The Indian conglomerate set up the SIG Tattva corporate venture arm, headed by Sriharsha Bandaluppi, at the end of last year and just unveiled its second investment.
At a time when many corporates are looking to consolidate or close down their corporate venturing arms, Indian conglomerate Somany Impresa Group has chosen to go the other way. It formally launched its corporate VC arm, SIG Tattva, in November last year to invest in early-stage ventures – a move that was set in motion by Shashvat Somany, group strategy head at SIG and founder of Tattva.
“We wanted to stop playing catch-up,” says Sriharsha Bandaluppi, head – innovation and corporate venture capital, SIG Tattva. “We realised we needed a better way to look at innovation, probably through a different lens.”
The team’s latest investment, unveiled today, is a strategic investment of ₹6 crore ($0.7m) in Mad Over Buildings, a fintech-enabled B2B ecommerce platform specialising in building materials. This investment in MOB is the unit’s second to be made public and reflects their vision to not only participate in but actively shape the future of India’s building materials ecosystem, says Somany.
Somany Impressa, founded in 1981, has interests in building products, consumer appliances and packaging products, and the investment in the MOB ecommerce platform is seen as a way to help parts of the group, like the Hindware sanitary products business, move faster into digital sales. The company’s glass bottle manufacturing arm AGI Greenpac, can also leverage the advanced ecommerce technologies.
The company is looking to make further investments in startups in deep tech manufacturing, enterprise software-as-a-service, clean technologies, next-generation ecommerce and disruptive product innovations.
Corporate venture capital as reinvention for the company
Somany Impresa Group has extended its business many times over the past four decades. It started off with sanitary ware under the Hindware brand and then moved on to faucets, pipes and other related categories. It later expanded into glass bottle manufacturing under AGI Greenpac.
“We are one of India’s largest glass bottle container manufacturers,” says Bandaluppi. “We do bottles for Coca Cola, Pernod Ricard, Diageo.”
This was followed by further diversification – cap enclosures, plastic PET bottles, chimney cooktops.
“But we were always looking for ways to reinvent ourselves.”
The Hindware brand, which had long held a strong market share in bathroom and kitchen fittings, for example, was seeing a growing number of competitors entering the market, and needed to find ways to maintain its competitive edge, Bandaluppi said.
Bandaluppi saw that most diversification avenues, however, were turning out to be very capital intensive. “It was either M&A or a joint venture or a partnership and then setting up a full-fledged manufacturing unit.”
“We needed a better way to keep track of what was out there in terms of the latest technology.”
At the same time, Bandaluppi and the parent company realised they weren’t setting the trends with new products, they were only playing catch-up.
“If someone had come up with shatterproof glass, for example, in the industry, we would then say let’s make something similar. This is when we realised, we needed a better way to keep track of what was out there in terms of the latest technology,” says Bandaluppi.
“Parallelly, Shashvat Somany had also had a chance to view corporate venture capital closely while studying in London. And he realised the value it can bring to the table. We took a go ahead from the board last year and formalised into a CVC.”
SIG Tattva’s first investment was in September this year when it led a $0.4m (₹3.5 crore) funding round in AI, IoT, AR/VR and cloud technology developer Crion.
The CVC unit presently stands at three closed investments and two more in the due diligence phase.
Pilot before pitch
“When we started, we thought we’d only do very small tickets between seed and series A stages,” says Bandaluppi. “But we’ve already done one pre-series B and our seed ticket size has increased from around ₹2-3 crore per startup to the range of ₹8-10 crore – which is close to a million dollars.”
The five-person team led by Bandaluppi invests from the balance sheet rather than from a separate fund, and looks for startups that have a strong strategic alignment with what the corporate does.
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To ensure this, the unit has come up with a unique programme called Pilot Before Pitch. This is an initiative designed to reshape how startups and enterprises collaborate.
“What this means is that every startup has to have a substantial pilot first and this pilot has to get a go ahead from the business users. Imagine I’m a salesperson and there’s a startup that comes to me with a product or technology. I’ll only give the go ahead once I’m satisfied with it,” explains Bandaluppi.
Through this programme, SIG Tattva aims to create a collaborative ecosystem where startups, investors and industry co-create solutions for the future in order to accelerate the adoption of innovation.
“There are three parts to our investment lens. The first and foremost is the strategic fit – not just in the way the whole thing moves but also how it functions as an innovation. The second is any adjacency diversification at the product level that we can look at. And the final one is the financial or commercial angle,” says Bandaluppi.
“We have to stay ahead of the curve to remain relevant.”
