As the Indian consumer story is growing, investors are seeing a huge interests in the sector in the last one and two years. There are myriad ways operators are funding expansion and development, from asking patrons to participate in funding, to finding the right private equity partner. Here are top criteria that an investor looks into before putting their money into the business:
Longetivity of the Concept: To start with what is the mobility of the concept and then to see the longetivity, scalability because most funds exit and being on the funding side you have to plan your exit at the time of investment. “You have to also see that what kind of people you are associating with, how best they know the market, how are they associating with it, how are they accepting changing trends and people’s habit. You need to change every day as food business is an everyday business,” shares Sharad Sachdeva, Director of Operations, L Capital. Restaurant business has to be relevant all the times, innovating and doing things as these are some of the ingredients that is important for an investor.
Is the Concept ready to Scale: “We actually invest in a company that is at a very young stage. For us there are two very important things that we look at…first, is this company going to get funded at the next stage. The second thing is the amount of money company is asking for and is it sufficient to run their businesses for 18-24 months,” points Nandini Mansinghka, CEO & MD, Mumbai Angels Network. The biggest challenge today happens at the food and consumer space and this is happening more if the founder is not from the space where they are not getting an estimate of the money they want to raise and how long is it going to last them till the next round of the funding happens.
It’s all about a Good Team: “The primary bet we do at Gaja when investing a brand is we bet at the team. We are very clear about the team, the concept and the ability to scale,” adds Manoj Balan, Director of Finance, Gaja Capital. The restaurant business is all about scale and growth and at any point of time when an investor decided to exit and it becomes exciting for another investor there has to be growth and a path that has to be made. So, for any investor the initial filters are what the team demonstrated, how capable is the team etc.
How Disruptive is the Concept: Business today is a lot more than dealing with today’s time and issue. Three years ago investors would have put in their money with somebody who has passion but today we already have a Zomato, Swiggy and if somebody comes to them and say they want to do a food-tech or food delivery they will be highly skeptical to look at it. Similarly, if you look at cloud kitchens there are already invested company in the market. So, for them the team has to come with such an experience or a model which can disrupt the business.