know and we had some amount of liquidity before that but you know my father who's the chairman now being the true entrepreneur that he is he wanted to put the money back into Mariko. So he said there's no point in doing going to other asset classes or into equity and that's the time I came to him and I told him that just in why why do you want to put all your eggs in one basket why not look at diversification and you know before before this liquidity event I actually was very keen on on doing some small investing on my own and before the whole thing the whole startup space became as sort of sexy as it is today you know the so he saw that in me and and luckily for me you know he believes in sort of you know being a pioneer and doing things in doing new things and he had I mean it wasn't that easy but because I had I had a gentleman who was the sort of MNA of Mariko and he was on his way out and so along with him you know both of us actually started investing and that's when my father had faith that that fine you know these guys are onto something and there's potential out here because the kind of investments the initial investments we made were actually I mean it it panned out that that we did things that we understood we did a lot of what we understood and what we what we know and so that that gave him some some sort of conviction that that final there's you know there's these guys are onto something and you know there is potential here and you know slowly but slowly I think you know we got our toes wet as they say and you know we started doing a lot more sort of initially we were doing VC funds so you know I'm not a PVC from a PVC background or from an investment background so I'm more of an operator but you know we got that perspective you know meeting the funds meeting the entrepreneurs seeing seeing what's out there and understanding the ecosystem understanding what is the term sheet what is the shareholder agreement what space to get into understanding the entrepreneur so that was the journey that it that began and and then we formed an asset allocation strategy where we did 18 to public and 20 into the unlisted and and again we had a multi-family office like a like a servant or an interest a sort of you know do that or do the entire public markets for us and we did the unlisted part of it so that's where the journey began sure and what kind of startups have you primarily invested in the on the unlisted side sure um so we've done a mix uh the two so you know initially it was funds so we did a whole bunch of tech funds and the consumer funds uh and then you know later on when we were confident we did stuff that's consumer forward so things that we understand better so um you know where's in our own backyard with with with the consumer businesses that we own so you know we've done we've done across multiple stages we've done something like nika which is a sort of you know vertical into personal skincare products you know our personal care products and you know through that i mean we did nika we've done a whole host of other consumer deals we've done a beer company a mattress company a health foods company um now we're into edtech so it's it's it's been a it's been a mixture and i think over the years also it's been a six year journey now and sort of you know it's now that we found our sweet spot so it wasn't always like that we've made our own uh sort of mistakes along the way where we did things that were outside of our comfort zone so you know things like we don't understand uh the whole um medical uh space of you know the the you know medical trials and you know drugs drug trial companies so we've done some investments around that onto deep deep tech which we don't really understand and appreciate so that's when we came back to our core and said that listen we understand consumers so let's focus on what we know and what we can appreciate and uh you know so it's not just about the the return of course the most critical thing is is getting the financial return but you want to be a part of the journey and it's a long journey right with the with the investment say eight ten year horizons so you want to be there through and through um and depends on the the high touch low touch mid touch with the entrepreneur but as long as you can appreciate the journey as long as you can understand where they are going i think it's very enriching as well it's it's of course it is a financial return at the end of the day but it's a whole host of other things that come come along with that and because we have another sort of operating entities you can add value back to the operating entities also with the insights that you get and vice versa even with the with the marico you can you can give so much perspective of the entrepreneur so i think it it works both ways sure no that is great and it's also good to see that you know you'll take so much personal interest in d2c uh kind of brands and more consumer facing brands you know they always know that there is somebody they can reach out to which often sometimes you know in a vc world it's very hard to figure out you know which is the right fund for them so thanks for sharing that rishab let me come to benefit benefit welcome and uh you know i've i've been noticing the rape at the family office for a long time and i understand that you know you were one of the early movers into the whole startup space when it came to take investments and understanding that you know startups could be a great space or an asset class where family funds could be deployed into and build assets instead of just invest in assets so you know how is it uh that family offices and i mean since you've already done a course of about eight years uh with these investments what has the learnings that have come to you as a family office about working with startups uh how do you feel that startups today can um you know work more closely or can work better or can see and enhance investments uh going forward from family offices great so yes we've been at it for a while uh like you mentioned and we've we've uh we may had some hits we've had some misses but i just think that the whole ecosystem has really come a long way from where we started off eight eight odd years ago uh the systems evolved uh i would think that startups and what families generally look for what got us excited about the whole ecosystem was just first the drive of these entrepreneurs to kind of deliver and uh when we met a lot of these uh i mean till now the last count that we have is we've crossed about a thousand fifty companies that we've seen so far at least from the time that we've been recording uh you know on a simple uh uh note and uh uh our startup uh founder age group has been varied you know so we've seen a uh a bunch of startups also coming from the very mature uh you know the second innings kind of promoters and then we've seen a bunch of startups who've actually uh come from a very younger uh mindset kind of promoters so we've engaged ourselves in both uh but what the first most critical thing for a family office to kind of get into this ecosystem or even look or support as this ecosystem is to kind of find a level playing field with the particular promoter or uh you know entrepreneur so the first thing is how do we perceive that particular entrepreneur and whether we see synergies in what we can add as value to these uh uh to their business and to their strategy and whether there is alignment on that count once there is a an established alignment found then we actually go across and see the other parameters which is typically the way we would like to see startups at least at raise that uh we look at a certain cutoff we look at some so we don't look at anything at concept stage we look at it with a little proof of concept it might be very low in uh a few lacks of revenue etc but we do that we've also uh over time each family will be unique so they will like to pick on a theme which or a or a strategy which they would be finding core to their