Mumbai: Chief mentor of Infosys Technologies Ltd, N.R. Narayana Murthy, said on Monday that his venture capital fund will have a wide portfolio and not focus on any particular sector.
Murthy has formed a Rs600 crore venture capital fund called Catamaran Investment Pvt. Ltd to help incubate start-ups in the country.
“We will have a wide portfolio for both horizontal and vertical opportunities. By vertical, I mean we will be doing angel investing, early-stage investment, mezzanine-stage, late-stage investment. By horizontal, I mean any sector of economy,” Murthy said.
He has put in Rs174.30 crore in the venture capital fund by offloading a 0.13% stake in Infosys while his wife Sudha Murty had sold two million shares of her Infosys holding to raise around Rs430 crore.
Murthy said that he was in touch with a lot of entrepreneurs and many of them have sent their proposals. “We are waiting for our office and by 15 March we will be more active,” he said.
“We will be evaluating ideas, viability of business plan, scalability of business, leadership capability of entrepreneurs and market readiness and then will encourage the companies,” he said.
The Infosys co-founder said that investments in start-ups would depend on various factors. “There is no specific sum we will be putting in... It depends on idea, their funding requirement, at what stage a start-up company is coming, valuation, our need for balancing portfolio and need for mitigating risk,” Murthy said. He said that start-ups in the information technology (IT) sector should focus on niche segments and come out with unusual ideas.
“The way any new start-up in the IT sector can succeed is by focusing on niche areas, small verticals and doing certain unusual things that big companies are not doing,” Murthy said.
“Today, there are many companies in vanilla IT services area that have huge cash and built big brands, and it is not easy for small companies to become another vanilla IT services company,” he said.
Niche sectors could be specializing in retail, pharma, small and medium enterprises and providing mobile solutions, among others, he said. The idea of the start-ups has to be much more specialized than the bigger companies, he said.
“They (start-ups) have to demonstrate that the idea which they are bringing to the table are not the idea big companies are bringing,” Murthy said.
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