About 18 months ago, Helion Venture Partners, one of India’s oldest homegrown venture capital firms, found itself at a crossroads. It could either continue with a blended sector focus, investing primarily in technology and some non-technology businesses, or pivot to a specialist technology investor. It chose the latter.
The decision wasn’t an easy one to make. It struck at the very foundation of the 10-year-old firm. In September 2014, shortly after the change in strategy, Kanwaljit Singh, one of Helion’s four founding partners, decided to quit. Singh was the primary champion of non-technology investments at the firm. At the time, the firm had more than a dozen non-technology companies in its portfolio across businesses ranging from specialist healthcare services to quick-service restaurants to salon services.
Today, the firm has a fourth fund, with a reported $300 million target corpus, in the works, a new team at the helm and a recalibrated investment strategy in play. “Helion is a seed and Series A investor. We’re largely focused on four investment themes—disruption of existing online businesses, offline-to-online platforms, digital enablement of Indian small and medium businesses and online adoption in large verticals," says partner Alok Goyal. The former SAP India chief operating officer, along with partners Ritesh Banglani and Rahul Chowdhri, and managing director Rahul Chandra, make up the new team leading Helion’s investments.
The team has its task cut out. It has to ensure that Helion, which in some ways pioneered the current wave of venture capital in India, remains relevant in the next decade. The first step towards that is for the firm to find its identity—something it has struggled with in the past.
When the firm started up in 2006 with the $140 million Helion Venture Partners Fund I, the plan was to back early-stage Indian technology start-ups. The strategy was defined by the founding team’s combined backgrounds. Ashish Gupta was a serial technology entrepreneur, having founded and exited US-based firms Junglee and Tavant Technologies. His brother-in-law, Sanjeev Aggarwal, founded and sold business process outsourcing (BPO) start-up Daksh eServices to IBM. Singh came from operating experience at consumer products firm Hindustan Unilever Ltd and chipmaker Intel Corp. He also led Carlyle Group’s venture capital investments in India for four years. And, Chandra, the youngest founder, had a venture capital stint at Walden International and merger and acquisitions experience at BPO company e4e.
It seemed the perfect fit at the time. Six years later, things changed. Sometime in 2011, about two years after the 2008-2009 global financial markets crisis, founding partner Gupta decided to relocate to the US from Bengaluru. By this time, Helion had raised a $210 million second fund, sported an investment portfolio of 35-odd firms, had barely any exits to show and was recovering from a write-off on one of its earliest investments—Gridstone Research, a financial research start-up founded by former Infosys global sales head Basab Pradhan. The only silver lining was the Nasdaq listing of online travel services provider Makemytrip Ltd.
Gupta’s move and the early investment experience led to a change in strategy.
The firm would continue to invest in technology firms, including cross-border start-ups which had a significant presence in the US. In addition, it decided to pursue investments in non-technology sectors such as education, financial services, healthcare and consumer services. That led to bets on companies such as R&R Salons (salon services), Denty’s (dental chain), Vienova (education) and Brand Calculus (quick service restaurants).
But, by the beginning of 2013, despite the change in strategy and a third fund worth $255 million under its belt, it was clear Helion had fallen behind. The consumer Internet sector, notably e-commerce, had exploded in India and compared with some of its peers, Helion’s portfolio looked like a laggard. Peers such as Accel Partners, Kalaari Capital (then IndoUS Venture Partners) and Nexus Venture Partners had e-commerce leaders such as Flipkart (already valued at $1 billion), Myntra and Snapdeal in their portfolios.
Helion also made some e-commerce investments but not all played out as expected. Letsbuy, an electronics etailer, was acquired by Flipkart in 2012 in a stock-and-cash deal. It gave Helion a backdoor entry into Flipkart with a reported 0.2% stake. The same year, flash sales site Exclusively.in was acquired by Myntra in a cash-and-stock deal. The terms of the deal are not known. E-commerce aside, the fate of its investment in property search platform Housing.com remains undecided. Following a very public stand-off, Housing founder Rahul Yadav was ousted by the company’s investors led by Softbank Corp. earlier this year.
Since September last year, however, Goyal and his colleagues have done some things right. Seed-stage technology investments, especially in the Internet and mobile segments, now account for 25% of the firm’s overall investments. It has reportedly sold its 0.2% stake in Flipkart for ₹ 156 crore ($23.5 million). It now has a minority stake in taxi hailing company Ola, currently valued at $5 billion.
Its portfolio company Taxiforsure was acquired by Ola this year in a $200 million cash-and-stock deal. And, it has a couple of promising e-commerce investments left in its portfolio—groceries etailer BigBasket and marketplace Shopclues.
Goyal thinks the market still offers plenty of emerging opportunities for Helion to ride through to the next decade. “We believe there is $500 billion-plus of new market cap to be created in the next 10 years. The next two years will be a great time to invest," he says.
With more than $600 million in funds under management and 70 companies in its portfolio, Helion is still certainly a force to reckon with in India’s venture capital market. It just needs to find its groove and soon.
These are parts of a multi-part series on 10 years of venture capitalists investing in India. Over the next few days, Mint will profile some of the most active venture capital firms in the country.