In recent years, the trend of Bollywood stars investing in start-ups and launching their own businesses has gained significant momentum. This trend represents a shift in the way Indian actors approach money and investing, as they seek to diversify their portfolios and leverage their stardom to transform eco-friendly, consumer-facing brands into successful businesses. While this trend has its benefits, there are also risks that both celebrities and start-ups should be wary of.
One of the main advantages of celebrities investing in start-ups is the instant credibility and promotional boost they bring to the young companies. Start-ups often have limited resources and by partnering with a celebrity, they can reach millions of consumers and gain valuable media exposure. Additionally, the association with a well-known celebrity increases brand recognition and builds trust among consumers. For example, cricketer Virat Kohli and actress Anushka Sharma’s endorsement of plant-based meat company Blue Tribe Foods not only drew attention to the brand but also created awareness about the issues with the current meat industry.
From the perspective of Bollywood stars, investing in start-ups provides an opportunity to participate in the upside if the company succeeds. By taking equity in a company instead of cash upfront, they align their investments with their personal ethos and can contribute to businesses that resonate with their values. However, it is essential for celebrities to exercise caution when choosing the start-ups they support. They should not only assess the business risks associated with a company but also consider the reputation risks. Recent governance scandals and funding challenges have affected several high-profile Indian start-ups, leading to markdowns in valuations.
While the start-up ecosystem in India did face a funding downturn in the first half of 2023, some industry experts view this as an opportune time for investment. Attractive valuations could potentially yield substantial returns for investors in the long term. Celebrities can take advantage of this downturn to acquire equity in promising start-ups and nurture their growth. This strategy has been successful for celebrities in the West, such as Jay-Z and Ashton Kutcher, who have made significant returns on their investments.
However, it is crucial for celebrities to realize that relying solely on their popularity may not be enough to grow a brand. Start-ups require strategic planning, sound business models, and effective execution to succeed. Celebrity endorsements can create initial buzz, but sustained success relies on solid business fundamentals. It is advisable for celebrities to conduct thorough due diligence on the start-ups they consider investing in and assess the scalability and viability of the business.
For start-ups, partnering with celebrities can be a double-edged sword. While the association brings immediate credibility and access to a wider audience, it also means giving away equity in exchange for the celebrity’s endorsement. Start-ups must carefully consider the trade-off between preserving cash and leveraging a celebrity’s media presence. Additionally, it is essential for start-ups to choose celebrity partners who align with their brand values and can contribute beyond their popularity. The involvement of celebrities should go beyond endorsement deals and extend to strategic guidance and support.
In conclusion, the trend of Bollywood stars turning into start-up investors and entrepreneurs has the potential to reshape the Indian business landscape. It offers benefits to both celebrities and start-ups, but caution must be exercised. Celebrities should carefully assess the reputation and business risks associated with start-ups, while start-ups need to evaluate the long-term value of the celebrity partnership beyond initial hype. With proper diligence and strategic alignment, this trend can create successful collaborations that propel the growth of Indian start-ups.
