Forbes India 15th Anniversary Special

He's On a Search, Find and Fund Mission

It's likely that you've never heard of Chenraj Jain. But his unique approach to investing has already helped create over 40 entrepreneurs, and he's determined to take that number up, to 350 by 2015

Published: Sep 2, 2011 06:34:33 AM IST
Updated: Feb 14, 2014 11:58:32 AM IST
He's On a Search, Find and Fund Mission
Image: Gireesh GV for Forbes India
Chenraj Jain

Jia Jain was devastated. In his business, either you have it or you don’t — and the judgement comes pretty early. After all, he’d seen so many swanky restaurants come up on busy streets and as many vanish without a trace. Now, his own fine-dining restaurant — idealistically named 1947 — seemed to be headed towards a painful closure: People didn’t come.

He didn’t turn to his parents or brothers for solace. They were in far-away Assam and he was trying to make it big in Bangalore. In fact, he hadn’t even told them he was starting a restaurant — he was planning on surprising them.

Instead he went to Chenraj Jain.

Jain — no relation to Jia Jain — is 50 and an investor in the restaurant. Jia Jain had gone to a university run by Chenraj Jain, and after completing his studies there, he was encouraged by Jain to start his own business. He funded, advised and supported him. With his own parents far away, Chenraj Jain was like a father-figure to Jia Jain.

When Jia Jain approached him with his problems, Jain listened with patience. And then he spoke about the nature of restaurant business, and the need for patience and perseverance. Jia Jain, however, was worried about the mounting losses. Wouldn’t it be wiser to close the restaurant down, cut the losses, and move on? Chenraj Jain told him not to worry about losses. “The losses are all mine, the profit is yours. Just go for it Jia,” he said.

In the world of Indian entrepreneurs, there is a yawning gap between the traditional and the modern. In small towns across the country, young entrepreneurs depend on a mentor-mentee relationship with seniors of their community while setting up businesses. They look up to them for motivation, guidance, support and funding. The seniors are happy to provide the same, in part because they too benefited from such help during their early years and in part as an obligation to their community. For instance, in Sivakasi, a printing and fireworks hub in Tamil Nadu, the first major order for a new entrepreneur who sets up a printing press typically comes from a senior businessman from whom the entrepreneur learned the trade.

This is in contrast to the venture capital model made popular by Silicon Valley where valuation, due diligence and business models are everything.

The investors have definite ideas about return on investments and they never enter without an exit strategy. For their part, the entrepreneurs are happy to take help from a venture capitalist (VC) and tap into his network. But they usually don’t appreciate too much intrusion. Many second-time entrepreneurs refuse to have anything to do with VCs. Hurt by the cold formality of their approach, once is one time too many for them.

Chenraj Jain is trying to fill the gap between the traditional and the modern approaches. In the past six to seven years, he’s incubated over 40 businesses, guided by instinct rather than valuation models. He is paternalistic towards his entrepreneurs and provides support through his social and business networks. Together, the businesses he helped create make over Rs. 147 crore in revenues every year and employ 3,500 people. Now, he wants to scale up and take the number up to 350 businesses by 2015. In many ways, Jain, who lives in a joint family of 11 in Bangalore’s Cox Town, is like the senior of a community. He’s propelled by a sense of loyalty and obligation to support young entrepreneurs; except that his ‘mentees’ are drawn from a diverse background, cutting across religions, castes, regions and languages.  

For Jain, a philanthropist involved with charitable institutions like the Mahaveer Jain Hospital in Bangalore, angel investing is where his family, social and business values converge.

Mohandas Pai, till recently a member of the Infosys board, says, “He is the Indian version of an angel investor with a lot of mentoring and support, where you treat it as a family business and the entrepreneur becomes part of the family. It is not like the Western model of high growth and high return. Here, the person who is mentoring is more important than the investment.”

The Early Days
Chenraj Jain learned the basics of business as a distributor for Dhirubhai Ambani’s Reliance Industries. He dropped out of school in his teens, joined his family business and worked in a shop in Basavangudi, Bangalore. Later, he moved to a Bombay Dyeing showroom as a sales executive.

In April 1976, Devraj Ranka, a distributor of Reliance for Karnataka and a family friend took Jain to Ahmedabad and introduced him to Ambani. Jain was very impressed by Ambani’s energy and still remembers the firm handshake he received the first time they met. Some years later, Ambani said he was impressed with Jain’s enthusiasm and business skills. (Jain used to take a lot of interest in organising dealers’ meetings and once achieved a three-year target of setting up a retail network of 300 outlets in Andhra Pradesh in just three months.)

He also learned from Ambani that the key to success was to set a big goal and work backwards.

While working with Reliance, he realised that the best way to get more retailers to sell Reliance products was to create more entrepreneurs — by convincing good salesmen to start their own outlets. Many were reluctant  initially. Jain encouraged them to start small, and display bits (not the full length dress material). In a matter of months, he set up a network of 800 bits’ showrooms. He travelled all over the south, and over time, was dealing with 8,000 customers.

He's On a Search, Find and Fund Mission
Illustration: Vidyanand Kamat

Looking at how Ambani operated taught him to look ahead and plan big. “I remember they [Reliance] used to think about 2020 in 1980. And I knew if I have to grow big, I have to look far ahead,” Jain says.  

When he looked ahead, the school dropout saw a huge demand for education and wanted to set up institutions. But obstacles came in the form of bureaucracy. When he wanted a government permission and found that the ministry was reluctant to give it for no particular reason, he stood outside the minister’s house everyday waiting for his car. “I used to simply stand in front of his house — it was my own Satyagraha. Eighteen days passed, and he signed the order out of frustration,” Jain says.