understanding so at re for example we've picked tech through the venture funds that we've invested and that that is led by a separate set of professionals the venture fund heads uh at re we picked up two actually two three themes which have evolved over the years so first we started with consumer because we thought that was an easier segment and we could add value uh we've led on to fintech and then we now off late for the last two years we've been looking at digital content so these are outline parameters that we've set uh you know towards some of these startup ventures and like I said that it's more important to find a level playing field where we can add value and the entrepreneurs also open to ideation sure no that's wonderful and particularly uh on the on the tech side what sectors would uh there be that you would now be looking at particularly post the pandemic uh so we've uh closely uh started working last two years like I mentioned on the other fund where we were doing ai and a lot of iot iot i think is also taking up a lot of uh you know attention now because uh it it requires a certain amount of analytics to kind of fall into place to kind of predictive to kind of set a predictive analysis on what we can do ahead so that space is gaining more traction and uh with the pandemic of course there is uh health tech also which has taken over so you see a lot of innovation happening there you've seen a lot in the past six months and that's also a space that is exciting sure thanks uh and if I uh let me come to Raj Mohan Raj Mohan you know interest has been one of the pioneers in family offices in India where in you know multi-family office which was probably a very very early concept uh back in 2010 11 uh you know was when you started working in this area so uh what what have you observed what trends have you observed in terms of how h&is want to react or want to invest in startups you know what what kind of risks are they looking to take and what where are the risk a worse uh when it comes to working with startups and over the course of journey where do you think family offices can add value in a startup operationally from a governance perspective uh or from you know helping the entrepreneur build contacts or um you know have some kind of a support system which they might need in the early days of the business so what are your views on this so um thank you thank you for having me here and so I would put it this way so I've seen that the the private equity industry evolved since 2007 in fact 2000 the first fund uh that time I I didn't have I was not in interest I was with quota so that was the first private equity fund which was launched and it was more of a push okay than a pull okay so it was basically sold as a as a kind of a new concept and private equity was is completely a new a new area which which generated a lot of interest among investors but if you look at um some of the funds and it's very very early like the first biotech fund was there then the sector agnostic fund was there the first p fund so some of them um in fact performed well some of them did not do that well and investors didn't have a great kind of an experience uh and and these are very very early days so it was not evolved at all but if you look at uh India as a as a as a market uh there are only pockets of uh investors who are willing to take this okay and these pockets are clearly uh investors who have had uh some taste of success okay either they would have uh what do you say done some exits uh or they would have made some what do you say uh kind of a windfall kind of a moneys out of uh some of their uh what do you say stocks and uh they're on their allocation what do you say they'll make a kind of a small allocation in terms of uh uh investments where we see a lot of interest is there the I would say this second or a third gen okay when like for example typically Rishabh what he spoke is just so Rishabh has taken interest when it comes to uh marico in terms of so he's taken interest and he said saying that why don't you invest the same uh what do you say thought process is there everywhere if you look at uh uh Mr. Pai is known thus by sons so they have they they have a priority to be fun and likewise you see a lot of youngsters who have come in and they have set up uh funds and also they are looking at taking risks okay but if you look at the the uh the the the mature investors I would say basically people who really made the money okay themselves they are not very comfortable in terms of this asset class okay so typically they are they are still what do you say contemplating uh and and they're not they're not there in terms of the startup kind of an investment but um what we believe is it's like um uh what do you say the the panelists say it has come of age it's like it's changing okay I every day I keep receiving like for example just before this call I had a call with an investor he's saying saying that things are happening Mumbai angels things are buzzing in fact why don't we kind of look at an opportunity to invest okay and there are a lot of new new opportunities which we should evaluate and what do you say invest now from our side what we do is we just don't uh we are we are not just passive investors okay when we invest money we are completely involved with the company okay when we say we are involved we are involved in terms of the management we are part of the most of the set we don't take a board seat but we are board observers and most of these investments we track the performance we we help them with with strategies in fact we we give them connects in terms of wherever there is a business connect which is involved we connect them in terms of governance like basically we are very very focused on the governance part okay and extremely in the diligence part also so we are extremely focused on that I think uh an organization like us um being involved in in the in the firm is always is great for an investor because his interests are completely protective and uh and he he can rest in peace meaning in terms of he can clearly say saying that there's somebody who's looking at it every day okay and if there's any problem okay then we get in okay like for example there are investments where there have been some issues that we have gotten we have spent hours together in terms of the promoters with the what do you say the privately investors we brought a kind of a resolution to these investments and we have kicked it off okay we rigidly entire thing so there's a lot of value at which a family office can do with respect to the investments and we have had great experiences in this sure totally agree there and I think what you've made is a great point is that you know family offices can jump in where operationally they are required and start up and actually handhold the startup wherever they feel that you know their presence could help the business which I think is a good thing you don't need to be completely hundred percent involved but at the time when it is critical for a startup at a certain juncture one can be involved and therefore it's a win-win on both sides um so Muneesh um let me ask you this you know if a family office or a high net worth individual comes to you and says they want to make an investment what kind of typically rate of return is it that they are looking on their investment um you know to say that okay this is what we expect and then typically I mean you know even if you're looking at startups because the the whole agenda today is to see how family office and startup connection can be built then how do you sort of pick up your startups or how do you what kind of startups to you then pick up to understand you know that this would just be right for the HNI or the family that I am representing in this startup so you know how does the whole process work and of course as I was probably asking Raj Mohan the same thing do you also encourage participation of the family in the startup business as well sure I think great question I