Ernst & Young: What were your surprises in the last 12-18 months?The full interview is available here
Sudhir Sethi: When we raised our US$ 150 million fund and started operations in September 2006, we focused on early stage technology investments. Our focus was and continues to be in Software Products and Services, manufacturing and engineering, medical electronics, digital consumer and telecom / semiconductor sectors.
Our first surprise was the pace at which funds are vacating the venture
investment space and moving increasingly to the growth investment stage. Our intention is to dominate the venture stage technology focused sectors as an early stage fund.
Our second surprise was the extent of competition in our sectors; except for digital consumer space (internet / mobile VAS), we really do not face significant competitive pressures in our other sectors.
Our third surprise was on valuations; we find valuations in the venture stage of the technology sector extremely attractive.
Our fourth surprise was the maturity of the entrepreneur who today values relationships and value-add from a venture investor.
...In the past 18 months, we also found that venture investments in India require business model innovations to create companies and not just fund conventional deal flow; hence we funded ConnectM, a spin out from Sasken; Aujas a managed security services pure play, through an EIR Program and 3D Solid Compression, which was incubated by Stanford and Indian Institute of Science, Bangalore.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.