Today, Jain Group of Institutions includes 59 schools and colleges, employs over 3,000 people and has taught over 30,000 students in the past 20 years.

As someone who works 18-20 hours a day, Jain resumed his education, got a Ph.D from Mysore University, and started teaching entrepreneurship to commerce and MBA students. It soon dawned on him that he could do more.

“I came across these really intelligent, hardworking students when I walked around the campus. And I knew instinctively some of them will make great entrepreneurs. They were too young to realise it themselves. They needed some push, encouragement. That is all,” he says.

Jain’s approach to his investments is simple. He looks for passion and ability to work hard. (“In India, ideas are not in short supply,” he says.) He believes in aiming high, but scaling up gradually. The companies span technology, BPO, retail, consulting, financial services but he suggests education, healthcare and hospitality to those who dither. (“They are recession proof”.) He typically takes 30-50 percent stake in a venture, and doesn’t have a fixed time-frame for an exit.

What makes this approach stand out further is Jain’s personality. Those who worked with him say he is a motivator, an empathiser, patient to a fault and always generous with his money and with his network.

Abdul Sait, who runs a financial services firm called Basket Options and one of the early entrepreneurs Jain funded, says it took just two minutes for Jain to okay his project. As a student, Sait was inspired by a lecture on entrepreneurship by Jain. So, he met Jain after class one day and told him he wanted to start a brokerage. Pat came the reply with the promise of support.

Of course, he doesn’t say yes to everyone. He goes by his instincts. Mythili P. Rao, principal of Jain College’s J.C. Road campus in Bangalore, says Jain is exceptional at identifying talent. “He gives the responsibility, and that pushes the person to discover his or her own strength,” she says.

Billiards world champion Pankaj Advani agrees. An alumnus of Jain College, he says Jain has an uncanny knack of identifying talent and making them think big. Once, on seeing Advani in the campus, Jain asked him about his billiards practice. At that time, Advani was thinking of making it big at the national level. Jain told him, “You should aim for world championship.... in two years.” Though it looked like a distant dream then, Advani felt inspired. “What strikes you most about him is his empathy. You always feel here’s a person who understands your aspirations.”

He's On a Search, Find and Fund Mission
Abdul G. Sait, Founder, Basket Options

In some cases, Jain uses his own educational institutions as a captive market. If a school comes up in a new place, it creates demand for uniform, shoes, books, notebooks and even transport — and an opportunity for an entrepreneur.  

That’s how Saket Jalan, who now runs a bouquet of businesses including hospitality and financial services, took his second step into entrepreneurship: Building and running hostels for Jain colleges. Earlier, he’d tried to run a restaurant in Mumbai and ended up in losses.
Eventually, he shifted to Bangalore, chanced to meet Chenraj Jain and was so impressed by him that Jalan wanted to do nothing but be around him and learn. Jain suggested he start hostels for the students of his colleges. Jalan started small ­— with just 35 students — but that was enough to give him the confidence to scale up and then diversify. His businesses now employ 300 people, and have a combined turnover of Rs. 16 crore.

Time To Scale UP
Jain is no longer happy to let chance meetings determine his portfolio. He wants to scale up and has committed Rs. 500 crore to incubate 350 businesses by 2015. To this end, he brought all his investments under an umbrella called JGI Ventures, and appointed Hemachandran Seshadri, a chartered accountant, as its CEO this year. Seshadri has worked for Hindustan Unilever, DCM Group, Reliance and most recently the Tatas. “What impressed me most about Chenraj Jain was the free education he was providing to the poor through some of the institutions that he has been running for profit. That said something about the man,” Seshadri says.  

 Seshadri’s agenda is clear. He has to drive JGI Ventures, find good use for the money Jain has committed and spot entrepreneurs. While some of the lessons that Jain learned so far would guide the new investments, Seshadri will also be required to put in processes that will help scale up faster.

Now, Jain has launched a 30-month entrepreneurship programme (iDea - Incubation & Development of Entreprenurial Ability) to increase the conversion rate. The programme includes a mix of classroom training and seminar, and travel to six countries, culminating in the incubation and launch of businesses. He expects to have about 100 students in the first year.

While these two might help JGI Ventures scale up, the missing element could be his personal touch. He nurtured the first 40-odd ventures by being generous with his time and ideas. But that model works only as long as the numbers are limited.  

He's On a Search, Find and Fund Mission
Jain is aware of it, and says the scale of his ambition came with its own solution. He doesn’t want to stop at 350 entrepreneurs, but wants to create over 8,800. It’s just a number he came up with. The only way to make that happen is to make his own entrepreneurs inspire others.  “I have at best 10 to 15 years of active life ahead of me. I am a man in a hurry. And if I have to create 8,800 entrepreneurs I know the only way to do that is through my network,” he says.

That will be a lot tougher than setting up an angel fund, or starting an entrepreneurship course. But he’s trying. When Abdul Sait wanted to move to a bigger office, Jain did not involve himself in the negotiations, instead he asked Jia Jain to help Sait. The negotiations went well, and Sait got a good deal. In the same spirit, Jain hopes JGI entrepreneurs will help the younger generation.  

Saket Jalan says he is always on the lookout for both prospective entrepreneurs and opportunities, and when he finds someone promising, he tries to bring him in. Both Jalan and Sait are in the management team of JGI Ventures. “He expects us to inspire others to take up entrepreneurship, he wants us to help our juniors and support them as he helped us and supported us,” Sait says.

(Additional reporting by Nilofer D’Souza)

(This story appears in the 09 September, 2011 issue of Forbes India. To visit our Archives, click here.)