IDGVI News: Media Coverage 2008

Private equity's new face

A younger group of professionals at the helm of private equity and venture capital firms has ensured an infusion of fresh ideas in one of the world's most promising markets

HT Mint - Wall Street Journal, Mumbai | 11.02.2008

By Namitha Jagadeesh and Rana Rosen

As private equity (PE) investments, followed by venture capital (VC), grow in India, the men and women who manage these pools of capital are getting younger.

A random survey by Mint indicates that the average age of fund management teams at PE and VC firms in the country today is below 40 years.

This is true across mega leveraged buyout shops and mid- to small-sized outfits. Many of these teams are, in turn, led by equally young individuals-faces that emerged barely two years ago and, in some cases, maybe less.

Some have moved back home from overseas jobs in consulting or investment banking. Others have changed lanes, moving out of domestic sectors such as information technology, manufacturing and financial services.

Compared with PE, the VC space, which is PE's early-stage variant, perhaps has more new and young faces-the segment started coming into its own in India only last year.

In the absence of a local base of professionals, most of the people in this space hail from Silicon Valley in the US-Americans of Indian origin who have moved base to India to earn their wings in what is now widely seen as one of the world's most promising and yet under-exploited venture markets.

We picked six young protagonists, three each from VC and PE, who represent the new face of the business today. Each, in his or her own way, represents how the business has changed in the country.

Suvir Sujan from Nexus India Capital and Manik Arora from IDG Ventures India are part of a growing breed of successful, home-grown entrepreneurs who are taking to venture capital to mentor new entrepreneurs.

Vish Narain at TPG Growth and Rahul Khanna at Clear-stone Venture Partners moved back home from the US to lead the India operations of their respective firms.

Dimple Sanghi at Indivision Investment Advisors, born and bred in the country's financial capital, changed lanes from conventional investment banking to play a decisive role in a still emerging asset class.

Harshawardhan Sabale's Lauris Capital Partners was born of a decision to continue concentrating on small- and medium-sized enterprises in India, which caught his attention when he was the director at a Malaysian PE firm.

All six investors co-founded or helped set up India operations of their respective funds. Nexus and Indivision were home-grown.

IDG, TPG and Clearstone are among the many firms that have arrived from the US. And Lauris is an India-focused start-up fund that was conceived in Hong Kong, with French backing. So, these six investors are also co-creators of India's increasingly diverse PE and VC industry.

Chasing opportunity

IDG Ventures India

IDG has set a precedent for the incubation model of funding start-ups and is trying out the idea of entrepreneurs-in-residence.

During the last round of venture capital investment in 1999-2000, Manik Arora found himself in a position remarkably similar to that of 3D Solid Compression (P) Ltd., a Stanford University and Indian Institute of Science (IISc) spin-off that his firm, IDG Ventures India, recently invested in. Arora was part of the founding management team of International, a Singapore-based multilingual domain name technology start-up incubated by Stanford University and the National University of Singapore. And he had to pitch to General Atlantic, much like the founding team of 3DSoc pitched to him. Only, "I was clueless about VCs and a little scared of them," he says.

General Atlantic eventually funded his company, and while interacting with them, he developed an interest in private equity and eventually joined them, working on investments such as Patni Computer Systems Ltd. and Daksh eServices Pvt. Ltd. This was followed by a stint with Battery Ventures, where he led their India practice. All this convinced him the real opportunity was in India. After 25 years-his family had moved out of India when he was seven-Arora came back to start IDG Ventures India, backed by media company International Data Group. Co-founders of the $150-million fund include Sudhir Sethi and T.C. Meenakshisundaram.

As an early-stage fund, IDG has set a precedent for the incubation model of funding start-ups. In addition, Arora and his colleagues are also trying out the idea of entrepreneurs-in-residence. They have two such ideas brewing in their offices-security solutions and an Internet company-and plan to incubate more such ideas in the hope of creating fundable businesses from scratch. Arora recently moved to Mumbai to set up the firm's operations in the city.