Book excerpt | What are Shark Tank India judges looking for in a startup?

Shark Tank India is a reality show where entrepreneurs can pitch their start-ups for funding.

A new book by Shark Tank India with journalist Prerna Lidhoo lays down the startup principles that the Shark Tank India judges (Sharks from here on) swear by. Sample this: Fast, fearless, frugal are the three qualities Shark Tank India judge and co-founder of consumer electronics firm boAT, Aman Gupta, looks for in a startup. To eyewear company Lenskart's co-founder and Shark Peyush Goyal, empathy is a key trait that a company/entrepreneur must have. Shaadi.com's Anupam Mittal explains that a bit of panic is actually good for startups. And Shark Vineeta Singh of SUGAR Cosmetics compares starting up to running a marathon - she's of course done both. Singh explains that adaptability is key - when it seems your startup has hit a dead-end, pivot.

Juggernaut Books; Rs399.

The book begins with some basic steps to starting up. (How basic, you ask? There's a short explainer on how stake sales affect valuation and a definition for Series A, B, C funding.) It then moves on to the traits each of the Sharks values, and claims to have found useful in their own startup journey. Finally, towards the end of the book, there's an example of a startup that embodies many of these qualities, and got funded by the Sharks in season 1 of the SonyLIV show. Here's an excerpt from this section:

Pratik Gadia: Stitching things together

Pratik Gadia, founder and CEO, Yarn Bazaar, has a vision – to organize the unorganized textile industry. He says, ‘Our aim is to create an end-to-end yarn platform serving all needs and pain points of the industry; making it very seamless and efficient.’ Yarn Bazaar is a holistic B2B yarn marketplace, which targets solving the problem of broken supply chains in the traditional textile industry. Pratik featured on the first season of Shark Tank India, and his company raised Rs 1 crore from Peyush Bansal, Ashneer Grover, Aman Gupta and Anupam Mittal. After watching the show, one of the biggest global manufacturers, H&M, reached out to him for help.

Also read: How Shark Tank India zeroed in on new India’s huge ambitions

Pratik was born and brought up in textile manufacturing and distribution, since that was his family’s business. When his father was just 15, he ran away from his village in Jhunjhunu District, Rajasthan, to avoid studying. Gadia senior went to Nepal and joined a small company as a saree salesman. That was his entry into textiles. He later shifted to Kolkata as a commission agent in the late eighties and eventually moved to Mumbai in the early nineties and entered manufacturing for a few clients in Delhi and Kolkata.

This story from a bygone era is a great example of how entrepreneurship is hardly an alien concept in India. Long before the word ‘start-up’ was coined and shows like Shark Tank were dreamt of, millions of wannabe Indian entrepreneurs dreamt of building their own businesses. After completing his bachelor’s in Bombay, Pratik joined the family business with the typical gung-ho attitude of a 21-year-old. ‘The idea was to spend a year in the family business and go for an MBA after that,’ he says.

But that year changed the way he saw the world. ‘During that year, I realized how broken the supply chain was, and that there was no professionalism in the industry. I wanted to build on the concept of legacy, not lineage,’ he adds.

After he returned from the University of Warwick in the UK, where he went to study Innovation Entrepreneurship, his dad convinced him to rejoin the family business. He spent the next six years managing yarn procurement, fabric production, and scaling the business and making it sustainable. ‘My daily pain point was yarn sourcing, which is extremely middleman-heavy. It was like calling an agent to book your flight tickets back in the old days.

Time consuming and redundant,’ he says.

For context, India is the largest exporter of cotton in the world and the second-largest exporter of yarn in the world. Textile is the only industry in which India ranks among the top 10 of global market share and 80% of the players consist of small and medium enterprises. One of the first things Pratik managed to disrupt was the practice of doing every transaction on credit, rather than via advance payments. ‘For at least 60 to 120 days, everything is driven on credit in India. We started with a 100% advance payment just before the pandemic and this was the biggest struggle because no one was agreeing to breaking the pre-existing system,’ he says. Keeping that pain point in mind, Yarn Bazaar was born in July 2019. ‘So far we’ve done about Rs350 crore worth of transactions, all in advance payments,’ he says.

‘I knew people in the diamond industry who explained how trading had gone digital. Now, diamonds are a non-standard, high-value product whereas yarn is a standardized commodity. I thought if diamonds can be done digitally, why not yarn?’ ‘The USP,’ he explains, ‘is the quality control, discovery and recommendation that the digital platform provides to the buyer. Typically, between manufacturer and consumer there used to be multiple middlemen; there’s a distributer, a dealer, a trader and a broker, and each link is inflating the price for the consumer. To begin with, better prices was our value proposition. The buyer wants good quality with good prices and timely delivery. We wanted to solve for the supply chain problem and the credit problem.’

2020 was the first full year of business for the start-up, and in FY21, Yarn Bazaar managed to do Rs 100 crore worth of business, while in FY22, it grew to Rs 135 crore. Apart from yarn buying and selling, the company also conducts interviews and podcasts with industry experts, adding value to the sector.

The biggest advantage of being featured on Shark Tank India, he says, is that the visibility is very high. Pratik vividly remembers that his episode aired on 5 January. ‘Because of the power of OTT and social media, even today people continue to wake up to this new content. Then, they discover Yarn Bazaar and start contacting us. Earlier it was a big effort for us to reach out to buyers and suppliers; now potentially everyone in textiles knows about us,’ he says.

The biggest breakthrough on the client front was H&M, which does $7 billion of yarn sourcing globally, wanting to work with him. ‘They saw the show and my struggle, and the pain points resonated with them. They wanted us to look at their supply-chain problems and do yarn sourcing for them. That’s the power of television,’ he says.

Pratik, in fact, was about to drop out of the show as he thought a B2B company would never be able to raise funds. ‘I had no confidence that I would make it but I had a conviction when I was starting out. I also had a safety net in my family business. This backstop is important because you can take higher risks. Even if you lose everything, you have something to go back to.’

Also read: 'They lost huge opportunity': Shark Tank India judge on 'some startup ecosystem members'

His pitch, however, impressed the Sharks. He explained, ‘We enable textile companies to buy and sell yarn more efficiently through our website or mobile apps, using our proprietary online reverse auction (ORA) process while getting access to flexible unsecured lines of credit. This enables a yarn seller to increase their reach/sales and lead to better margins and lower their credit receivables. At the same time, the yarn buyer can reduce their raw material procurement costs.’ This disrupted the processes of procurement, marketing, distribution and sales, which used to be done completely offline via phone calls and one-to-one meetings.

Be shameless

Pratik used to wear his Yarn Bazaar-branded white T-shirts everywhere. ‘I would travel by local trains in Mumbai from my house in Malad to my office in Kalbadevi wearing that T-shirt. Many of my fellow passengers who were also from the textile business would come up and ask about my company,’ he says. ‘It was a great way for me to bring up my company in conversations.’

The amateur rhythm guitarist who used to play in a heavy metal band says that he has never been self-conscious about advertising his company. He would even wear the T-shirt to wedding functions and birthday parties. ‘I wanted everyone to know that I’m starting this.

This is my brand and I’m going to wear it every freaking time. As an entrepreneur, you have to believe that you’re doing something great even if it’s nothing. You have to meet people and make them trust your vision. That will only come from self-confidence,’ he says. ‘One big reason why start-ups fail is because you stop believing in them.’

Excerpted from Shark Tank India: Start-up Fundas from the Sharks and Participants by Shark Tank India with Prerna Lidhoo, with permission from Juggernaut Books.