IDG Ventures India kicks off 2008 with the opening of its Mumbai office this week. The Bangalore-headquartered venture investor launched operations in India in September 2006 with a $150 million (Rs589.5 crore) fund. It has announced six deals till date, totalling an estimated investment of $16.5 million.
The firm is backed by International Data Group, which has three global businesses— market research, publishing and event management and venture capital—united by one theme: technology. The firm typically invests $1-5 million in early-stage companies in areas such as software products and services, engineering and electronics, and technology for consumers including the Internet, mobile and the media.
In India, IDG is among the few venture funds which have started incubating start-ups from scratch. Manik Arora, managing director, IDG Ventures India, elaborates on the firm’s approach to deal making. Edited excerpts:
What is your investment approach for India?
Our strategy is to be very flexible. We think there is a lot of talent sitting in large companies in India, and they have entrepreneurship experience starting businesses and products inside companies. We want to find them. We want to bring people in to incubate companies. Right now, we have an Entrepreneur-in-Residence working on a managed security services company, and plan to incubate an Internet company in the Mumbai office. In addition, we are also looking to back teams from multinationals or large Indian companies—even if they don’t have a product. We did two investments last year that were spin-offs from existing organizations and we like this approach.
Flexible strategy: IDG Ventures India managing director Manik Arora. (Photo: Hemant Mishra/ Mint)
How many of your deals in 2008 will be such types of ventures?
In 2008, I expect us to do six-eight deals with a couple of them being spin-offs and a couple of incubated companies.
Why would a large organization want to partner (with you) for a spin-off?
The typical situation might be when people want to leave to start something but the company still wants to be associated with them and maybe the company doesn’t have the experience for brand new concepts or the concept is too far outside the core competency of their business.
Would you back people who want to enter a new sector?
We just need confidence in a team. In the US there are serial entrepreneurs, which we are now starting to see in India, who go from one sector to another and have the required skill set: passion, ability to rally people, critical thinking and good selling skills.