Lose your teeth on Shark Tank and five facts about India’s startups

The analysis shows that over 40 per cent of pitches have been in the fast-moving consumer goods (FMCG) space and 18 per cent in beauty and fashion. Together, the “Sharks” invested in the show totaled 128 crore (including equity and debt) in 176 out of 320 startups, a third of which went to food and beverage companies and personal care products, indicating the direct-to-consumer (D2C) wave sweeping India. Venture capital (VC) funding in consumer-focused startups has been on the rise since the pandemic, with fashion and FMCG being key drivers.

“Sharks” are panels of investors startup teams need to woo in order to get money their way. Half of all pitches came from founders in just four cities—Mumbai, Delhi, Bengaluru and Pune. It is in line with the realities of the real world. These cities are among the fastest growing startup hubs in the world, according to startup research center StartupBlink’s Ranking 2022 Global Startup Ecosystem Index. Startups from big cities in the show focused more on building technology and education products and services, while those from smaller cities focused more on agriculture and handicraft.

women in business

Analysis shows that over 50% of Shark Tank India’s pitching teams were either all male, or had more males than females. Startups led by women constitute less than 15% of all pitches.

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Social media marketing and online advertising have enabled women, the largest segment of d2c brand consumers, to start and run similar businesses from their homes. For example, nearly all pitches made by women on the show were for products in the beauty, clothing, and home decor categories, while the technology, electronics, and media industries were dominated by men.

The lack of representation and limited opportunities to innovate in some sectors reflect other barriers, such as raising capital, that women face in starting their own enterprises. These challenges are greater for women in smaller towns. Of the 320 pitches analysed, only nine were made by all-women teams from a tier-2 or tier-3 city.

deal size

On average, the conversation on company valuations tilts in favor of the sharks. were less than the investment made by the shark 1 (Polypower, where 100 hours of mentorship was offered in exchange for 0.5% equity), to 2 crore (acquired by healthcare company Medulance).

Sharks often manage to subvert the valuation anchor set by the entrepreneurs by demanding higher equity in exchange for the desired funds. In all areas, the average valuation offered was less than half of the valuation requested. The average deal size at the show was 60 lakhs in lieu of 10% equity. This is compared to the typical size of angel investment deals in India.

The high growth potential of early-stage startups makes them an attractive opportunity for investors. The show has also become a platform for entrepreneurs to promote their brands and reach out to a larger audience. Some of the startups that appeared in Season 1 have reportedly seen an increase in sales.

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risk-averse shark

Portfolio analysis of investments made by five sharks – Anupam Mittal (Shaadi.com), Vinita Singh (Sugar), Piyush Bansal (Lenskart), Namita Thapar (Mcure Pharmaceuticals) and Aman Gupta (BOAT) shows low risk appetite .

No shark has invested more than 10% of his net worth. One in five deals involved debt to secure the money. The sharks also largely stayed within their areas of expertise: Thapar’s portfolio had a high presence in pharmaceuticals, Singh’s in beauty, and Bansal’s in technology. (This may not reflect the largest investors in each sector, but simply shows how much of each shark’s portfolio is dominated by that sector; see chart.)

The show is a great platform for startups, but there is a need for diverse pitches and more diverse sharks in the coming seasons.

Surbhi Bhatia is a data journalist based in Mumbai. The analysis is based on a data set compiled by Sathya Thirumani, a Bengaluru-based software engineer.