PM Modi sees entrepreneurs as today’s freedom fighters: TVS Capital Chairman
Prime Minister Narendra Modi loves entrepreneurship and believes that India’s freedom fighters of this age are the entrepreneurs, says TVS Capital Funds Chairman and Managing Director (MD) Gopal Srinivasan.
“Prime Minister (Modi), I think he loves entrepreneurship. I have met him in groups, at least, two times in long meetings. I sense a man who believes...that the nation's freedom fighters of this age are entrepreneurs,” he tells YourStory Founder and CEO Shradha Sharma.
PM Modi does indeed often speak about startups and entrepreneurs in his public addresses as well, highlighting their importance in shaping India’s future and economy, displaying a certain affinity for the startup ecosystem.
In fact, at the beginning of this year, the prime minister had predicted that this decade will belong to Indian entrepreneurs, while adding that the true potential of entrepreneurs would be realised when the government stands by the ecosystem as a partner.
Through the pandemic, PM Modi has often stressed on the importance of building an ‘Atmanirbhar Bharat’ (self-reliant India).
“In order to fulfil the dream of making the 21st century India’s, the way forward is through ensuring that the country becomes self-reliant," he had said in a televised address in May.
Gopal believes the way the Narendra Modi-government has “thought about issues” and “done all the right things” is commendable. In August, the finance ministry announced several measures to provide relief to startups amidst the coronavirus pandemic. These included steps such as scrapping ‘angel tax’ for registered startups, and expediting GST refunds for the micro, small and medium enterprise (MSME) sector.
A third generation entrepreneur from the TVS group, having done nine startups before launching the TVS Capital Funds in 2007, Gopal says, “we are fuelling entrepreneurs with both capability, as well as capital.” He was later joined by former vice-chairman and chief financial officer (CFO) of Hindustan Unilever Ltd (HUL) D Sundaram. “He left and joined me and said ‘I'll help you do this’ so he also helped me a lot and we put this together,” says Gopal. TVS Capital is backed by domestic financial institutions, family offices and high net worth individuals.
The fund has invested in Nykaa, Go Digit, Suryoday Small Finance bank, Wonderla Holidays, Leap Logistics, among others. TVS Capital made nearly 6X returns out of its recent exit from Nykaa, the online shopping beauty store.
In early July, TVS Capital announced the second close of Rs 1,100 crore for its third private equity fund - TVS Shriram Growth Fund 3, raised entirely from domestic investors. Jointly sponsored by the TVS Group and the Shriram Group, the third fund has a target corpus of Rs 1,000 crore. The July fundraise is estimated to have taken TVS Capital’s cumulative assets under management (AUM) to Rs 1,664 crore.
Gopal reminisces, “When we started that fund it was more with the idea that look, we need to promote entrepreneurship. Therefore our slogan became - empowering the next generation entrepreneurs.”
Surviving the pandemic
This is not the first global economic crisis the fund is witnessing, having started its journey around the global financial crisis of 2007-08. Commenting on the current crisis which the International Monetary Fund (IMF) has called a “crisis like no other”,
Gopal says recovery is unlikely to happen anytime before April 2022 and things are going to get worse before they get better.
He explains, “It's a really difficult time. There is no question about it in my mind, it is going to get worse. One of our advisors told us in April that this is going to be a bathtub type of recovery. Bathtub is a long flat bottom with a lot of bumps in it and then a recovery.
“Sometime around March-April (20)22, is when we actually see some sense of normalcy coming back.”
The entrepreneur-investor believes COVID-19 is going to be around for a “long time” and people need to embrace that reality.
However, he believes that entrepreneurs are a special kind of “warrior” tribe and will not go down without a fight. But the pandemic is sure to cause “deaths” among startups, he highlights, while adding that the ones who do not survive can always be reborn in a different avatar.
Gopal elaborates, “And it doesn't mean that to die is anything [sic], you will be reborn (in) another form. So keep that in mind and keep fighting, just survive for the next one- one and a half years in whatever way you can. Make all the changes and corrections.
“The amount of changes we made inside our firm is crazy, in the last six months... the way we work, the amount of technology we are using. So I'm sure everybody's doing that, everybody I speak to is making dramatic changes in this time. So, and if you don't survive it doesn't matter. Come back, there will be rebirth.”
The journey from entrepreneurship to funding
Gopal reveals that his journey from entrepreneurship to funding happened because of his mentor, the Late CK Prahalad, who was his professor in the 80s at the University of Michigan’s business school. After having been a serial entrepreneur, sometime in the early 90s Gopal started reflecting on whether he wanted to start one more company “every two years.”
“I had brought Whirlpool to India for washing machines. I started TVS Electronics, I started a finance company, I started a contract manufacturing company, I started an engineering design services company, and on and on, somebody making locks, car seats. It’s a long list,” he says.
Watch the full conversation here:
It was during this phase of introspection that Prahalad told him that while Gopal undoubtedly loved entrepreneurship, it was time to back younger talent. Gopal remembers, “Prahalad told me - 'entrepreneurs are the nation's freedom fighters, economic freedom for the bottom of the pyramid is going to come because of entrepreneurs.' He gave me the belief and confidence and I am doing it for that reason."
Prahalad’s response-- “You are no longer the entrepreneur you used to be, there are better people than you. These boys and girls who are 25, they are the best people, so why don't you back them rather than you be the only person to do this.” -- took a few years to sink in for Gopal, he admits. Ultimately in 2007, he took the plunge.
Gopal describes how the first fund took off, “So I took it up (the advice) and then I had the good fortune to meet Mr (R) Thyagarajan of the Shriram Group (who has since become his mentor) and he said look ‘I actually wanted to start a fund, why don't you do it and I’ll support it.’ And one of my very close friends, Lakshmi Narayanan, the co-founder of Cognizant, encouraged me and said, ‘I’ll invest in your fund if you start one’.” TVS Capital raised its first fund of Rs 600 crore in 2009, followed by a second of Rs 600 crore in 2012. The private equity firm has completely exited the investments made out of its first fund.