Mumbai: Menlo Park, California-headquartered New Enterprise Associates (NEA), which manages $8.5 billion (Rs33,830 crore) in committed capital, announced its seventh deal in the country last week with an undisclosed investment in Chennai-based Novatium Solutions Ltd. Novatium, incubated at IIT Madras, makes low-cost computing solutions and counts Ray Stata, chairman of Analog Devices, and Rajesh Jain, managing director of Netcore Solutions, among its founders. NEA has invested in Novatium from its global fund pool. Investments by the firm, apart from Novatium, include Sasken Communications, which it has already exited, Telsima Corp., GlobalLogic Inc., ProtoStar Ltd and ISGN Technologies.
The firm also invests in India through a local joint venture, NEA-IndoUS Ventures, in which it has a 20% stake. The joint venture is investing from a $189 million fund that was raised last year. NEA-IndoUS Ventures’ team is headed by Silicon Valley entrepreneurs Vinod Dham and Vani Kola, who re-located to Bangalore last year to set up the fund. It has invested in inSilica, Minekey, Obopay and FlightRaja (now known as VIA). It is also a co-investor in ISGN.
Globally, NEA, for whom China is another key emerging market (total investments there are more than $200 million), is known to invest across stages, from seed to early stage to growth. In terms of sectors, it is narrowly focused on three—information technology, health care and energy technology.
The firm has invested in 500 companies, of which 200 have gone public, globally till date and some of its notable past investments include Apple Inc., TiVo and Juniper Networks. Last year, the firm raised the world’s second largest venture capital fund, its 12th till date, with a corpus of $2.5 billion. Ben Mathias, vice-president, New Enterprise Associates (India) Pvt. Ltd, set up the firm’s Bangalore headquarters in January this year. Prior to this, he was vice-president of E2open, a supply chain software start-up company.
Mathias spoke to Mint about the firm’s latest investment, its dual investment strategy for India and how it views the start-up opportunity here. Edited excerpts:
How do you split investments between the two investment vehicles—NEA and NEA-IndoUS Ventures? How do you classify Novatium?
We invest both in early-stage and growth companies in the Indian market. Growth investments are typically done from the global fund. Early-stage investments are done by NEA-IndoUS Ventures. Novatium is more of a growth investment.
Why have a separate fund for early-stage deals?
Early-stage investing requires a different approach and focus. The investing team has to be on the ground. Sometimes if a deal requires more capital, we may
invest together. ISGN Technologies Ltd, for instance, was a joint investment. The two board seats that we have on the company are occupied by partners who sit in California.
Growth graph: Ben Mathias.
You have a local joint venture here. Any plans for a specific NEA growth fund for India?
No, there are no plans for a new fund at this point. We are comfortable doing growth investments out of the global fund pool.
Where do you see Novatium going with this tranche of funds?
The company has been deploying its solutions for a while. Next week it will launch in New Delhi and will gradually expand to other parts of the country. They are looking at adding 20,000-30,000 new users per year. We went into the deal because we saw some radical thinking in the business model. With low-cost computing, it has a finger on what the Indian middle class is looking for. We also have a few companies in our US portfolio, which Novatium could collaborate with in terms of technology know-how, to enhance its own products.
What is the size of your investment in Novatium?
We have not disclosed the terms of the deals for a few reasons. But we have taken a significant stake in the firm.
Do you see a lot of campus-incubated projects in the tech space? What are your impressions?
Yes, we do look at a lot of incubator projects at university campuses and elsewhere. However, many of these are still ideas and require an entrepreneur to come in and build a company out of it. There are no specific pockets of innovation, though ideas being incubated on university campuses seem to be more focused on the local market.
What kind of business models excite you in this market?
We look at companies that are focused on addressing domestic needs, within the technology space. Like Novatium, we also look for business models that are disruptive in nature and seek to change the existing ways of doing business in their segments.