think uh Ritu the reason of a family office wanting to invest in a startup can be very different so even two brothers in the same family may have very different reasons for investing in a startup so I think that becomes the most important part when a family comes to us to assess why they want to you know be in the startup space and I think one of the one of the key areas that you know are key functions of a multifamily office Ritu is also education you know helping the family understand the space better because we are not distributors of any product we don't have any of our products so you have to handhold them through the process of why do you want to have an asset class and I think once you have an asset allocation for a family of in place and a risk pool in place that's the time when you educate that family of what and why should you be investing in this space now on the return part I think return is a is a very uh is a very personal uh question that gets asked to us uh for some families that we talk to for them return is the only reason they are investing that oh I hope to get a return of maybe 16 17 18 percent kind of a return but for others the reason may be completely different he's saying okay I may just get an equity return a listed equity return but the kind of experience I'll go through by investing into a startup and understanding how a startup scales up what are the issues how does that asset class behave reserve is the other listed asset class that's also a learning that's also a return for that family now just linking it back to what Rishabh said you know when they made their initial investments that was a you know that was an important cost he paid to learn about investing in the startup space so I think initially when somebody comes to us our our our talks in most cases with them to understand is to get the asset allocation in place make them understand what a risk premium is all about because ultimately we are all wanting to have that identification of risk premium from that asset class and then understand why they want to be in that space and just you know interfacing with an earlier question of yours the intent of that family may be very different intent of Rishabh was to start something separate from the main business and maybe set up an expertise inside the family office to invest in that space usually most family office will start from the from in the domains which are aligned to their main business so which are maybe you know second level second circle or third circle in that space that they will do directly because they may have the wherewithal to help those families and as you know you also you know put out very clearly that that help is very essential at some part of time so the intent might be just to maybe able to expand the zone of operations of the main business of the main family business and invest in that space the second circle is unrelated investment so if Rishabh was to do a deep tech or an AI or an IOT kind of an investment you know that may not be something with he can add value at all I mean he just he may not even want to have a board observer seat in that kind of an investment but in investments where he can add value he will definitely want to be there do remember venture capitalists are usually financial investors you know they may not come from the same domain as what family offices do come around in that and the case of Binifer I mean their experience in technology helped them to understand initially and since I know the family office from quite a long number of years but yes they've expanded slowly and slowly in other areas as well which have nothing to do with technology as well in some cases so returns is only one of the discussions they have I think we handhold them through the process of understanding how should you start direct versus fund investments pros and cons of each and what is benefited for that particular one family and finally being active or non active I think the question depends upon frankly depends upon our ticket size as well if I'm just putting a half a million dollars frankly I can't expect to even get a board observer in some of these larger rounds but I think if the family can definitely add value the promoter or the founders of the startups are very happy to I think keep them on board and help out in those processes I think that's the reason return becomes an outcome of multiple factors it's not a standalone figure of 16 frankly out of your 20-30 investments 10 will go bust and as Raj clearly said some have already gone bust before he sees returns in his portfolio but that's the way it is it's part of an education that we have to provide so return yes they want to have at least maybe 500 600 basis points above the listed equity returns that's the ballpark theoretical figure I think which people do run with these days sure no you're right over there to say that you know education is very important so I mean I think given the fact that you know today on one side there is somebody who's running a family business and they want to also invest in startups which could actually at some point of time be critical for their own business also you know so I mean what Rishabh said that they invest in FMCGs and at some point of time you know that startup might actually become part of Marico only so Rishabh do you see such situations coming up here in you know the R&D which would otherwise have happened in your own organization now you're working with startups over there and do you see that product becoming part of the main marico or one of the marico investments sure no thanks thanks to two it's a it's an interesting question because a lot of corporates will be thinking like that and a lot of family-owned businesses will be thinking like that so it depends I mean I'll give you our context and then I'll give you the other context as well we're a public limited company and you know one of the reasons why we have good valuations is because of corporate governance so today if I'm a really related party and I'm doing some business and I'm an investor in a business that's doing business with Marico the minority shareholder can always come up and ask us saying that you know what is this business that you guys are doing together you know so I mean we always do things in arms length transaction and we discourage any related party transactions so from a from a marico construct we will not do it in fact we discourage it we clearly discourage doing anything where there's work to do with any of the investing companies I mean it will so happen that that you know marico would be working with a large sort of skincare vertical like nika but that's nothing to do with our investment in in in that business so but but again that's because we're we're a public limited company and you know corporate governance is very high but but in other sort of family-owned privately held businesses of course you know you know munisha and I were on a panel sometime back and we were talking to this one gentleman and where it's a privately held organization and his engagement with with um with the portfolio companies was was very high you know and and there's a lot of linkages so I think it depends on on who it is and if it's a public versus a privately held I think there's a lot more room for collaboration in a privately held business and when those same promoters go out and invest in in startups so pe or vc if I may just add rito one point here right now the corporate venture teams are also becoming important for many corporates especially in their aligned businesses or correlated businesses so whenever actually this is happening lately that when you go to a family office and you showcase a deal which fits into the family's profile sometimes they you know they always tell us you know we may not be able to do it but maybe our cv arm may be interested because this may be a strategic investment going forward that's also what we are seeing um you know happening in this space sorry just to add to that uh