Time for mix doubles to VCs

Time for mix doubles to VCs

By agencies   |   Wednesday, 26 April 2006, 07:00 Hrs
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NEW DELHI: For venture capitalists coming to India, it’s time for mixed doubles. While co-investing may not be a new phenomenon globally, it’s a trend that’s fast catching on here with prominent VCs choosing to tie up for their India-focused funds and investments.

Besides co-investing in one-off deals, VCs are seeking strategic long-term relationships for the Indian market. Explains Prakash Bhalerao, Silicon Valley-based serial entrepreneur, angel investor and VC, ¬ďIndia is the flavor of the month among VCs in Silicon Valley and the third-generation India funds have become really big.

The big firms, coming to India for the first time face challenges and risks. Relationships with people who have an India presence or genealogy are thus becoming increasingly important.¬Ē The logic, perhaps, behind big league partnership like that between Kleiner Perkins and Ram Shriram, who¬ís among the most successful Indian VCs in the U.S.

¬ďFor our entry into India, we were looking for a partner who would add value and expertise on board rather than the money. In Shriram, we obviously found both. For VC firms in the U.S. that are entering the Indian market for the first time, it makes sense to team up firms that have local expertise.

Shriram, apart from his shrewd investment instincts, also brings expertise and experience about India to the table,¬Ē says Ajit Nazre, partner KPCB. Agrees Sandeep Murthy, who has joined Shriram¬ís Sherpalo Ventures as partner and is looking after Indian operations of both companies, ¬ďSherpalo & KPCB have co-invested in U.S. companies like Pod Show and Zazzle.

In India, the partnership is about adding value through synergies. While we are working together on our Indian investments, we are also open to other partnerships.¬Ē For another well-known VC of Indian origin Vinod Khosla, his new firm Khosla Ventures too is co-investing with KPCB, where he was a partner.

While local expertise and experience may be sending VC firms scouting for partners with Indian genes, sometimes it¬ís global skills, which drive partnerships among VCs too. Says Sanjay Anandaram, founding partner, JumpStartUp Venture Fund, ¬ďAs companies become more global, different experiences and skills are required around the table.

In addition to spreading the financial risk, co-investment helps provide a company with more rounded experiences. It is happening all around these days.

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