A Tactical Exit: Pocket Aces Co-Founders On What Went Behind The Saregama Deal
In an interview with BQ Prime, the three founders spilled the beans on what went behind the making of the deal.
A partner that took about a year to find a bumper exit for initial investors is now preparing for the next round of growth.
These are the defining hallmarks of the deal that the Pocket Aces' Co-Founders—Aditi Shrivastava, Anirudh Pandita, and Ashwin Suresh—struck with Saregama India Ltd., that resulted in the legacy music label giant buying a Rs 174 crore stake in the digital entertainment startup on Sept. 29, with an option to further raise ownership.
In an interview with BQ Prime, the three founders spilled the beans on what went behind the making of the deal and what the road looks like for the company and individually for the founders.
"About a year ago or so, we decided that going down a road to find a strong strategic partner was the right next move for us in terms of scaling the business," Shrivastava said.
"When we started reaching out to players, Saregama's name came up. We were very excited to think of a music label player because it's very complimentary to what we do. When we first met the team, there was just a lot of comfort and a lot of resonance between our team and their team, and it just felt like a really good fit. Obviously, we had been talking to other people as well," she said.
It has been on their minds as founders to "provide the right sort of exit to initial shareholders and people who believed in us from day zero", Pandita told BQ Prime.
"Providing the right returns also provides encouragement for future investment in the media sector in India... It will encourage a lot of new startups that will come out because we will serve as an example, and for us, all our early shareholders are very happy with this transaction," he said.
Pocket Aces Pictures Pvt. produces content pieces ranging across web series, sketches, music videos, and reels on its channels, FilterCopy, Nutshell, and Gobble. Across its social media channels, Pocket Aces has about 9.5 crore subscribers and followers.
It also owns a talent management arm, Clout, which manages over 100 digital influencers. Its long-form studio, Dice Media, has produced several web series across OTT platforms.
Suresh and Pandita had not been in an operative role in Pocket Aces and had been heading Loco, the company's gaming arm that was spun off about two years ago. Shrivastava, however, will continue to helm the content giant and assure that all divisions and teams within the company will be retained.
Pocket Aces, in FY23, registered a Rs 104 crore topline. Revenue had grown at a CAGR of 34% over the last four years. So why did the founders exit at a stage when topline was growing?
"We would've continued to grow with or without this transaction, but I think the rate of growth can certainly be accelerated with a partnership with someone like Saregama," Suresh said.
Going from a hundred to a thousand is a different ball game, according to Shrivastava. "You can do it faster with more experience and relationships... I think for our next phase of growth, this was the right move, and we have been thinking about that for a while."
On a day-to-day basis, nothing's really going to change for Suresh and Pandita. "We're committed to building Loco out. Part of the reason why this transaction was monumental for us, besides the fact that there will be liquidity available, is also that we wanted to repay the faith shown by early investors and early employees in the company. It was a good time to reward those early employees by helping them see liquidity as well. It was a tactical thing for us to some degree," Suresh said.
"We have a very important responsibility towards Loco, and gaming is obviously a booming sector in India. So, hopefully, we can provide them returns on the other company as well," Pandita said.
Suresh is already active in the angel investing space; he will continue doing that, while Pandita will invest his gains passively.
"We'll continue to make great content. This time, with even better soundtracks," Suresh said.
"We're now representing so many people making popular content, so you're going to see from us on every single platform. We really only were missing film music, and now with this current acquisition, that also gets solved," Pandita said.