rito that's exactly what's happened here with us as well where you know with marico they did uh I mean it's it's in the media but you know they did something in male in the male grooming space they acquired a business called beardo and uh you know for us as a family office you know we would like to be a bridge between the corporate and this and the startup world so we give them the right of first refusal so you know first we'll see okay is this of interest to marico and if it's of interest to marico that's great let them take the deal but we will not participate and if it's not of interest to them then then we look at it so this way we give we have exposure to the corporate in terms of looking at the deal and um you know if not then then we look at it sure yeah that's an interesting point of view uh when I for let me ask you this and since you particularly invest in tech startups digital transformation has become you know a very important aspect and family businesses are the ones and SME businesses are the ones who need this digital transformation do you see some kind of connection here between the startup world particularly startups who are providing more enterprise tech kind of solution based program or product for businesses do you see an opportunity for family businesses to invest in such startups who can help them their business as well to transform and also that can become a norm in the industry so let's say if it's the let's say the chemical industry now if there is one startup which invests and comes and you know does a digital transformation for one business one large business in the chemical industry then it can become like a benchmark too for for the same startup to go and actually go out to the entire chemical industry for them and one that business who was one of the early movers who took this service or took this product could be the investor for such startup do you see such situations collaborations happening in the coming times with digitization being the norm happening in the startup space see in the startup space especially in the tech when it's related to enterprise tech etc a few things which come relevant is what is the nature of the business the family is in and secondly is how much funding will that enterprise actually require to go on you know to become a very meaningful play now our observation on this is that sometimes some of these early digital plays come in and you know take the earlier checks because they want the patient capital till the time that they are developing you know some of the strategies are trying to mix match and find the right blend for what works and what doesn't once they've achieved their product as a mix of what they want to deliver to the market our experiences that they're happy are going to the venture funds one is because they can cross-pollinate on their networks that's one two is there are specific funds in the industry which actually nurture and cross-breed some of these very very actively and that's where the disconnect between a family only want you know kind of trying to handhold an enterprise versus a whole ecosystem trying to handhold an enterprise that is clearly there right so i would think that the both both routes are possible it's just also impact and any kind of automation the kinds of capital that is required for building up a whole strata of you know a product which is very very viable is immense sometimes families might not be very keen to kind of go that go that route another important thing is that at least for families and i think Raji can add to that what we've seen is that at least you know when we want to invest in certain companies or put our time energy effort or ideation or networks behind a certain name of an entrepreneur we want to see and we are naturally entering at a pretty early stage we want to see a certain percent of ownership in the company and there is also sometimes a little bit of disconnect in the tech world of how much they would want to let go at such an early stage so i think these are two things which once they find their merit they can grow otherwise the venture ecosystem is something which is more apt for that kind of group. Sure Muneesh just to add to what bennifer said do you at all receive requests from ultra h&is you know who find that their business was probably made in a more traditional space and today they want to modernize they want to be part of the new age sort of of businesses and therefore the interest to invest in startups and therefore the interest to be partnering with startups is something that is cropping up and how can we now maximize this is a real question and i think for family businesses it's going to be extremely critical and of course starting with the large family businesses you know rishabh classically said that this was something that they you know he it was something at the back of his mind to see that you know whether they could actually potentially help a lot of D2C or direct consumer facing businesses to actually grow their business through their you know whatever setup that they had in large enterprise that they were running so do you see such possibilities going forward and that might actually increase or accelerate family businesses to or family offices to invest more in startups. Yeah no very true you're absolutely right Ritu the reasons the reasons of as I said investing in a startup can come from varied reason but let's take an example of a family that we are currently working on the governance side there in the cement business a very small scale cement business the next gen is absolutely not interested in that business at all because they're all both the brothers are you know educated abroad they they love the new age tech you know those kind of innovation techs they have been born and brought up in that space because they're you know very early age they left India so in that case it becomes very important for the promoter of that family business you know or the karta of the family as we call them an Indian in Indian space to understand what they are wanting and hence he came in with a request saying that you know can we seed certain businesses or startups in the space my next gen is interested into and that falls on our shoulders as a multifamily office as well because part of our job is mentorship so while you're defining a family governance or family constitution part of that job also falls to us to mentor the next gen so you do get requests of you know why don't you spend time with my kids understand that space and sometimes you know the the kids maybe sometimes can't talk to their first gen so easily there is a respect which is you know generally there but they do open up to people like us so that request does come in and second part which you I think rightly mentioned is that the family business is in a very I will not call it old age businesses because there are many businesses will continue but in most cases it it may be a disruptive space where they see that they are getting slowly disrupted so their business you know their business environment is changing so they really want to de-risk and that's the place where the family office starts then playing its role of understanding okay now you know we've got five it takes years it doesn't take one year it takes years to you know get the family execute get their personal capital out slowly by having different events and those kind of stuff and not put everything into their business and slowly create those second or third rungs of their family business and it's a it's a very old saying when we when we you know people like us meet together that you know family business has to go and become a business family while a family business may have only one business when you are a business family you may have multiple businesses and you may actually become sort of mini-clock conglomerates that's the reality of life but next gen yes they do come often to us and say you know I don't want to be in my dad's cement business or rugs business for that