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March 14, 2008

“Cos. we invest in should be able to match or better the ‘Reliance Rate of Return’” - Interview with Harshal Shah, CEO of Reliance Technology Ventures



Venture Intelligence recently spoke with Harshal Shah, CEO of Reliance Technology Ventures Limited (RTVL) which has announced a series of investments in telecom technology companies like Sequans Communications, Stoke, E-Band Communications, etc. RTVL was launched in 2006 to incubate new business ideas and streamline the Reliance Anil Dhirubhai Ambani Group’s investments in emerging and high-growth technologies.

Venture Intelligence: RTVL’s recent investments have been in the telecom space. Would this high focus on telecom continue?

Harshal Shah: Not at all. It is just that Reliance Communications was the first out of the blocks in the Reliance ADA Group. As the group’s other areas of business – including Energy, Financial Services, Media & Entertainment, etc. - mature, we will make investments in areas synergistic to them.

VI: Why has the focus been on companies outside India?

HS: Technology is geographic agnostic. Since we can invest anywhere in the world, it really doesn’t matter where the company is located. At the end of the day, we are making investments focused on providing an extra edge to Reliance ADA Group companies.

VI: What are the key criteria you use in making investments?

HS: We need to get a “Reliance rate of return” or better. Given the kind of high growth and returns that we are able to create within our own group firms, any investments we make should be able to generate at least that kind of IRR.

Other things we would look for (in investee companies) is how they would be able to add value to us (the R-ADA Group) and how we would be able to add value to their businesses. The company should be able to leverage the Reliance ecosystem in a way that we can generate higher returns.

VI: What is your preferred stage of investing?

HS: We are purely opportunistic. The threshold of returns expected is pretty high. The way we see it, the amount of work that goes into a deal is the same. So, for it to make sense for us, the proposition needs to be something that can scale fast and have the capability to grow into a multi-bagger.

We could invest in cases where it is just an idea but has great capability to scale up and give us the kind of returns we look for. For example, yatra.com was not even incorporated when we decided to go ahead and invest.

VI: Would you look at the same kind of time frame for exits as a regular VC firm?

HS: We have Unlimited time and Unlimited Capital. The bottom line is generating a higher IRR. (As long as that’s clear) there is no pressure of time and capital.

VI: RTVL has invested in SeedFund. Would you invest in other VC funds as well?

HS: The options are open. But nothing has excited us as of now.