Rajan Navani, the entrepreneurial principal of the diversified Navani family-owned JetLine Group of Companies, says trust and clear communication are essential to build bridges between family offices and venture capitalists.
Navani spoke with CampdenFB before his chairmanship of the Indian Family Office Meeting, hosted virtually by Campden Family Connect, on 19-21 January.
JetLine traces its roots back to Bangkok in the 1930s and established itself in India in 1975. The leading family manufacturer of paper-based packaging has also embraced technology and India’s 1.3 billion digital consumers.
Navani, vice chairman and managing director of Jetline, founded and is chief executive of JetSynthesys within the group. JetSynthesys is investing in and acquiring consumer-facing digital platforms, products and services in India, MENA, South East Asia, Japan, the United Kingdom and United States.
The tech division has operational businesses in digital media, entertainment and in categories including short format video and music, over-the-top, gaming, classifieds, cricket, mobility, mindfulness and healthcare. The venture is also building artificial intelligence, blockchain and AR/VR/MR/XR led Industry 4.0 solutions.
JetSynthesys is engaging with startups in India, Israel, Singapore, Japan, the UK and US through its early-stage fund JetVentures and innovation accelerator JetLabs in Silicon Valley-style co-working spaces called ‘Garage’.
Navani shares his thoughts on the family office space in India, how he intends to fund growth in 2021 and which prospects are exciting him as an investor.
Family offices are becoming increasingly important in India. Today the role of a family office goes far beyond just managing the wealth of one family or ensuring it extends across generations, this role has grown to include several other services such as funding business diversification, tax management, succession planning, financial arrangements and investing wealth prudently. Please do give the family office the importance it truly deserves.
How would you rate the progress of the nascent family office space in India so far and which areas should Indian family offices focus on improving in 2021?
Family offices are now beginning to make great progress. In a changed disruptive world, family offices in India can allocate more capital to new age high risk, high return investments. It can also provide a learning to launch new businesses for the future.
In India, 1% or less of the portfolio capital of family offices is allocated to startups, as compared to their peers in other developed countries that allot close to 15%. Also investing more in the later stage growth, unlisted equity space, directly or through private equity funds, can generate higher returns in today’s fast paced world.
You have said the bridge between the venture capitalist and family office needs to be strengthened—how can that be achieved?
Building trust and ensuring transparency, is key in any investing activity, especially when dealing with a family office. Once a VC is able to build trust, then it becomes easy for a family office to invest through a VC as a first step. It’s a good way to learn from a variety of founders and understand the space. Family offices can also use VCs as advisors on where to invest.
What would also help bridge the gap between venture capitalists and family offices is proper and clear communication—for a family office to invest in a VC, the science of venture investing should be very clear—portfolio construction, stage of investing, reserve management policy, exits, treasury management policies, mortality rate, valuation policy, team economics, cost.
Our investment strategy, while cautious in the first quarter of this financial year, with a goal of maintaining high liquidity, turned aggressive in the last two quarters. We believe there is great value to be unlocked in the future and we have increased our exposure to unlisted, high growth equity investments that have ‘digital’ as the underlying theme. We also have several digital businesses operating globally and have allocated more investible capital through our family office to those businesses too. We have retained our real estate portfolio as is.
What have been the toughest business decisions you have had to make to during the pandemic?
Going through the pandemic without any salary cuts across all our group companies was a difficult decision in March 2020. However, looking back, there couldn’t have been a better decision. As a matter of fact, we had a new appraisal cycle introduced to increase salaries in this pandemic year. The loyalty and support we have received from our employees in return, is overwhelming.
How do you intend to fund growth in 2021?
We have further capitalised our group companies through partial equity dilution, especially those in the digital domain, to meaningfully leverage opportunities in this space. We have made acquisitions as well as created new growth partnerships into which we intend to invest significantly.
Which asset classes or sectors are most exciting you as an investor?
Unlisted equity clearly stands out for us as an asset class to further invest into. Consumer internet and theme based specific VC and PE funds with track records, direct investments into businesses that consume large amount of data, like gaming, e-sports, mindfulness along with deep tech are exciting sectors for us, areas in which we are increasing our exposure.