Startups – The new celebrity junction!

Many celebrities like Anushka Sharma, Virat Kohli, Deepika Padukone, Shraddha Kapoor, Alia Bhatt, and Katrina Kaif have invested in start-ups, thereby starting a new trend. In 2018, Priyanka Chopra arguably became the first Indian celebrity to start the wave of investing in start-ups by putting her money in the dating app ‘Bumble’.

Earlier, the trend was such that celebrities used to invest in real estate, or in the hospitality sector like opening restaurants, cafes, bars, and then there was the Indian Premier League (IPL) wherein many celebrities invested in IPL teams. But then the change slowly started taking place and today the scenario is completely changed.

Actor Deepika Padukone has invested in three start-ups, namely Front Row, Epigamia, and Nua. Similarly, Shilpa Shetty has invested in Mama Earth, Alia Bhatt has bet on fashion start-up Style Cracker, while Shraddha Kapoor has invested in make-up brand MyGlamm. Celebrity couple Anushka Sharma and Virat Kohli have invested in alternative meat start-up Blue Tribe Foods. The list goes on and on, as everyone in the entertainment industry either looks keen, or has already invested in start-ups.

BestMediaInfo.com spoke to industry experts to understand this emerging trend in the entertainment industry and how it works in the favour of celebrities.

Karthik Nagarajan

Karthik Nagarajan, Chief Content Officer, Wavemaker India, said, “Celebrity-driven cultural entrepreneurship has been a global trend for a while. Sports champs like Floyd Mayweather and Hollywood celebrities like George Clooney, Ashton Kutcher, Di Caprio and Jessica Alba have been doing this successfully for many years now. This is happening for a variety of reasons: It is a way of cultural expression for them, of the things they believe in. They also realise that careers in Showbiz can be short and this gives them a longer play. More importantly, this is the golden age of private equity and it makes as much financial sense as it does culturally. The show ‘Planet of the Apps’, which is Shark Tank meets Hollywood, is a great expression of what is happening and also why it is a long-term trend and not just a flash in the pan.”

Preranaa Khatri

Talking about how this is a growing trend for many celebrities to invest in start-ups, Preranaa Khatri, Executive Vice-President, Brand Solutions at OML Entertainment, said that from whatever we’ve seen over the past few years, this is already a trend and it’s only going to continue, given there have been some very interesting success stories. 

“As a country, we’re also becoming more open to the idea of start-up investing with shows like Shark Tank making this a household dinner table conversation. Of course, there are bound to be some cases where the investments may not be successful, but by and large, with certain due diligence and caution, I think this can be beneficial for celebrities and brands and is definitely a trend that is here to stay. Comedians OML works with have been investing in tech start-ups for more than 5 years now. Celebrities are now drawn to the tech space because valuations are astronomical because of the promise of scale and involvement there has become a status symbol—cash ebbs and flows, and tech investments don't affect their primary stream of income,” she added.

Aayushman Sinha

However, this growing trend raises the question of celebrity endorsements, will they be able to endorse the same line of brands in which they have invested? Aayushman Sinha, Founder & Head of REPRESENT, said, “Most celebrities will be mindful of not directly investing in areas where their brand endorsements are most active in order to avoid conflict - however, I feel the format of endorsements too will change. Public figures will now request a mix of cash + equity for their endorsements so they’re able to enjoy a more long-term return from the business and a start-up is able to land a public figure at a lower cost at an earlier stage in their business.”

Endorsements are an important part of revenue for celebrities, so how does it work when they have invested in a brand and are endorsing the same? For instance, Shraddha Kapoor who has invested in MyGlamm is also the brand ambassador for the brand.

Experts say that the endorsement deal is dependent on the company as well as the celebrity. There are multiple kinds of associations, such as part cash and part equity deal, which means if the celebrity charges around Rs 8 crore for an endorsement, she/he will get Rs 4 crore in cash and the rest will be offered as equity stake in the company. One of the other ways is the celebrity being offered royalty deals along with equity, which means that whatever products the company is selling, a part of it will go to the celebrity as royalty.

As for the other trends in the investment landscape, Nagarajan of Wavemaker said that in India, younger celebs from the field of sports and cinema are likely to make unconventional choices. “From a generation of superstars endorsing ‘paan masala’ and tiles, we are likely to see sports brands, sustainability products and Web3 start-ups find more favour. This will usher in a new wave of cultural entrepreneurship meeting breakthrough technology.”

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