Venture capital firm Canaan Partners, headquartered in Menlo Park, California, raised its eighth global fund last month with a $650 million (Rs2,554 crore) corpus. Outside the US, India and Israel are key markets for Canaan. The company plans to invest at least a quarter of its new fund in these countries. So far, it has invested in four companies here, including jobs referral website TechTribe Networks Inc. and remote desktop support firm iYogi Technical Services Pvt. Ltd. The firm, which set up its India office in June 2006, expanded the local investment team earlier this month. Canaan managing director Alok Mittal, who has led investments solo so far from the firm’s Gurgaon offices, will now be flanked by Harish Gandhi, who comes on board as executive director.
Gandhi has played a variety of roles in the telecom sector. He was head of value-added services (VAS) business and new product development at Bharti Airtel Ltd. He has also worked at Nokia Oyj as director of technology and marketing and as business head at US-based mobile multimedia start-up Dilithium Inc. Gandhi spoke to Mint about being a venture capitalist and the revenue share issue with telecom firms. Edited excerpts:
What will be your role at Canaan ?
I will join Alok (Mittal) in making early-stage investments here. I will also take board seats. Canaan’s appetite and interest for deals has increased. With two investment professionals in India now, we will be able to address a much larger base. The deal flow is very strong. I find a few new deals almost on a daily basis.
What sectors will you focus on?
Given my extensive experience in telecom, we will be looking at doing a lot more deals in that space. In my earlier role as head of VAS, I regularly met a lot of small mobile start-ups. I will be talking to many telecom entrepreneurs here too. I will not be restricted to telecom, but it is definitely a focus area. Alok has plenty of background in the field of Internet. Between us, we will look at companies in the technology, telecom services, Internet and wireless sectors.
In the past, you have worked with telecom companies. How do you find your role as investor?
It is very different from my last job, which was more an operational role in the company. But there are similarities—I was working with smaller companies there too. Also, I had worked with Bain and Co. as a management consultant, so this is not an entirely new thing for me.
But does it put you on the other side of the revenue share argument now, when you invest in VAS companies?
The current arrangement is a result of the demand-supply situation. VAS players still need large operators to work with, to promote their products, and the revenue share reflects that. Still, smaller companies make money because the volumes are high. As a VC (venture capital), we would want our company to make more revenues, and that will happen over time. Right now, the focus of the operator is still subscriber acquisition, not services.
Will Canaan set up office in other cities here?
Not at the moment. We will continue to operate out of Gurgaon.