matter but we want to do something else the the daughter-in-laws may come with a different set you know what we want to do something in this impact investment startup space so can I do something in the rural housing startups or rural finance startups in that space so I think the reasons are multitudes but as I said we have to make them understand or what they're trying to enter into and these requests will happen and you know well transition is only one part of it when you transition a family from one generation to another another the whole nuance of understanding what a family business should be maybe changing completely because a difference in backgrounds education I think that will become a bigger challenge now so a very important question for that part Ritu absolutely Raj what what do you say about what Vinish had just mentioned you know going from a family business to a business family that that's an interesting take from what he just said so how do you sort of see this from this transition where does startup investment fit and you know do you do you would you rather I mean given from what learnings you might have had from other markets also markets like China Europe US how do you see a better participation or an increased percentage of startup funding coming from family offices no I'm sure that what Vinish said is actually right in terms of when you're looking at when you're looking at family business to a business family it's a transition it's a it's it's not transition it's a transition of the thought process it's a transition of the family itself okay right from across generations people have to sink in in terms of this thought and typically what happens is not everybody in the in the second gen or the third gen it's not required that people are extremely keen in terms of probably diversifying getting to know businesses what happens is invariably the kids have seen grown with the parents okay and they would have seen a lot of dinner table discussions on the firms what they run okay and so typically there is a lot of bias towards the business what they know very well okay now anything which is tech which is deep tech which is AI these are these are completely new areas okay now I see a lot of these areas what do you say these are these are primarily these investments are coming from what do you say the younger generation who understand the space quite well see it's very important when you're investing in a startup it it is not just what do you say investing in a fixed deposit or a or a mutual fund or something like that it's not a it's not an instrument where you're investing it's a business okay so when you're investing in a business understanding is very very important okay and when you're sitting in a board meeting when there are multiple challenges going through in a business you need to understand what is happening in the board meeting what people are trying to even even bring it up okay if you don't understand that at all you'll be completely all at sea and even if your family office you appointed a family officer even a family office person like rightly when you said saying that everyone can't understand all the businesses right so it is very very important so that is why I feel saying that the trend what I see is investments are happening purely based on the understanding of the business so typically if you look at somebody who's in the tech industry okay understands tech very well okay so his idea his interest and and nobody looks at startup investing uh see if you're looking at investment as a as a as a vehicle then you'll go to a fund okay you will go to just go to a fund it's a it's a vehicle which carries multiple what do you say companies and you have to just bother about return but whereas if you're investing in a company then that's not the that's that's not why you're investing you're investing because you like the business you see a upside in the business and you see a trend in the business and that's why you invest okay and for that a deep understanding of that business is very very important otherwise just investing uh will not give you the satisfaction and number two is if you're most of them invest because they want to participate in the management they would want to mentor they would want to contribute they want to value add to the business so where will I value add if I understand the business I will value add otherwise I'll be going and sitting just like that in a meeting without any value add so it's very very biased towards I feel startup investing is happening completely biased towards what industry I like what I believe in and what I can add value to let me ask you this question given the fact that you know family businesses need to change it's much faster than um you know probably a lot of other businesses out there do you see at some point of time um you know the funding that businesses may pull in India for startups and I'm not just talking in metro cities and very large businesses but I'm talking like this becoming a thought like deep down India you know and wherein this could be happening regionally do you feel maybe five years down the line we see then family business office funding might be competing with each other I feel it will happen because you see I as I said earlier India is a very evolving movement okay and and and we have we've seen last about 10 years is when the family office and the family offices have gained some kind of an importance and we have seen all this action in the last about five years and I'm sure like what you're saying will happen definitely and in the next five years you'll see a totally new generation of people coming in okay and start looking at uh what is a private equity investment or venture investing you know from a completely new perspective okay and and as we and and if you look at the menelials look then look at investing completely differently from from the earlier generation I'm I'm sure that will happen I'm sure that will happen can I add one point with your hair uh I think just a small number uh which uh you know Mr. Chris Gopala Christian shared in in couple of you know space places he has spoken is that he said out of the ultra high net worth wealth in India right now only one percent of that wealth is being invested into startups so that's the challenge whereas globally if you look at Europe and more of these markets I think almost 10 percent of the investments are happening from family offices and also another point I think which we discussed is that VC is only one part of the investments there is private equity at the late stage as well where and and he I think clearly mentioned that the the mula being created or the profits being generated in the late state is completely being taken away by offshore capital so uh you know in in the in the theme of making sure the money also sustains in India and then powers more innovation you need to have larger family offices guided towards private equity as well the growth stage funding you know which will actually allow these companies to make more profits and give that profit back to Indian investors which can again be plowed back because right now I thought if I'm not wrong if I remember correctly I think 90 percent of the growth capital comes from offshore funds or offshore related entities so I think that's one space where we definitely need to grow uh and grow with the proper education I think that goes without saying as as Raj Mohan was saying actually involving here sorry so I mean what where I was so what to both what Raj and Manish said and Benai for Rishabh please add here do you see a complete ecosystem now VC is a complete ecosystem so there are you know uh VCs who would typically give a pre series A and then different VCs who will be giving a series B and different VC will be giving a series D and then the private equity will start participating we don't see anything like that it's a very flat layer right now for family offices when it comes to startup investing do you see these