It has been reported that Bollywood’s highly successful young actress Alia Bhatt is set to sell her clothing brand ‘ED-A MAMA’ three years after launching it.
According to media reports, Alia’s company is about to be acquired by a retail arm of Reliance Industries, one of India’s largest conglomerates.
In exchange for the deal, Alia Bhatt is expected to receive 3 billion rupees.
Investor Bhaskar Majumdar has stated that if this deal happens between Alia Bhatt and the Reliance Group, it will encourage more major film stars in India to invest in startup companies. Alia Bhatt is one of many Bollywood stars who have recently invested in startups.
Actress Deepika Padukone also launched her skincare brand 82°E last year. At the same time, Deepika’s husband, actor Ranveer Singh, also bought a stake in the beauty brand ‘Sugar Cosmetics.’
Industry watchers say this is not a new trend.
This started back in the 2010s when startup companies in India began to make their mark. Investment in these companies started when Bollywood’s biggest stars, including Salman Khan, began investing in them.
Salman Khan was one of the first Bollywood stars to make such investments, starting with a small stake in the travel portal ‘Yatra’ in 2012.
Now, as India has emerged as the third-largest startup hub in the world, more film industry people are following the trend and investing in these companies.
In 2022 alone, 14 Bollywood actors invested in 18 startup companies.
Most of these companies were in the early stages of development.
Many of these artists invested in companies that deal directly with customers (D2C). At the same time, some others invested in ed-tech, e-commerce, and food-tech companies.
Successful Business
Aviral Jain, Managing Director of Karol’s Valuation Advisory Service, says, “Today’s celebrities don’t just want to be recognized as film stars; they also want to be investors.”
“Alia Bhatt has shown how a celebrity can turn a local, eco-friendly brand into a successful business by leveraging their fame and large following.”
This marks a significant change for Indian film artists in terms of money and investment.
Previously, many stars were happy to rely on their family members for managing their finances and investments.
However, many stars, like Shah Rukh Khan, have become successful businessmen, investing in sports companies and restaurants.
However, actors like Amitabh Bachchan and Jackie Shroff have lost money in such ventures, and their companies went bankrupt, likely because they invested heavily in the highly risky film production business.
Today’s superstars, however, are much smarter when it comes to money.
Along with investing in traditional industries like the stock market, real estate, and infrastructure, they are now putting money into rapidly growing industries like startup companies.
Nojot Kaur, Associate Director at Epic Capital, says these actors diversify their investments across various businesses to “spread their risk.”
She adds, “Wealthy individuals in India are investing their money in venture capital, and celebrities are part of this segment.”
Aviral Jain further states that many actors have even opened offices to manage their investments professionally.
Experts believe the partnership between brands and celebrities can be mutually beneficial.
For startups, securing investment and celebrity endorsement enhances their credibility, helping them reach millions of customers more easily.
Shorya Bhutani, partner at Breath Capital, says these startup companies have limited resources, so selling equity in exchange for funding is a great way for them to grow their business.
Brand Identity
Benifer Malandkar, Chief Investment Officer at Ray Global Investments, says, “Startups also benefit from leveraging the fame of a celebrity to promote their brand.”
Partnering with a famous personality instantly boosts a brand’s recognition, and their name becomes more trustworthy in the eyes of customers.
Something similar happened with Blue Tribe Foods when cricketer Virat Kohli and his actress wife Anushka Sharma invested in this plant-based company.
Sohail Wazir, the company’s Chief Commercial Officer, told BBC, “When Virat and Anushka joined our company, the investment not only boosted our brand’s promotion but also brought our business to millions in no time.”
Rather than simply taking money from a company, investing in it means film stars will also share in the success when the business grows.
This is why celebrities invest in businesses that align with their personal values.
Virat and Anushka are both vegetarians and often advocate for animal rights, so they invested in a business that matches those beliefs.
However, business promoter Ganesh warns film stars investing in startups that they shouldn’t just consider the “business risk” but also the “risk to their reputation” before joining any company.
Many well-known startups have faced serious allegations of irregularities in their operations, and due to a lack of funding, many of these companies have seen significant declines in their valuations.
According to a report by PricewaterhouseCoopers, between January and June 2023, Indian startups raised the least amount of money in the last four years.
Through 298 business deals, Indian startups managed to raise only $3.8 billion, which is 36% less than the investments made between July and December 2022.
Partner at Angel Fund Fysis Capital, Mitesh Shah, believes that this should not be seen as an obstacle but rather a great opportunity to capitalize on.
Shah told BBC, “With attractive valuations, these startups have the potential to create substantial wealth for investors in the long term.”
Much like how celebrities such as Jay-Z, who bought shares in Uber, and Ashton Kutcher, who invested in companies like Skype, have made a good profit, Indian celebrities are also expected to see returns on their investments.
Bhutani believes that in the next decade, we can expect new consumer brands worth billions of dollars to emerge in India or to have support from Indian personalities.
To some extent, Alia Bhatt and Katrina Kaif’s early investments in the publicly listed unicorn Nika already demonstrate this success.