Dealmakers bank on e-commerce to venture on their own

Written by Anushree Bhattacharyya | New Delhi | Updated: May 4 2014, 04:45am hrs
FashionThe strategic shift to e-entrepreneurship is not without reason
What do Rajan Mehta, Falguni Nayar, Ajay Shetty and Rahul Garg have in common For one, all these investment bankers left their high-profile jobs as dealmakers in reputed financial institutions to become entrepreneurs, most notably in e-commerce.

While Mehtra was the founder of Benchmark Mutual Fund before he started My Healthcare Solutions, a healthcare service provider that uses technology such as cloud computing, Nayar now runs beauty and wellness e-tailing site Nykaa.com after a stint at Kotak Mahindra Capital as its MD and chief executive. Similarly, Shetty once crunched numbers for Merrill Lynch in Hong Kong before he shifted to Bangalore to set up Myra Vineyards. The same goes for Garg, founder of the e-commerce portal ArtisanGilt.com, who earlier worked as an investment adviser with various global investment banks such as the now-defunct Lehman Brothers, Nomura International and HSBC Securities.

The strategic shift to e-entrepreneurship is not without reason. As per KPMG in India and the Internet and Mobile Association of India (IAMAI), the e-commerce industry in the country has witnessed an incredible 150% growth in the past three years, increasing from $3.8 billion (R19,249 crore) in 2009 to $9.5 billion (R47,349 crore) in 2012. Moreover, in 2012, 63% of e-commerce ventures were started by first-time entrepreneurs.

Talking about the advantage of investment bankers in launching their own e-commerce businesses, Ashvin Vellody, partner, KPMG in India, a management consulting firm, says: A person venturing into e-commerce needs to have three basic qualities. First the person should have a good understanding of consumers and the market that the person wants to enter. Secondly, the person should be able to manage money well and have a good understanding of finance. Thirdly, the person should be well-versed with technology. Usually, investment bankers have all these qualities and this is a big reason behind them leaving their comfortable jobs to start e-commerce businesses.

Agrees Garg, founder of ArtisanGilt.com, who says it was his experience as an investment banker that helped him in selecting the right model for his e-commerce portal. Investment bankers have rich experience and good understanding of the e-commerce category. After working in different kinds of markets and handling various clients, we are aware of the pros and cons of the business, he adds.

Interestingly, unlike many popular e-commerce portals like Flipkart, Snapdeal and Myntra, the e-commerce sites started by these former investment bankers are self-funded.

As a matter of fact, they believe the first step is to build the business. In case of a start-up, the first job is to build the business and transform it into a sustainable business model. Once these two jobs are done, funds will flow in automatically, says Nayar, CEO of Nykaa.com. Nayar is currently on the lookout for investors for her portal.

For Rachna Nath, leader, retail and consumers, PricewaterhouseCoopers (PwC), an audit firm, a solid background surely helps in opening many gates, which in turn help in raising funds. Holding the tag of an ex-investment banker lends assurability and hence it becomes easier to present ideas to investors. However, ultimately, it is the viability of the business model that leads to flow of funds, she adds.

In addition to being able to manage funds successfully, investment bankers have the added advantage of a sound knowledge in technology. Shetty of Myra Vineyards, for instance, is using social networks such as Facebook to help buyers place orders via phone. He plans to expand his presence to five new cities by the end of this year and is also mulling to start his own e-commerce portal to sell liquor or tie-up with an existing player. Similarly, Garg of ArtisanGilt.com plans to launch stitching services for international buyers on his site.

Shetty believes that it is his past experience which has helped him in understanding the need of consumers. Under his brand Myra, he will soon be launching an affordable brand of wine, which will be available at just R330. With the Indian consumer being exposed to global lifestyle, he or she too wants manufacturers and service providers to match up to his or her expectations when it comes to their products and services. We are, therefore, forced to think out-of-the-box, he adds.

Agrees Rohit Bansal, co-founder and chief operating officer, Snapdeal. He says the e-commerce category, which is still at a nascent stage in India, needs smart people who can think different. The entry of smart people will lead to the development of innovative ideas, which in turn will lead to provision of better services to consumers. The e-commerce category is going through a revolution and has huge potential for growth. The entry of professionals, such as investment bankers, will further help in the sector's growth, explains Bansal.