How Startups are beginning to invest in the IPL and what that says about the VC Space in India
Issue 15 (20/05/2024): An article on how the level of startups sponsoring IPL teams may be a signal for overall startup health and excitement in the Indian economy
If you are like me, you have fixed (or completely ruined) your sleep schedule because the Indian Premier League (IPL) has been going on for the last two months and you have been religiously following it (yes, sadly the games are at 7 am everyday for me and I will do anything to see Virat Kohli play live).
Whilst watching what I thought to be another season of turmoil for my hero, the sudden surge of wins and a playoff position has brought a newfound joy after graduating college. But It’s also giving me a lot of time to reflect on what really matters - the ad space that the IPL takes (sarcasm). Like any sports league, majority of the visuals around the fields, the logos on the shirts, and even logos in the stands nowadays, are companies backing the league, the teams, among other things.
So for those who do not follow cricket, Bleacher Report wrote a lovely article titled “Lost in Translation: Explaining Cricket to the Americans”, but needless to say, technically, knowing how the sport is played is not important for this article. The only context required to understand the intrigue of why the marriage of startups and the IPL is to understand a brief history of cricket and the IPL.
National Pride
Cricket is a form of national pride and we hold the years of 1983 and 2011 very near and dear to our hearts - bringing people together from every corner of the country to cheer for one goal. It also is the common source for heartbreak, especially 2023 where our undefeated run crumbled at the last game - the final. Needless to say, cricket quickly transitioned from a sport to a lifestyle for Indians which brought on the creation of the Indian Premier League (IPL). Founded in 2007, it’s like any other round robin and playoff format sport league. The IPL is the most popular cricket league in the world which has grown to be a brand worth over $10 billion as of 2023, and it’s growing exponentially with this figure being $4.7 just two years prior. The IPL recently sold a five-year media rights for $6.2 billion, which just shows that the trajectory is upwards.
Startup Culture in India
We often talk about the startup scene in The Bay, Austin, or even New York - however, we forget to narrate the stories internationally. Notably SLUSH in Finland has grown to be a significant microcosm of startup culture in Europe, and India is growing to be a South Asian powerhouse of innovation. With a more welcoming regulatory environment, significant government support, and a growing rebellious nature to defy the traditional status quo that the young have adopted, India is arming itself with key tenets to thrive as a global startup capital. The “Startup India” initiative brought on my the Department for Promotion of Industry and International Trade (DPIIT) is a government initiative to encourage startup growth since 2016. Reports suggest that Indian startups raised over $10 billion in funding in 2021 with over 1500 startups receiving investments.
Match (pun intended) made in Heaven
It was only time that would keep the love marriage between cricket and startups waiting, but it seems like the IPL has changed that for the better. There is about a 68% increase in the number of startups that are sponsoring or affiliated with the IPL in the 2024 edition of the tournament with the two biggest teams leaning into startups being Mumbai Indians and Royal Challengers Bangalore. Both of these teams have partnered up with more than 10 startups, which in itself is an exciting concept.
We often talk about indexes such as the S&P 500 to give us a picture about the overall market health of an economy - however, I’m mildly convinced that the number of startups sponsoring the IPL may provide a glimpse into the startup ecosystem health in India. For example, in 2022, there were a total of 29 startups backing the IPL, but unfortunately this number dropped to 19 for the 2023 edition. This was attributed to a harsh funding winter as well as many profitability concerns in a difficult market. This has bounced back to 32 startups for the 2024 edition, insinuating an improved funding environment as well as an increase in marketing spending due to higher profits for startups. The amount a company spends on marketing has always indicated how healthy their cash flow and how convinced they are that consumers have excess disposable income - therefore, in my opinion, the markets are starting to regain their confidence. Of course to realise this hypothesis of startups being a ticker for overall startup health in India, we must wait for a few more seasons to notice the fluctuation - its good food for thought.
Why is this a great strategy?
Young Audience x Startups
India has found itself at the precipice of a very unique time. It’s currently in Stage 3 of the demographic transition model, which for the non geography nerds implies a declining death rate and what we know as the rising “golden age of workforces”. This suggests that there is a rising number of young people who are employed and gaining influence.
For a growing economy that is obsessed with startups and the IPL, it seems like a fantastic opportunity to push the narrative for both. Not only is the IPL creating the most unique of rivalries across India, but also bringing conversations to new innovations happening in the Indian economy. This may just be the purest form of a win-win that I’ve recently seen and I think everyone is here for it.
Attracting top Talent
Brand recognition is king and that’s a virtue that many startups lack. The IPL being the crème de la crème of brand recognition, it’s always supportive for startups to be visible. This may be a niche way to attract top talent into fast growing startups which fortifies the Startup India narrative brought into the country.
Global Viewership for Cheaper
As much as we talk about the IPL being an Indian followed league, it has global viewership. Viewership in the US according to the Economic Times is up 20% and expected to continually grow. Given the average cost for sponsorships are far less than competing leagues in Football (yes the real kind), Rugby, Basketball, among other sports, it’s a fantastic opportunity for startups to increase their global brand and reach early on.
What may happen in the future?
As the IPL continues to grow in popularity globally, the opportunities for startups to gain brand recognition and reach new audiences through sponsorships will likely increase as well. We may see more international startups, especially those looking to make inroads into the Indian market, pursuing IPL sponsorship deals. Additionally, as India's startup ecosystem matures, we could see some of the startups that initially sponsored the IPL evolve into larger, established companies. These "startup alumni" may continue their IPL sponsorships but at a higher level as their brands become household names.
Rather than just overall brand visibility, savvy startups may use IPL sponsorships to deliberately build affinity with specific communities they want to serve. For example, a startup focused on upskilling tech workers could target IPL franchises based in major IT hubs. Or an aggrotech startup may sponsor teams popular in rural cricket-loving regions. This allows startups to create contextually relevant associations.
The rising interest in cricket and the IPL across digital platforms like streaming and social media could also open up new avenues for startup sponsorship integrations beyond just the traditional field/jersey branding. Tech startups may innovate unique digital/virtual experiences or activations around the IPL. The massive viewership numbers provide incentive for startups to create innovative in-stadium experiences that integrate their products/services. Augmented reality overlays, interactive game elements, immersive fan zones and more could help startups leave lasting impressions. Some may even explore ownership stakes in building new, futuristic cricket venues. I would love to see a Red Bull model in the IPL, where new franchises are started and grown from existing brands - similar to Royal Challengers for RCB.
While sponsorships have been the primary mode of startup-IPL partnerships so far, we could see more unconventional models emerge over time. For instance, startups may structure revenue/rev-share agreements to create co-branded digital experiences or product placements within stadiums. Some may even acquire stakes in broader IPL commercial rights down the line.
Moreover, if the correlation between startup sponsorship levels and India's funding environment holds true, tracking the ebb and flow of IPL startup sponsors year-over-year could potentially serve as an interesting alternative data point for gauging sentiment in India's venture capital ecosystem. By closely monitoring which startups opt to sponsor the IPL and at what level, investors may gain insights into the companies' cash reserves, growth prospects, and willingness to spend on marketing activations. A spike in IPL sponsorships from startups in a particular sector could signal increased VC enthusiasm and funding flows into that domain. I would love to see this thought mature over the next few editions of the IPL and closely track the sentiment.
Overall, the synergistic relationship between the IPL's rising global appeal and India's flourishing startup culture seems poised to deepen in the years ahead as both pursue future growth. As I continue to hope for RCBs first title, I continue to hope for greater startup visibility across the IPL as well.