Ratan Tata: No checklist to find a winning company

RITU JHA

Entrepreneurship did not exist in the past because you either had a bankable product or not and there was no middle ground of risk capital like now, said noted Indian entrepreneur Ratan N Tata.

Ratan Tata, chairman emeritus, Tata Sons and Tata groups, known for taking the Tatas to new heights during his 25 years of chairmanship at the company, was the opening grand keynote speaker at the TiEcon 2021 on May 6.

Tata spoke, with moderator Shereen Bhan, managing editor of CNBC-TV18, on what is the wow factor that excites him to invest, the role government can play for the private sector, and nurturing the Indian startup ecosystem.

The government can play a very important role in furthering technology, which the private sector cannot do because it’s big money,” Tata said. “But if you look at some of the most interesting startup companies who have used government money to institute activity… that investment would never have happened without that government input.”

He cited the DARPA (Defense Advanced Research Projects Agency) as an example. 

Asked what makes him choose a company for investing and what are the qualities he looks for in an entrepreneur, Tata said: “There are many entrepreneurs who build a company to cash out as soon as they can. While this might help them personally in a short term, it might not be very value adding for their investors and other stakeholders. It is not somebody you would like to associated with.”

He added: “I would rather look at the founders of the company…

To me, the relationship you establish with the founder is very important. The value he puts on the table makes the difference, rather than a flashy entrepreneur who is either trying to copy other companies, who’s been successful, and those who are trying to cash out.”

On new companies, Tata. who has funded startups such as ride-share company Ola, said: “While mentorship is important, every company needs an investor who keeps the capital flowing in the right direction, so that they capture the local market for organic capital growth.”

Asked what had impressed him about companies who have gone on to break the norm and how does one find that breakthrough company, Tata said: “There is no checklist to find that one winning company, or even industry.”

He added: “It’s all a question of the people behind the brains of the enterprise you’re looking at. In my view, it means that you have to be the investor, who gets the encourage the founder’s vision and play as a role model, or constrain them for profit.”

He said: “The segment of enterprise the one I am most impressed by… a bunch of ex-students who have a common view — something that could happen… company like Google that has been established with… where two college goers start a search engine and when you look behind the vision and the entrepreneurial spirit and have to say ‘Wow, that this is something that is impressive.’”

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