Shark Tank India: Judges back a co-founder but not his company due to its unjust equity structure

• Gavin Paris is a streetwear fashion brand creating gender-neutral oversized clothing.
• In just 7 months of operations, the startup made sales of ₹1.4 crore - thanks to the marketing genius of co-founder & CTO, Ashutosh Roy, who has 0% equity in the company.
  
• Though impressed with the startup’s sales and product quality, the sharks backed out because of the unfair equity structure between the co-founders.
  

Many times, it’s not just the product that wins over the Shark Tank India panel, but also the person pitching the product. Something similar happened when founders Kishor Jairamka and Ashutosh Roy pitched their streetwear fashion brand, Gavin Paris, on Shark Tank India Season 2 on Monday, February 6.

However, what was surprising was that most judges on the panel offered to invest in Roy, and not in Gavin Paris, for any other startup that he may run.

All the sharks were left duly impressed by Roy’s marketing skills and were shocked at his almost non-existent equity share in Gavin Paris. Consequently, he received not one, but two funding offers - from CarDekho.com co-founder Amit Jain and boAt co-founder Aman Gupta.

“Ashutosh, if you ever want to start a business, contact me for funds,” remarked Jain. Gupta added, “if he (Jain) doesn’t give a good deal, come to me!”

Co-founder without equity ‘practically running the company’

Founded in 2022, Gavin Paris is a Kolkata-based startup that creates gender-neutral oversized clothing. By tapping into the current popularity of oversized fashion, the startup generated sales worth ₹1.4 crore in just 7 months of operations - only by selling on their own website.

And that was primarily because of Roy’s marketing genius.

26-year-old Roy and 40-year-old Jairamka are family friends. Roy, who functions as the company’s chief technology officer (CTO), is a BTech graduate who founded his own startup, TechOrion, in his second year of college – and it stopped operations in 2021.

Jairamka, meanwhile, has a 15-year-old family business - a manufacturing plant of packaged drinking water, currently being headed by his younger brother.

Roy shared that the monthly spend on digital marketing (on Facebook and Instagram) was anywhere between ₹5-6 lakh. Moreover, in just 7 months of operations, the startup had 115k followers on Instagram.

“You (Roy) do the marketing on the website - you practically run the entire business,” added Amit Jain.

On further inquiry, the sharks realised that while Roy was clearly the reason behind Gavin Paris’ phenomenal sales, he had no stake in the company - 100% equity was with Jairamka, who had invested ₹50 lakh in the company.

“I have 100% equity. Ashutosh is on a commission model - later, when we register the company, we’ll discuss the equity. We’ve verbally agreed on 10% equity (for Roy),” shared Jairamka on the show.

Roy shared that he receives ₹25 as commission per product, which translates to a monthly earning of ₹1 lakh.

“There are two parts of your business- backend i.e. production which you’re (Jairamka) handling. Second is value creation, which includes technology, marketing, and user understanding - it’s the most important and captures more value, that’s handled by Ashutosh. The guy who is responsible for value creation, you’ve kept him on a commission model,” commented Anupam Mittal, founder, Shaadi.com

‘Robbed the kid blind’

The sharks were impressed by the quality of the products and the nominal pricing, but expressed their concerns over what they deemed to be an unfair division of equity.

Roy not only handled the marketing but also answered many of the questions the sharks posed about the startup - from the future vision to the target audience, profit margins, and even the challenges the company was facing.

While Jain commented that Jairamka had “robbed the kid blind,” Mittal believed that even the proposed equity split was unjust.

“You (Roy) seem very naive to me, and you (Jairamka) appear to be over-smart. What’s happening is unjust in my opinion… Ashutosh, I feel you should sit with him (Jairamka) and assert your rights. Stand up for yourself and demand what you deserve,” shared Mittal while backing out from investing.

Namita Thapar, executive director of Emcure Pharmaceuticals, also backed out because she didn’t believe the product had a strong USP to scale in a cluttered market. Jain, meanwhile, backed out because he didn’t believe Jairamka understood the importance of his co-founder.

“The day he (Roy) leaves, your business will shut down. How will you generate business in the absence of digital marketing and technology? Where will you sell?” remarked Jain, while also adding that he felt Roy deserved a fair equity share.

BoAt co-founder Gupta also backed out but advised Roy to not lose sight of the important things - and even made him an offer to branch out on his own.

“Fight with him. Stop working and take the shares. If he doesn’t agree, I have an offer for you -start the same business with me. Please think about yourself,” said Gupta.

Jain also made the same offer as Gupta, again adding that Roy’s marketing skills were truly commendable. Sugar Cosmetics’ co-founder Vineeta Singh, however, made an offer for Gavin Paris - ₹30 lakh for 10% equity, and ₹20 lakh in debt at a 12% interest rate - but on the condition that Roy received a 40% equity stake. This valued the company at ₹1.5 crore.

However, the deal fell through as Jairamka didn’t want to offer a 40% equity stake to Roy.

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