I heard Mr. Ambani at the 2019 AGM wherein he said that Reliance will target to get to zero net debt by 2021. Few people interpreted this statement to mean that Mr. Ambani was becoming risk-averse and the Reliance investment cycle was coming to an end.
I had shared my thoughts on this issue on a blog on my website last year. In my view, getting to zero net debt does not imply an end to the investment cycle or reduced risk appetite. The decision could have been driven by first principles, some of which are outlined below :
- Leverage the ecosystem by building long term alliances/partnerships/JVs
- Value creation, ROI and prudent use of capital
- Monetize when money is available
In the same blog, I had also shared that Reliance could explore allocating USD 2 Billion of risk capital and create an environment and ecosystem to promote entrepreneurship and risk-taking. After having been in the start-up ecosystem for some time, I believe there is not enough risk capital to encourage path-breaking innovations and business models.
Reliance could set up Start Up Farms with relevant infrastructure, resources, and capabilities to provide capital, market access, technology, mentors, scale, brand building, a culture of risk-taking and innovation, etc, and also connect start-ups to world-class universities and relevant businesses. This will encourage and enable Start-Ups and MSMEs to build world-class organizations and if possible, target 50,000 patents within the next 3 years if not sooner. I believe the future growth will come from the integration of different cultures of large-scale institutions and Start-Ups by leveraging each other’s strengths.
I heard Mr. Ambani speak at the 2020 AGM of Reliance. I was mesmerized with his thoughts, vision, philosophy, and thinking around the construct of “Inclusive”. It was great to see Reliance became net debt positive way ahead of its target and build some interesting partnerships in one of the toughest times. The other most important takeaway for me as an Angel Investor was how Reliance was thinking about making start-ups as an important pillar of growth strategy, this in my view would revitalize the Indian start-up’s ecosystem and encourage founders and business owners to take risks to pursue their dreams and deliver amazing outcomes to all stakeholders.
As I said, Reliance may need to set up Startup farms to harness the energy and passion of the founders to make a meaningful impact not only in India but globally by leveraging the ecosystem of Reliance and make India Atmanirbhar. There could be two starts upstreams, one which is core to Reliance and others which may be non-core. In both cases, the Jio team could consider taking significant minority stake to ensure founders’ freedom and agility in decision making is maintained, however with start-ups that are core to its business, path to acquisition could be defined upfront.
In conclusion, I would once again like to compliment Mr. Ambani and his team of young and experienced intrapreneurs for promoting an enabling a start-up ecosystem.
August 2020
