Beyond big ticket deals: Millions chase 'millennial' ventures

Bets are being made on gaming, personal fitness and ride-sharing, among others

Beyond big-ticket deals that centre around infrastructure, real estate and IT plays, investors are also looking at businesses that cater to millennials as new ventures emerge to match new lifestyles. 

While the past decade has seen examples such as food delivery app Swiggy change the way young professionals eat, and others like Uber and Ola the way they travel, it’s just the beginning of what the future holds. 

A market research by private equity fund Multiples Alternate Asset Management indicates that India has half a billion millennials between the ages 18 and 35, which means they acco­unt for over a third of the nation’s population, and almost half of the country’s works force. 

An equal number of millennials are also primary wage-earners of their family but investors caution that it’s not enough to simply invest in franchises without understanding how young buyers actually rationalise purchases. 

Sandeep Naik, Managing Director of General Atlantic in India, says “Millennials leverage technology to eat, shop, commute, bank, watch co­n­tent, socialise, and now even to find love.” He’s on target, and exemplifying his view are several investors chasing deals in related areas. The basket is a mix of PE funds as well as venture capitalists that include Multiples, Lighthouse Funds, Gaja Capital, and Eight Roads Capital, and more.

For each of their use cases, new disruptive companies have emerged and have quickly become or are becoming household names in India. 

“We believe that we are in the early innings of this playing out in India,” Naik adds. He says that among the more powerful changes are the empowerment of the Indian woman who has become an economic force and represents an underserved consumer category. New businesses targeting her have a huge opportunity. 

Gopal Jain, founder of early stage venture capital firm Gaja Capital, says that in the context of food businesses, “Mille­nnials photograph their food so they can share it on the social media, and they do it before they actually start eating.” He adds, it is unusual and different from older consumers. The learning? “If you’re catering to that sort of an audience, make sure the entrees look as good as they ta­ste, and are affordable as well,” adds Jain.

Yash Baheti, an associate with Multiples, breaks it down. “Millennials are connected to each other, have moved from owning to shared goods, attach a premium to personalisation and are fitness-focussed,” he says.

Bounce, a scooter-sharing app, exemplifies the sharing mindset, and some investors say in the future don’t be surprised to see the same approach for luxury goods that include watches, suits, tuxedos and wedding wear. 

“Their incremental earnings are appropriated towards consumption as opposed to savings.” 

They're also very mobile in the way they look at entertainment and spend leisure time. That’s why Multiples invested in Dream 11, a fantasy gaming start-up. Jain agrees as he states that millennials connect with sports more viscerally than do earlier generation consumers, and what he means is there’s a greater connect to a particular game than before.

The difference between millennial businesses and others? The profession is seen as ‘a gig economy’ and revolves around experiences and benefits versus corporate brands and flexible workplaces. With the rise of co-working spaces, millennials are the chief earners in their families, aspirational and manage their own finances. 

“Millennials are expressive and opinionated and don’t hold back. This can be blessing or a curse. Some of that can be worked around,” says Mukesh Sawlani, managing director of the House of Anita Dongre, funded by General Atlantic.

“While there isn’t very much of a scientific approach one can take with younger demographics, what we know for now is this: The millennial wants to look and feel good, and be told the truth and that is a very powerful driver,” he adds.