Meet Sanjiv Rangrass, the investor behind the ITC mafia in India’s startup ecosystem

If America had the PayPal mafia, where a group of former employees and founders went on to start successful technology companies, India in the last decade has seen entrepreneurs mushroom from companies such as Flipkart, Paytm, Zoho, and Freshworks, among others.

But the old economy is not far behind in minting first-generation entrepreneurs. In fact, a growing list of founders is emerging from ITC, a diversified conglomerate whose interests range from FMCG to hotels to software to agri businesses. And if there is a common thread that binds the ITC mafia, it is Sanjiv Rangrass.

Rangrass spent 40 years at ITC, where he joined as a trainee and became the chief executive officer (CEO) of the company’s agri-business unit before retiring as its group head for R&D (research and development), sustainability and projects in June this year.

He is also an active investor and mentor, with an envious track record of making investments in unicorns such as Zetwerk, OfBusiness and BlackBuck.

While the Zetwerk founders look up to 'Rangy sir' as their teacher and guide, who they inducted on their board recently as an independent director, Blackbuck founder Rajesh Yabaji described him as a role model and godfather. The 62-year-old Rangrass is particularly bullish on new-age agritech startups and has also invested in companies like Vegrow, Absolute Foods, Krishify, Farmart, Loopworm, and AgNext, to name a few.

Moneycontrol caught up with the ITC veteran who has minted a generation of business leaders and founders. As he takes on his new role as Zetwerk's independent director, he said working with the unicorn's founders, whom he hired and mentored, is the best 'gurudakshina' he could get. Rangrass also revealed the role he would play in Zetwerk’s launch into a 'larger league.'

Edited excerpts:

You recently joined Zetwerk’s board. What roles and responsibilities will you take up?

How many times in your life will you get a chance to work with people who you hired and mentored? It's the best “Gurudakshina” I could get.

My job as an independent director will be to guide them in putting robust corporate governance and policies in place so that they can launch themselves into a larger league. Once you are listed, much like Zomato and other startups, corporate governance requirements take priority because you are open to scrutiny.

My second job is assisting them in looking at their people in the organisation, the people systems and talent development.

Could you share some insights on how you have witnessed the founders of unicorns in your portfolio - Zetwerk and Blackbuck, evolve over the course of growing their businesses?

In my investments, I always bet on the person. To me the idea is secondary, the person is very important. In Guntur, I brought Zetwerk’s Srinath in 2010 and he played a major part in launching sustainability practices for agri in a big way. Both the other founders Amrit and Vishal were other key parts of the team, one did manufacturing and the other built up a new factory. Rajesh Yabaji is also from the same batch as Srinath. So all these people have been with me and gone out to start up their own companies.

I think, on a maturity scale if they were six on 10 within ITC, once they walked into their own worlds, they are 10 on 10. And I call them my reverse mentoring group. If I have a problem, I go to them for genuine advice. When I walk into the offices of these companies, it gives me a sense of pride. If your intention is good, you can create organisations of the future and I have a big belief in these two organisations.

Before we talk more about your professional journey if you could share a little bit about your back story?

I'm born and brought up in Shimla, a small-town guy. My father was in the government service, and my mother was a school teacher. They both migrated from Pakistan. The primary emphasis for my parents was education. And I would say, my development is primarily attributable to the fact that my parents invested heavily in my education. And that's the spirit that I pursue in my family.

For the last 10 years, my wife has been running a school in Andhra Pradesh. After school, I joined IIT Kanpur. At the end of my degree, I evaluated various companies where I had got job offers and I found that ITC was forward-looking. I didn't apply so much of my mind like all of you, it was a very simplistic view.

You have been with ITC for 40 years. What is your opinion on the new work culture and the added hassle to retain GenZs and millennials that employers are facing today?

That is the single biggest issue right now. When I joined ITC, I didn’t have many choices. If I thought I had to leave I didn’t know where to go, and there was no Internet.

At no time in my four decades have I seen such a rate of change as there is right now. It is an easier time to attract talent but very difficult to retain them.

Money is not going to solve this. People are moving out even at zero salaries, there is an urge to do something, make an impact.

You must put in systems, you have to make it exciting for people and find opportunities to move them from one role to other. Secondly, if there are 10 steps in your talent recruitment pipeline, you should have enough people at all stages. The HR (human resource) function needs to be absolutely on top of its game.

What differences do you see if you compare the culture of a company like ITC with that of new-age startups?

The culture of a startup is defined by the founders. So, if the founder is temperamentally poor, that will reflect on the culture of the company. That’s because your policies are still not evolved, you still need to put your corporate governance in place.

So, if he or she is empathetic, willing to listen, and pretty open, I would say that’s a very good starting point for any startup. Secondly, several people who are launching into the startup world are primarily tech people or people who've not had too much experience in running large teams.

People like us became chief executives after 30 years of being in an organisation. The new generation is far smarter than all of us, but they still need time to cook and to be ripe. So, they should have the openness to say, I need help. That's one reason why I'm joining Zetwerk, they said they need help as they scale up, and with that, the organisation will completely change.

Can legacy companies like ITC penetrate newer segments and trends organically or will they need partnerships, investments, and acquisitions in new-age tech startups to do so?

Does any large organisation have a choice? It does not, it will have to change. But in a large organisation, change may happen incrementally, while the world is changing very fast. The worry is always that they will be disrupted by some of these agile, fast-moving companies. You don't even know where competition is lurking.

So, it would be a mix of both. Bringing in startups and investing in them in an inorganic fashion teaches you things that organically you may find difficult. But nevertheless, ITC itself is transforming. It has an internal startup culture also.

You have been particularly bullish on the emerging agritech sector. Considering that the agritech sector in India is nascent, on what parameters do you evaluate startups?

Somewhere along the line, we forget that the primary customer for our agritech startup is one person, the farmer. The toughest game is if the farmer is willing to pay you. If they are - you have an outstanding product. But if you're trying to squeeze the farmer out, that's a poor product and should be rejected. If the farmer gains, you will gain that is a simple equation that I use, to evaluate.

Whenever I go to a startup, I ask them to show me the value chain, starting from the farm to the fork. It shouldn't be that I'm just going to be another middleman.

How can startups use emerging technologies to solve issues in agriculture today like intermediaries in the supply chain, access to credit for marginal farmers, and so on?

We are becoming used to seeing apps or some devices in the name of technology. Startups are still not focusing too much on core research and development (R&D). They're fixated more on tech which is related to information flow. I believe that we need an amalgamation of technologies starting from the seed to the fork.

Also Read: Which agritech segments got the most funds in FY21?

While chasing growth, many of the highly valued startups are recording huge losses. What would be your advice for startups to build more sustainable businesses?

There must be a sense of responsibility. I always believe that tech people who come and start these new companies do an amazing job in building tech. However, good organisations need a balance of all functions. Technology will take you from zero to one, but not from one to 10, not from 10 to 100.

To me, where most organisations fail is in people systems. Good talent does not come at the tap of a button. You must give time to bring in people and you need to develop them. Your tech is strong, you've got a good idea for sales, and you also figured out manufacturing - where many startups also struggle. Similarly, for both finance and HR, you need to build a full ecosystem.

People who are putting money need to see some returns but also to them my request is to put in some check and balance system.