Sustainable baby care brand SuperBottoms on Thursday announced Alia Bhatt as its investor. Earlier this month, Parineeti Chopra acquired a minority stake in personal care brand Clensta, former cricketer Sourav Ganguly picked up a stake in food delivery startup JustMyRoots, and Suniel Shetty invested in do-it-yourself healthcare venture The Biohacker.
Executives expect the trend to continue. It’s a win-win proposition, they said, with these mostly consumer-facing startups getting a face to push their brands besides the money, and celebrities getting a low-risk, high-potential investment opportunity.
“At a time when traditional established funds may not be investing with as much frequency, what is working for actors or sports celebrities as individual investors is that these new businesses are low-scale, low-risk, and don’t require large funds. Hence, we are seeing a lot of mid-sized endorsements moving to ownership,” said Manish Porwal, managing director at a talent management and marketing company Alchemist, which works with L’Oréal and Reliance Group.
ETtech“This trend will escalate,” said Kannan Sitaram, partner and cofounder of early-stage venture fund Fireside Ventures. “For celebrities, such investments are strategic deals which pay off in many multiples in the long term.”
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Fireside Ventures has invested in diverse D2C brands such as Traya, Slurrp Farm, The Sleep Company and Pilgrim. “While overall investments in startups have come down, we continue to see lot of traction in the D2C space,” Sitaram said.
Other such deals in the past quarter include Sanjay Dutt investing in alcobev startup Cartel & Bros, D2C health foods maker WickedGud raising Rs 2.25 crore from Shilpa Shetty, Katrina Kaif investing in health and wellness platform Hyugalife, Suniel Shetty picking up stake in edtech firm Klassroom Edutech, and Good Glamm group setting up a joint venture with Akshay Kumar to sell personal care and wellness products for men.
“For the mid-sized startups and D2C brands, it works really well…since they get star power for their new emerging brands, and deals don’t always involve only financials since they include endorsements,” said Vinita Bangard, founder of talent management company Krossover Entertainment.
She said presence on digital and social platforms like Instagram and Twitter are key advantages the celebrities bring to emerging brands, which would otherwise require long-term investment and scale.
This comes at a time when startup funding has slowed down and some larger startups are facing governance issues.
The Indian startup ecosystem reported the lowest funding in the last four years during January-June 2023, at $3.8 billion across 298 deals, a decline of 36% compared to July-December 2022 which had seen cumulative funding of $5.9 billion, PwC said in a report earlier this month.
The accounting giant attributed the decline to increase in due diligence by larger established investors before making investments both in terms of detailing as well as coverage – from typical finance and legal, to areas like technology, HR and business processes.
Almost all the celebrity investment deals are structured such that the celebrities also endorse the brands, and hence, the brands don’t need to hire external names to cut through clutter in the categories where they are competing in.
Chopra announced her first strategic investment on her Instagram page, stating: “I’m (finally) getting to do something that I have been wanting to do for four years but needed the right team to do it with.”
Porwal of Alchemist said, “For the celebrities, it’s also about creating hedge models for their personal career growth at a time when movies have much shorter shelf lives and there’s an influx of social media and micro influencers who brands rope in for endorsements often at one-tenth the fees.”
While Deepika Padukone, Priyanka Chopra Jonas and Virat Kohli have backed multiple early-stage and growth-stage startups and D2C brands for some time now, the trend has escalated to a new high with beauty and fashion, edtech, food and fitness being the sectors with the largest investments.
