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Bengaluru: Less than two weeks after convincing Twitter Inc. co-founder Biz Stone to invest in his start-up Lookup, young entrepreneur Deepak Ravindran reached out to Yusuf Bashir, the new head of Infosys Innovation Fund. Ravindran wanted more backers for his messaging app that connects local businesses with customers.

In the same month, Shanmugavel Sankaran, founder of FixNix, a start-up dealing with governance, risk and compliance software, also had a 40-minute long meeting with Bashir at Infosys’s Palo Alto office.

“Why don’t you come back with more user-defined cases (read: more clients)," said Bashir said, as he politely turned down Sankaran, who later recounted this incident to Mint.

It is not known if Infosys will invest in Ravindran’s start-up.

At the start of the year, when Infosys’s chief executive officer (CEO) Vishal Sikka boosted the company’s start-up fund by five times to $500 million—many thought of it as a money gusher.

Since Sikka gave the keys of this vault to Bashir in April, more than 750 start-ups have reached out to the company, an executive familiar with the matter said.

Bashir, who is also Sikka’s former colleague at SAP AG, has met with 160 start-up founders across six countries—from Norway to US. Many of Bashir’s colleagues at Infosys Innovation Fund pored over the portfolio firms, backed by the likes of YCombinator, a venture firm that specializes in funding early-stage start-ups, even as the senior management listened to start-up pitches made at Stanford University. Sikka and other senior managers at Infosys have also been wooed by top venture capital firms seeking to interest the company in their portfolio.

Still, 150 days later, Bashir has opened his wallet to spend a mere $18.4 million on three start-ups and invested an undisclosed amount on Vertex Ventures, a nine-month-old venture fund run by a former Facebook Inc. executive Jonathan Heiliger.

That has many wondering about Infosys’s strategy.

“(It is about) finding technology that our customer needs," said an Infosys executive, who asked not to be identified.

Infosys has asked the heads of its business segments, ranging from manufacturing to retail, to give feedback on the technology requirements sought by their clients to Bashir and his team of eight executives stationed across the world.

“Every investment which has been made and will be made follows a simple rule: do our clients need this technology," said the executive.

Infosys declined to comment for this story.

Once the Infosys innovation team has identified the start-ups that can be connected with its clients, Bashir and his team meet the founders to learn about the management and how they plan to scale up their businesses.

So how did Infosys invest in ANSR Consulting, which was not working in any of the disruptive technologies, including machine learning, big data and cloud computing, as articulated by the company earlier?

“We got this feedback that some of our clients wanted to open captive (centres) in India; we went back to the drawing board, connected with the people, and invested in ANSR Consulting," said the executive.

In an interview to Mint earlier this year, Sikka narrated how Infosys decided to spend $2 million to take a stake in Airviz, a personal air-quality monitoring start-up from Carnegie Mellon University (CMU).

“It was just a very serendipitous connecting of the dots," Sikka had said in the interview.

“We had a two-day design session with a mining company in Palo Alto, and they told us that air quality in the mines is a huge problem. (It was also at the time) when Beijing was shut down for three days because of bad air quality. I met Illah (Illah R. Nourbakhsh, head of robotics at CMU) and I asked him what are you working on? (And then he told me that he has this air-quality monitoring start-up).We were walking, and I said oh wait, wait, wait, tell me more about this."

The second principle, according to the executive cited above, is that Infosys will come at a relatively early stage of a start-up. “We don’t think we have much to contribute or gain when a start-up has already got some scale."

That explains why Infosys decided to partner Palo Alto-based Vertex Ventures, which has already invested in four early-stage start-ups, including storage start-up Hedvig, and cloud security start-up PerimeterX.

“It works just like the way say it works when you invest in a mutual fund. And so, when we invest, we have a broad exposure to the start-ups," said the executive. “And since they too back early-stage start-ups, it just fits perfectly."

Another incentive for the partnership, said experts, was the skills that venture capital firms bring to the table.

“I can see the temptation to extending your reach and connections by teaming up with VC firms that have greater resources, perhaps including deep domain expertise in the fields of interest, in order to avoid missing out on the best opportunities and to help evaluate start-ups of interest," said Eilif Trondsen, research director at Strategic Business Insights, formerly Stanford Research Institute.

Infosys also looks mostly at start-ups that boast a few clients who are using their product offerings, something that Sankaran could not do when he made a case for FixNix.

Ravindran didn’t respond to an email seeking comment.

Still, while Infosys has promised to spend half of the $500 million to back start-ups in India, it won’t be an easy task.

“I’ll say it is an issue which is a challenge both to start-ups and Infosys," said Sharad Sharma, co-founder of software products thinktank iSpirt.

“Infosys and the top four IT firms have just 4,000 clients. And they are working with the largest companies, which are actually struggling to embrace the disruptive technologies. So, the start-ups focused on disruptive technologies will first like to engage with Paytm and the like than with Infosys simply because many of the clients, like the large banks or retail firms of IT firms, will find a challenge to adopt the new technologies. At the same time, the start-ups in the country also have a patchy record—in some spaces, you have quality candidates but many (that) are just me-too," explained Sharma.

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