Ratan Tata: Valuations seem to be driving these companies

Legendary business tycoon, Ratan Tata believes that valuations of e-commerce companies are very high but these firms should be given time to prove themselves on a par with established
Ratan Tata: Valuations seem to be driving these companies

Ratan Tata, Emeritus chairman of Tata Group, has actively invested in around 10 strartups ecommerce startups. Further, he believes that valuations of e-commerce companies are very high but these firms should be given time to prove themselves on a par with established businesses.

"It's true valuations are very high and valuations seem to be driving these companies more than the more traditional metrics of valuations," he said at an industry event in reply to whether Indian ecommerce was headed for a valuation bubble. "It is similar to what has happened elsewhere and we ought to give these young entrepreneurs a chance to prove themselves shoulder-to-shoulder with traditional business.

Tata, chairman emeritus of the Tata Group, has invested in more than 10 startups since last year, including in Snapdeal and Urbanladder. The investments were made in his personal capacity and not by the group, he said.

"I believe that Indian enterprises need to be encouraged. One needs to lend mentoring to young people, give them a chance and feel very proud that this new industry is emerging in the country," said Tata.

Tata's involvement with startups has come at a time when Indian internet companies are attracting record investments - about $5 billion (Rs 32,000 crore) in 2014, and about $1.8 billion between January and March this year.

Tata, 77, said the flood of foreign capital into Indian startups will keep ethics, governance and business practices in check. "The fact that they have external investors, overseas investors, is good as they will exit if the company is imprudent or the business is operating in a grey area."

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