Mithun Sacheti didn't see it coming.
The first time the founder of CaratLane heard of Titan Co.'s move to acquire an additional 27.18% in his business for about Rs 4,617 crore and buy out his stake, he said it came as a "a sucker punch."
Sacheti didn't expect to be separated from his bootstrapped venture. But what this does is propel him to the upper echelons of India's startup ecosystem. It's one of the largest exits in India's startup space, and second, possibly, only to the Bansals being bought out of Flipkart by Walmart Inc.
Despite a punch in the gut, Sacheti says the conversation with Titan was very clear. "An IPO was not something on their mind ... They did not want two jewellery businesses to be listed and a subsidiary under Titan adds no value for them frankly," he told BQ Prime in an interview.
Titan was clear about the fact that if they don't do this now, they'll have to do it at some point in the future, when it will get more and more expensive, Sacheti said.
"And when you're in a partnership, you have to accept the fact that it's not a one-way street, if it doesn't add value for the partner, why should the partner do it," he explained.
"[CaratLane is] at a stage where it can run independently and you know, I've been grateful for the partnership I've had with them and after good conversation with my mentors, with my family, I think it made sense to go ahead," Sacheti said.
CaratLane also stands as a great example of how a bootstrapped startup leveraged a large conglomerate's resources and grew its own venture to a much larger size, and in this case, about Rs 17,000 crore.
"Titan put all of Rs 99 crore in the business, but what Titan gives you is far more than money. The two most important things for us was working capital and brand. The house of Tata is the gold standard of trust and Tanishq is the gold standard of trust in jewelry, so we could get brand leverage from that. Secondly, when we're a subsidy of Titan, then you solve for balance sheet as well. Our efficiency in building a business significantly improved because of the presence of Titan," he said.
"I think it may be blasphemy (to think we) would have been better off without them, so you could do an IPO. I think those are all wishful thoughts," Sacheti said.
With windfall gains of more than Rs 4,500 crore, Sacheti can be one of India's biggest angel investors. But his heart still lies with consumer businesses.
"Pure play vanilla investing is the need of the hour for me because of the capital that we'll have, but it's not the part that excites me ... I'm not the smartest angel, so I certainly am not looking to be that," he said.
"Consumer businesses excite me. Compounding on the changing behaviour of what I have understood of the Indian consumer excites me. Marrying these two and finding businesses where this knowledge can benefit that excites me," said Sacheti.
There'll be more things that he'll end up doing in life, he said. "It's just that it's so early right now. I don't think I've thought it through."
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