Mumbai: In a bid to spot more fundable product start-ups here in India, Palo Alto, California-headquartered venture capital firm Artiman Ventures is building its focus around what it calls an entrepreneur-in-residence (EIR) programme.
The firm, which likes to invest in early-stage “white market opportunities”—emerging sectors with few existing players—in the product space, is setting up an incubation centre within its office and has signed up three teamsso far.
Stimulating plan: M.J. Aravind, a partner at Artiman Ventures. (Photo: Hemant Mishra/Mint)
“We have seen extremely good (business plan) proposals, but very few people with exposure to product-marketing, so we want to stimulate more fundable plans,” says M.J. Aravind, a partner at Artiman, declining details on the in-house teams or the product areas they are working on.
While programmes built around resident entrepreneurs are not new, it has been implemented selectively among VCs and has been a practice more common among large companies aiming to increase the reach of their technologies and services. One example of the VC variety is Bangalore- based IDG Ventures India, which incubated security solutions firm Aujas Networks Pvt. Ltd in EIR mode for several months before investing $3 million (Rs12.6 crore at current exchange rate) in December 2007.
Aravind, a co-founder of outsourcing firm Daksh eServices Pvt. Ltd that was later acquired by International Business Machines Corp., set up Artiman’s India office four years ago, but made its first investment only earlier this year. It has invested $7 million in Gurgaon-based telecom network monitoring company Guavus Network Systems Pvt. Ltd along with Sofinnova Ventures.
Artiman, says Aravind, had a twofold strategy when it set up shop in India: to help portfolio companies set up part of their operations here for cost efficiency and to invest in product companies. “We have been successful at the first but not with the second,” he says.
Aravind is not alone. VC firms in India have for long rued the paucity of fundable product companies in the country. The biggest reason cited is that the market for these products have traditionally not been in India, but in the US or Europe.
This has also led to a big gap in the availability of product managers and architects with the know-how to create local successes. As the size of the domestic market in sectors such as telecom grows larger, VCs are hopeful it will lead to more start-ups—with potential to scale up—catering to this market.
Another factor Artiman is betting on is talent coming out from Indian captive units of large technology multinationals, which has been exposed to the start-up culture of the US and global technologies.
In preparation for the incubator, it recently moved into a larger office space just off Brigade Road, a fashionable high street in Bangalore, and has hired senior technologist Ramesh Radhakrishnan, to act as ‘supermentor’ to its EIRs. Radhakrishnan has worked in the areas of wireless networking and security solutions for the last 20 years, including stints at Cisco Systems Inc., Airgo Networks Inc. and FireEye Inc.