Sula Vineyards (A): Indian Wine - Ce n'est pas possible!

The case focuses on the risks and rewards of early-stage investing in a successful emerging market consumer start-up (i.e. non-tech), from seed funding in 2004 to raising expansion capital in 2019. We observe the founder of Sula Vineyards, a winemaker from the Nasik Valley in India, as he makes decisions about external fundraising. Case (A) takes the seed investor perspective. It follows Deepak Shahdadpuri, who stays invested in Sula for 13 years, gradually reducing his equity stake along the way. Cases (B) and (C) follow the company as it raises successively larger rounds of funding to fuel its growth and international expansion. As the Sula brand and CEO Rajeev Samant become increasingly well-known, the company attracts the attention of diverse investors ranging from European family offices, Asian institutional investors, venture capital and growth equity, and sovereign wealth funds. Given its emerging market setting, the case can be used to explore investment risks from political and regulatory uncertainty, and currency risk for US$-based institutional investors.

Students have a chance to observe a fast-growing business’s financing needs through the eyes of the investor (at seed and follow-on stage) and the founding entrepreneur. They are asked to make decisions about partnerships, understand the nuances between investor types (financial, strategic, sovereign, family office) and the technicalities of valuation. Macroeconomic risks, governance, shared responsibility, active/passive investor experience, and conflicting investor interests are also discussed.
• Case A: Sula as an early-stage investment opportunity; the valuation exercise and risk assessment from a seed investor’s point of view covering product risk and founder’s risk.
• Case B: Sula at growth stage; raising a subsequent round to scale up; market risk and implementation risk; the entrepreneur’s choice of subsequent partners after the exit of seed investors.
• Case C: Sula at a later stage; the founder deciding whether to keep the company private or take it public, and the potential impact on governance of transferring a majority stake to a single investor.