layers being formed in family office funding also to invest in other businesses which is where this the the growth might be very large for startups to look funding for you know family offices from my experience right now probably you know when a startup is looking for a funding he would typically go to an angel investor then to a VC and then come to a family office now how do you reverse the situation and say that you know um and that is how you'll get good assets at the end of the day when you will everybody approaches you and you get to choose the best startup that you really want no so actually to your point the ecosystem is evolving and I think to the previous discussion it is going to become extremely relevant for family offices and family you know treasuries to actually start looking at a little mature stage investments so just to take off from Rishabh's example very early stage investors in Nica came you know came in from so came in and kind of invested now if you ask families today whether they are geared enough to take up a fresh investment in Nica maybe other than the ones who are doing a follow on to manage their state the answer could be no at this stage right because the stock is already kind of gone through its movement sorry to take that example Rishabh but what I'm trying to drive towards is there might be a lot of meat still on a deal which can be taken off instead of being taken off by XYZ US based firm or a you know offshore Asian entity or you know whichever way you look at it because there is when it actually goes into its mature phase right when you have an established when your risk return matrix is very very much in your favor versus to where it was when families like ours put you know whatever behind these early stage capital I think Indian families are still to evolve in that direction that's point number one secondly is that unlike earlier times see entrepreneurs who built businesses made it listed entities etc now in India we haven't really seen I mean even if you see the latest conglomerate who is getting deals every week that we see off in the market how many Indian families or Indian houses have actually partnered in that growth right when we see you know UAE based families and UAE based treasuries like even very mature funds you know PE firms from US participate or wanting to take a pie of that growth right why don't we see a PTM you know Vijay taking a stake there or why don't you see any of the newer age monies a Flipkart guy taking a stake there right so there is still that you know that actually I call it glass walls on you know it's my business it's my company and you know I will choose where we go to whereas in this in the they lose the thought process that India well should be growing India's wealth instead of India wealth growing offshore wealth you know I think that maturity is still to come in and that can only come in when there are professionals in between who actually disengage this emotional content of a business attachment versus a prudent investor you know mandate so I think that ecosystem will evolve and I think slowly and steadily from the early stage you will see some of these companies wanting to offload to us some of the larger families as well here but here I would like to what I would like to say is this when you're when you're looking at what do you say ticket sizes if you just look at the overall pie which is getting managed by either a family office or the family treasury or the family themselves okay if you just look at anywhere between four five thousand crores okay I'm talking about the higher side I'm just giving you 10 percent is what anybody is looking at investing in private equity okay 10 percent is a good sum okay are a 15 percent max which is about 500 to 600 crores is what we are talking about now if a kind of a very very late stage kind of an investment okay will involve anywhere between about 50 to 60 or even 100 million dollars kind of a ticket check size I don't think any family in India today except for one or two or three maximum will not be able to cut those checks whereas if you look at sovereign funds if you look at endowments if you look at my family offices abroad they have got the capacity to cut 100 million check for an investment okay and that is why I'm saying it is a journey okay we have started this journey it is going to take a while for this journey to reach there okay there's no shortcut in this because wealth has to grow okay and wealth you have to multiply it for people to really cut those checks okay when they know saying that yes we have enough money the wealth is grown and automatically this 10 percent or a 15 percent or a 20 percent that itself the pie will grow to a substantial sum where you can cut these checks till such time it's not hesitation it's basically it's about risk management okay whether I can really cut that kind of check and still stay grounded it is very very tough it's not it's not easy sure the only solution being the gentleman was asking a question sorry who wanted to add somebody wanted to add something no I was just saying that unless you start pooling off assets so you know today we are actually seeing in India earlier everything was pre-series A seed investments and you know we were series B now funds being launched in India which are saying we will be in series B and C which is pre-growth space as we speak the you know the they are filings happening as we speak I think that's the first stage we're getting into and pooling is the only way to there is no individual I think frankly all of us know five large family officers who can cut a hundred crore check today single investment there are actually some five six of them arguably but in case you do want to invest a thousand crore investment they can still be a pooling vehicle involved which can actually channelize this and as when I rightly said the risk return is very different in a private equity in the growth space so it lies somewhere between the listed equities and the venture capital space so when you actually you know asset allocate for a family you allocate that kind of risk as well or what part of the private market you want to be part of so I think pooling is the only way we'll be able to get this thing going yeah I mean had there been that kind of investments in family offices you would have actually cut a check for geo even after pooling we can't cut those checks I'm pretty sure so we've got a question from her shit we can probably give him an audio he's actually asked quite a few questions so her shit if you would want to ask it yourselves please unmute before you ask hello yes we hear you yeah so I would like to know like how certain businesses like medium scale businesses who are a large distributor with like in a large distribution space example like who are into a pharmacy business or who have a specific distribution of a specific brand and the kind of disruption by e-commerce and the geo coming into place so how could family offices help them to be relevant even today so they are relevant from past 20 years or something like and they are having their own margins all set but big players like Flipkart and geo coming in they would have a direct supply chains to the manufacturers so how could this gap be bridged in order for the medium scale like family business and large scale to be relevant in this disruption so who wants to take it up I think I'm equipped to I'll add there we have one business which is pre-dump few businesses Munish will know and so will Rishabh in this space what I want to and one of them is in pharmacy as well so I I'll just draw from that from the board meeting that we just attended a couple of days ago the learning is you know keeping not drifting completely towards either side the learning is to find a balance what we call in some context an omnichannel which is that you keep growing your base or your distribution at the ground level as you've been doing in the past you might have to do it at a little faster pace than