MUMBAI: With an eye on getting access to evolving technologies, mid-sized IT company Persistent Systems has launched a $10-million venture capital fund.
“We have launched the fund which will invest in very early stage companies, which will give us disproportionate access to evolving technology,” the company’s Chief Operating Officer Mrityunjay Singh told PTI.
“We are doing idea investing and not investing in a business model,” he said, adding the fund will act more like an angel fund.
He said the company is targeting investing in up to 40 start-ups through the fund and has already invested in five start-ups from within the country as well as outside, especially in the U.S. and Israel.
The typical timeframe till which the fund will stay invested is three-five years, he said.
Singh said if the investee company is doing good, it will command a high valuation for a complete acquisition by Persistent, while in the opposite case where it is doing badly, Persistent may not want to acquire it.
It can be noted that with fast changes in the landscape, many IT companies have increased their engagements with the fledgling start-up world.
IT bellwether Infosys has created a $500-million innovation fund, while rival TCS has associated with an accelerator called Startupbootcamp to have pitch days in the financial capital and Bengaluru.
Some analysts say the IT players are getting attracted to such investments because of the potential to work along side the investee company.
When asked if the size of the fund, at $10 million, is enough, Singh said given the size of the Pune- headquartered company, he finds it sufficient.
He said the company would be keenly looking at acquisition opportunities to achieve the targeted $1-billion in revenues in the next three to five years.
“We are at around $320 million at present and will have to grow both organically as well as look at inorganic growth opportunities to achieve the target,” he said, adding that it will not do acquisitions just for the sake of it but to get to the next level.
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