Mumbai: For a venture capital firm backed by Nokia Oyj, the world’s largest handset maker, the Menlo Park, California-based BlueRun Ventures has a curious investment strategy in India—to stay out of the mobile value-added services (VAS) sector. Until 2005, Blue-Run, which is currently in the process of raising a new global fund, was the Finnish telecom manufacturer’s strategic investment arm, known as Nokia Venture Partners.
“We have consciously decided to stay out of the space, as the current revenue share arrangement (between operators and VAS players) does not offer a viable business proposition,” says Sasha Mirchandani, senior investment director, BlueRun Ventures. This is in contrast to the interest shown by most venture capital firms investing in this market, which has resulted in mobile VAS being one of the most heavily funded start-up segments in the last two years.
Conscious decision: Sasha Mirchandani, senior investment director, BlueRun Ventures. (Photo: Ashesh Shah/Mint)
Firms such as New Delhi-based Canaan Partners and Mumbai-based Norwest Venture Partners continue to be bullish on the sector, citing it as a key focus area for 2008. BlueRun, however, is yet to review a fundable business plan. Instead, it will focus on sectors such as gaming, back-end retail and education for now, said Mirchandani.
The strategy to avoid mobility investments is specific to India. Of its six key markets worldwide—US, Europe, China, South Korea, India and Israel—this is the only one in which it has adopted this strategy. In other markets, especially in the US, the firm has benefited from its long-standing telecom experience. Mobile advertising firm Enpocket Inc., a portfolio company, was recently acquired by Nokia for an undisclosed amount. Its continued ties with Nokia gives it inside information into the company’s future road maps, says the firm.
But it will wait awhile before capitalizing on the relationship in India, until “VAS gets more prominence in the boardroom of operators and top management focuses more on data than voice,” according to Mirchandani. It also plans to step up investments in India this year. So far, it has invested in five companies, including Bangalore-based Sasken Communication Technologies Ltd (as Nokia VP) and Pune-based Nevis Networks, Inc. In the last eight months, it has also expanded its investment team in India. Along with partners Vineet Buch and Sujit Banerjee, who operate between India and the US, Mirchandani will be based in Mumbai.