what you've done it at the past at the same time you use delivery models etc which are more new age to list to get get to the end consumer that's one and two would be to also you know centralize some operations and kind of you know kind of get probably find hub hubs where you can you know kind of deliver some of these from the answer is not to heavily discount because that is something that we have been discouraging most of our companies to do the answer of any value of a business rise lies in the arbiter it lies in revenues and profitable revenues in the end of it all so what we would what we would urge you to do is that in at the cost of losing market share you should ideally maintain some part of that on a consistent basis because trends will come and trends will go but and discounting also will come and go like we're seeing in the telecom world today or we've seen you know the the pharmacies and the net meds and all those kind of worlds but I think keeping an omnichannel business is the answer according to me as to this harsher Bishop what what have what is it that you are advising your distributor networks you know obviously there is good there is a disruption in the distribution setups and today of course you know that there are huge number of businesses across states across regions of large distributors you know and they don't want to erode their family wealth by just putting more into physical distribution so what is it that they show I think the model is changing and you know when I for answer that question really well but just a little bit mind-morn FMCT distribution that we are seeing is that you know these you have these distributors and who've been doing this business for years and years and through generation through generation with as a family business and that whole model is being disrupted now you know for on multiple fronts one is that the new generation doesn't actually want to work out there because they think it's like a very old-school fuddy-duddy business and they don't want to deal with such manpower and you know it's completely unorganized you're at the mercy of you know large corporates so I think I think it's changing and each one is to find his is of a spot you know based on based on their strengths and I mean again what I'm saying is very theoretical on one end but you know as as Menaiford said it's you know the mid-lives or the the net meds and the pharmacies of the world are there but a lot of what's happening right now is just pure digitization so you know of course the the omnichannel route is there but but you know how do you how do you work with new age companies new age brands you know there is so much venture capital coming into early stage as well that you know some of these new age brands need you know these distribution folks and so you know if they can pivot and pilot or pilot new projects you know based on not legacy but based on new age something like that will actually also help them because there are there's a need there's a dire need for this for FMCG or for pharma to actually engage with the distribution setup from a from a new age perspective you don't have to have 10,000 stores under your sort of you know under your belt you can you can easily have a lot smaller sort of setup and still sort of you know sort of pilot pilot a few models and and see how it scales this way you don't land up you know spending too much money and you land up testing and seeing what what can work what won't work so Manish this was exactly what I was referring to earlier you know there are pockets of businesses in India today which will you know get disrupted so badly and their entire wealth might just slide off till somebody comes and does something about them so you know in fact this is the one question I've been talking to VCs for the longest time that you know while you're creating one set of wealth we are also destroying another set of wealth out there do you think family businesses business offices might have an answer that these businesses can be saved their wealth can be saved it doesn't get eroded because of disruption and whatever has been created can be used or probably multiplied in another direction so there are two parts to this this reality one part is that businesses run their own course and business environments change without on anything under your control so there will be disruptions let's be open about it earlier the disruption cycles were really long you know I'm I'm I've got an economist background so you know we when we look at from an economist point of view those cycles are now collapsing so disruptions are having faster if you remember those days when your father said I'm gifting you so many eternal shares which I've held for the last 20 years because they are the champions in FMCG you can't say that now because any any stock which survives five to 10 years is a is a long time for that stock because the businesses are getting disrupted so on one hand family businesses will get disrupted so they have to be a bit more agile on understanding risk to their businesses so the board meeting actually so I was a mentor to one of the distribution companies hyperlocal companies uh last year and frankly the challenge for most old businesses is that whether you you have to change is some something coming your way is that light at the end of the tunnel or is that a train beaming down on you you have to constantly in every board meeting keep on you know ascertaining where your family businesses are what is happening in the macro environment and if you read annual reports actually most of us have forgotten reading annual reports from any companies but they actually talk about this as well what are the risks they perceive and sometimes you really read and understand they're not talking about what can go wrong in the business what can change so one is this economic change or disruption which is happening from that angle hence the need of making sure that your family wealth still continues to gain and maybe you that felt is used to maybe set up new age businesses as well so that's one part of it and second part of it is and this is to you know gentlemen's question as well is that uh you know what what what is their function of their business it's like kodak kodak said we are in the camera business we're in the camera film business no they died right today they're making they're known as a chemical company and getting mandates from the US government but if they said we are in the imaging business so they would have gone created digital cameras maybe caught digital sd cards for that matter but they had this very narrow thing of i am a film camera company or a camera company that the businesses have to come out of and say okay i'm in the distribution business doesn't matter fmcg or it is anything i have to send products from a to b now i may have to change my ways of doing things because the new age companies require highly efficient systems to you know give delivery and hyper delivery is a two hour delivery i mean amazon fresh and all these things so i have to change my way of doing businesses so yes they will get disrupted into and you have to constantly as a family business owner and this is the conversation we have that what are the risks to the family business and hence because family business wealth is an outcome of family business we keep forgetting that if the family business is not doing well family offices will not happen i mean they will not be able to accumulate wealth so that's in one discussion which every business need to have and not just sit on laurels yeah some businesses are so strong i mean fmcg is not gonna go anywhere the ship can lie free but you know you need to be getting newer products off the on the shelf there is competition happening from one deodorant which is saying i'm gas-free i mean i don't know the difference between the two but you know theoretically speaking yes he is taking your market share so you have to be constantly being agile to safeguard your business