Last year, Hotmail co-founder Sabeer Bhatia earned credit as an early-stage investor when he pulled off big-ticket exits from two hugely successful US Silicon Valley start-ups—IronPort Inc. and Postini Inc. The first—IronPort—is an email and Web securities products company, which was acquired by Cisco Systems Inc. for $830 million (Rs3,270 crore) in early 2007, making it the biggest acquisition of a venture-backed company since the $1.6 billion Youtube.com deal. Postini, an email security solutions start-up, was acquired by Google Inc. late last year for $625 million. The two start-ups are part of a bouquet of 30 entrepreneurial ventures that Bhatia has backed since Hotmail. And he has played the role of investor in 24 of the 30. Yet, ‘venture capitalist’ (VC) is a hat that the 39-year-old Bhatia wears rather reluctantly.
Bhatia, whose latest Web initiative is SabseBolo.com, a free audio-conferencing facility, has been an investor in 24 of the 30entrepreneurial ventures he has backed since Hotmail
“I’m not a VC kind of guy,” he told Mint a few weeks ago in Mumbai on the sidelines of the launch of yet another entrepreneurial venture—SabseBolo.com, a free audio-conferencing facility. He prefers being an entrepreneur, though critics may argue that entrepreneurship has not worked for him since Hotmail. Take one of his earliest post-Hotmail ventures—Arzoo.com. It was intended to be a network of intellectual capital but sank during the dotcom bust. He transformed it into an online travel portal in early 2006, but several VC-backed players, including Makemytrip.com, Yatra.com and Cleartrip.com, already have the lead in this space. His most recent venture SabseBolo.com offers free audio-conferencing at a time when start-ups such as DimDim Inc. are moving towards free Web conferencing. Still, Bhatia is undeterred. “I know nine out of 10 (of my) ventures will probably fail, but the one that succeeds will bring phenomenal returns. We have seen this before,” he says.
Despite the tepid run as an entrepreneur, Bhatia has done well as an investor. The investments he made immediately after the $400 million sale of Hotmail to Microsoft Corp. are now bearing fruit. He has had about six exits so far, including IronPort, Postini and phone hiring technology company Jobflash Inc., which was acquired by talent management firm Taleo Corp. for $3 million. He has also been keeping good company as an investor. His fellow investors in IronPort were Hotmail co-founder Jack Smith and Paypal Inc. co-founders Max Levchin and Peter Thiel (famed for putting angel money in companies such as Facebook and LinkedIn). In funding Yodlee Inc., an account aggregation and financial products start-up, Bhatia joined Exodus Communications’ founder K.B. Chandrasekhar and Junglee Inc. co-founder Ram Shriram (an initial investor in Google) to form an angel triumvirate of successful Internet entrepreneurs.
Entrepreneur-investors such as Bhatia, Lechvin, Chandrasekhar and Shriram are fairly common in Silicon Valley, which has had a long tradition of successful entrepreneurs bankrolling new start-ups. In India, parallels can be found in Rajesh Jain, who sold his portal Indiaworld to Sify Ltd for $115 million and now alternates between angel investing and entrepreneurship. Being hands-on investors, often as co-founders, is not uncommon with such investors. “Sometimes, I start out as an investor, but I become far too involved,” Bhatia admits. For instance, take social networking site Apnacircle.com. Bhatia began as an investor, but was excited by the idea and soon became involved in decision making, without having an actual operational role in the company. Whether Bhatia is a better investor than an entrepreneur is open to debate. But his interest, along with that of others like him, in start-ups in either capacity is good for young entrepreneurs here.