Sand Hill Road, Menlo Park, California, is usually the address of a ‘gold standard’ venture capital firm. Meet some of them—Kleiner, Perkins, Caufield & Byers (KPCB), Draper Fisher Jurvetson (DFJ), Bessemer Venture Partners, Norwest Venture Partners, New Enterprise Associates (NEA), Sequoia Capital and Mayfield Fund. Most of them have become familiar names in the Indian context over the last 12-18 months. These are also the very names that trooped into India on a reconnaissance mission in December 2003—the first instance of Silicon Valley’s gold standard VCs testing the start-up climate here after the Internet bust. But it has taken them a full three years to set a firm foot in India.
This month, Norwest, which has actually been investing here since 2004, announced plans for a local office and a three-member team by September. Last month, Mayfield signed up a local team based in Mumbai. And a couple of weeks ago, Bessemer allocated $350 million (Rs1,417.5 crore) of its just-raised $1 billion global fund to India. KPCB and DFJ have also been investing here but are not yet comfortable about a direct, local presence. Only Sequoia and NEA have dug in their heels early—Sequoia in 2005 when it acquired local firm WestBridge Capital Partners, and NEA last year through a local joint venture, NEA IndoUS Ventures.
But one wonders, while Silicon Valley’s ‘gold standard’ firms spent three years ruminating over the right time for their formal entry, has the market here moved ahead of them? Because in those three years, smaller or so-called lesser known funds such as Canaan Partners, Matrix Partners and Clearstone Venture Partners have become Silicon Valley’s symbols.
Start-ups here are able to better relate to such firms because their on-ground presence is seen as higher commitment, relative to firms who invest from the US.
Ironically, such funds took their cues from folks such as Yogen Dalal, managing director at Mayfield, Rob Chandra, managing partner at Bessemer, and Promod Haque, managing partner at Norwest, who first pointed to the untapped potential of India’s emerging start-up economy.
There’s no doubt that the formal entry of the ‘gold standard’ cadre marks a turning point for India’s nascent venture capital industry. After all, some of the world’s best known tech innovators were seed funded by them—Netscape and Google (KPCB), Hotmail and Skype (DFJ), Compaq and Silicon Graphics (Mayfield Fund), Ciena and VeriSign (Bessemer). What is also noteworthy about all these firms is that each of them has taken over a hundred start-ups public.
Given their antecedents, these firms will certainly leave a deep and far-reaching impression on venture investing in India but whether they will prevail as the gold standard here as well remains open to debate.