Instant food brand Yu, which raised Series A funds last October, has recently bagged strategic investment from cricketer Hardik Pandya. Pandya has also come on board as the brand ambassador for the start-up. Founded by Bharat Bhalla and Varun Kapur, Yu offers instant food and ready-to-eat product offerings. Cricketer Virat Kohli and his wife actor Anushka Sharma have invested in plant-based meat startup Blue Tribe. Virat has also invested in One8 innerwear and a restaurant Nueva World. Actor Alia Bhatt has invested in Nykaa and StyleCracker. Her own company Ed-a-Mamma is already a Rs 150-crore kidswear brand. Actor Ranveer Singh has invested in SUGAR Cosmetics. Suniel Shetty invested in a fitness startup Aquatein.

India’s burgeoning startup ecosystem has not only attracted investments from Angels, VCs and corporate investors but also fascinated a breed of unconventional investors –cricketers and actors.

The new-age celebs don't want to be just brand ambassadors anymore. They seek their pie in the success of the company as stakeholders. As per a report on a business site, over 18 actors and 12 crickets invested in various startups in 2022 alone. Most of these celebs are on the top and still have plenty of careers ahead. None of them has disclosed the amount of investment though. While many of these startups are working in the direct-to-consumer (D2C) space, the remaining belong to the edtech, fintech, and drone sectors. Incidentally, most of these investment deals were forged in 2022, when angel investors and venture capitalists across the world tightened their purse strings.

Some of these stars have even launched their own startups as well. Deepika Padukone for instance, has a self-care brand- 82°E. Tiger Shroff has set up own active lifestyle brand PROWL. Priyanka Chopra too has a hair care brand Anomaly.

Smart move

Actors and cricketers have been diversifying their businesses for years. For instance, Shah Rukh Khan and Preity Zinta invested in IPL franchises, Salman Khan has a clothing range, Being Human, and Hrithik Roshan owns the fitness brand HRX.

Lloyd Mathias, an angel investor and business strategist, explains the reason behind the trend. “Celebrity-driven entrepreneurship has been picking up significantly. For many celebrities, especially sportspersons, careers tend to be short (10-12 years) and entrepreneurship gives them longer play to monetize their popularity.”

“Actors and cricketers are well advised by a phalanx of wealth managers and financial advisors. So they are getting smarter with their investment options”, says Sandeep Goyal, MD of Rediffusion.

To the start-ups, it is both some cash saved, and bragging rights too. So a win-win for all. All these celebs know that they have a finite life cycle- so cash or kind both work, he quips.

Mitisha Mehta, Co-Founder, Aquatien, adds, “Suniel Shetty’s name, his work, his ethics and his perspective on health, fitness and nutrition are known to all. When a celebrity with such strong values and vision comes on board a brand where he sees a similar ethos, the synergy turns into a powerful combination that is capable of bringing about change and evolution.”

Being a startup, his presence and support will add credibility to a brand that is still in its growing stages and is determined to reach every corner of the country, she adds.

Brands and Investors

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Barter deal?

Mathias and Goyal both point out that most celebrity investments in startups are in the form of a barter deal. The sportsperson or the actor commits time and resources against equity and some cash payout.

Equity in lieu of full fees is not a new practice. Bollywood top heroes have done it for decades by taking an ‘upside’ in their movies. With the current crop equity in start-ups is equivalent to ‘upside’, Goyal said.

Win-Win

Such partnerships help both the startups as well as the celebrities, experts say.

Samit Sinha, Founder and MD of Alchemist Brand Consulting, says, “The former get capital and the latter get an income earning opportunity that extends beyond their careers. The celebrity adds a bit of glamour to the brand and makes it more conspicuous. It can sometimes also help inspire both investor and consumer confidence in the brand.”

Stars bring much more to the table than just cash for many ambitious entrepreneurs, says Mathias. He noted, “For startups, a celebrity endorsement provides a huge benefit – starting with star power that gets their business & brand noticeability amongst consumers, employees, associates and investors.”

Brand expert Aviral Jain, explains, “If a startup is facing a challenge in raising funds through conventional channels, an investment from a celebrity can bring in more than just dry powder - it also comes with glam and shine.”

Overall, having a celebrity investor is a powerful marketing tool for a brand, which helps increase visibility, build credibility, and enhance the brand's reputation in a short period of time. The celebrity may also become the face of the investee company’s product, creating a unique strategic relationship contributing to accelerated commercialization, Jain added.

Despite the glam Q of celebs and investment, there is no guarantee that the venture would succeed. Several cricketers including Sachin Tendulkar, Saurav Ganguly and Virender Sehwag launched their own restaurant chains, most of them shut down over the years.

Impact on Celebs’ brand value

Do such partnerships add to the brand values of celebrities? Experts have a mixed reaction.

According to Mathias, celebrities association with a business enhances their brand value as their association as an investor gets picked up by the business media besides the lifestyle media. Also, they feature in the brands’ communication and a big part of a celebrity's persona is the media exposure over and above their salience in their core field – be it acting or sports.

“Brand associations are also a form of cultural expression and a private-equity portfolio is a welcome addition to their overall financial assets. Investment associations also help them financially as a monetary hedge post their active careers. Yesteryear superstars like Kapil Dev, Hema Malini and Madhuri Dixit still have a clutch of brand endorsements monetizing their immense star status that keep their cash registers ticking,” Mathias says.

Samit Sinha feels it does not help celebrities increase their own brand value as that comes almost exclusively from their proficiency and fame in their respective domains, be it cricket or entertainment.