and keep on thinking what can i add what can i be better and then interface with these new age so-called clients of yours and understand what does flipkart want what does you know what easy be you know all these delivery companies why are they so successful they're also making losses and i'm sure this gentleman company is still making profits but why are they under losses so like you rightly said money will come in and disrupt businesses and yes there will be some sad stories coming our way for short ritu sure so you know we've already overshot the time so one thing thanks a lot pal yeah you're welcome harsha one thing i would want all of you if you can sort of quickly give your last views on how can today businesses instead of getting disrupted come and be part of the family office and therefore save their wealth and you know particularly i understand slowdown times has given a very different perspective to all of us so you know if you can just share one thing that you think can uh becoming a family business office can help them to uh i would not even say disrupted it's more like destroy it you know so how can you save your business from destruction and but not your business business might actually just go wealth from destruction and be put to use in another area let's start with you uh risha for whoever uh would want to take this final round of question sure you review your question is that what can the family business do to make sure it doesn't get destroyed or disrupted uh no so the question is that the business their business might be such that might still get destroyed but the wealth doesn't so you know how can they make sure that their wealth is probably put to right use now so that they can um you know it so that the whole thing doesn't fall apart it doesn't become a house of cards and the whole thing doesn't go past so to when when a family realizes saying that the winds of change is the direction is changing okay i i think it's very very important to sense that change okay the minute you you know saying that the the the wind is blowing in a different direction and to realize that and to act swiftly like what mames said is very very critical okay and if you've got the ability and if you've got the right uh what do you say very difficult to do it in terms of the next gen or the people who are who can think completely differently i think it's a kind of a great thing now if you're not able to okay if you're really what do you say not thinking uh not thinking in a different direction okay and you you know you'll get consumed okay in this disrupt then it's better to safeguard your business in terms of probably if you want to exit the business and and reinvest it somewhere and to safeguard your wealth because what happens is once your your business is destroyed then you can't get back okay at least you have the business running and you have you have cash flows coming okay and it purely depends on uh uh case to case basis you can't generalize this this is very very tough i think uh uh the the family is very very critical they have to sit down they have to discuss they don't know the strengths and weaknesses and if they know saying that this is a weak point then it's better not to not to venture into that and at least safeguard whatever is there and that is what is to do sure um you were saying something sure sure um i mean no i think uh mr ajman said it really well but um you know just if if your if your business is getting sort of destroyed or disrupted i think the first thing to do is you know uh focus on your existing assets and you know move it to something safer or move the the liquidity that you're getting from your existing business to to a safer safer space build up enough uh capital out there and then you know when you're ready look at look at then starting a new business or you know investing in i mean then i would think even venture capital or private equities that's not even the way to go because the risk associated with that is significantly high but um you know just allocating capital and putting it in a in a safe space so i'm sure you know monisha or uh rathmore not able to actually be better better folks to answer this well i can just quickly add to rishabh thing and you know essential the most important role of a multi-family office or a family office advisor is to is to actually flag off risk to the family and investment is only one part of the risk and you know as i said earlier that in case your business is uh is on you know not very strong grounds and the family and the family is an entrepreneur a gentleman or the lady is an entrepreneur they understand the business is going down but it's just that they are so close to it it's a matter of heart and sentiments that they just don't want to do anything about it so i think once you realize it's on the down way path i think it's very important to understand that family wealth or the family office needs to be a separate entity from your family business legally speaking as well because this can actually the family wealth can safeguard you through the down times and also provide you capital for new businesses so our first advice to most families is sit down if you even if you don't have a family office sit down have a discussion between the key members of the family if it's a large family have a family business council meeting uh we do those meetings and identify what can be the way out and i think uh besides disruption the other things which are destroying wealth is also family friction so family friction in times of disruption are the worst case i think you will see court cases now just going up because of this disruption in whether where i told you so and i told you i want you and these kind of things will happen i think if you have a formal governance process a constitution process what happens when the business is going i think that's very essential as rishabh said venture investing can happen but i think family business first has to save their business part of the all they only a family will remain i think that's the best advice we give to most of our clients can i for anything you want to add to it no i think most points have been actually covered well i would just think ideate ideate ideate and uh uh simply put and the end line i want to play don't level because most families uh you know try to put uh good money behind bad purposes you know so what i want to say is that when you are in dire stress and when you are in uh more money to that is not going to do you any good so uh you know make sure that your level is in control uh so that we are not making netflix episodes of bad million and billionaires and stuff like that that's all i want to say yeah though i think well said there uh so thank you very much to the entire panel i think this was really interesting um you know uh you rightly said that the winds of uh businesses are changing things the way we knew it the way businesses the way they were built are not going to survive so one thing is of course change and secondly i think uh munish very nicely put it that we need to be thinking family business and family the office as two separate entities and therefore be able to maximize uh what we can create wealth and share this wealth um make more wealth out of your family office and see what best can be done on new adventures uh can be invested into thank you to the entire panel um to the panel raj mohan munish um rishab and bennifer for joining us here today this talk is going to be on facebook live if you have more questions if you think you want to know something more about family office or taking an investment as a startup from family office please keep on posting your questions there we're gonna urge all our speakers to answer them whenever time permits and certainly you know next time when we meet probably it will be out of the coins of the screen and really sure when we can actually shake hands to high fives that really talk about things one to one uh sort of personal so thank you very much