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July 13, 2011

Fund Manager Interview: Mohan Kumar of Norwest

Venture Intelligence spoke to Mohan Kumar, Executive Director, Norwest Venture Partners India, on the firm’s recent investments in the VC segment. Kumar, who had earlier worked for over 18 years at companies like Motorola and Texas Instruments, has led NVP's recent investments into medical devices firm Perfint Healthcare, tablet PC-based education services firm iProf and China-headquartered Smartphones maker Borqs.

This interview first appeared in the latest issue of the Venture Intelligence India Venture Capital Report.

Venture Intelligence: In recent months, we’ve noticed that Norwest is once again active in the VC segment with investments into companies like iProf, Komli, Quikr and Perfint. What is driving this?

Mohan Kumar:
NVP’s DNA has always been venture type deals. About 2 years back we had added two segments - financial services and infrastructure - where we started doing late stage deal with large size cheques. In Technology, E-Commerce, Med tech, Healthcare and Education, we continue to focus on Venture and Growth opportunities. Here we may do an early stage deal at a $2-M investment or write a $20-30M cheque for a company needing growth capital.

VI: What attracted you to Perfint and iProf?

Healthcare is a sector we decided to invest in India with medical devices as the primary focus; we are also looking at diagnostic chains and specialty hospitals. So, Perfint was as a good fit for us. The company originally developed products for the healthcare services sector; then graduated to create their own proprietary robotic products. We have funded them for a specific robotic tool for cancer treatment, which is being developed in collaboration with doctors who have worked at Stanford/European Universities. The tool can be used to pierce a very small needle through the body to the point of cancer. Perfint’s device provides the ability to detect cancer at a very early stage, when the tumour is as small as 5-7 mm, at an affordable price. A lot of doctors are using it on trial basis. Commercial launch is expected next year.

iProf is primarily a technology play in the Education segment. What attracted us was, #1 how do you make learning more interesting and #2 is how do you solve the problem of teachers’ shortage. iProf’s solution is to attract the best teachers, record the teacher’s lectures and specific subjects and host it in the “cloud”, which the students can then purchase from iProf. Another interesting part is that, when the student signs up, they give him/her a tablet PC.

VI: Is Medical Devices a sector that Norwest is active in internationally?

Medical Devices is a sector that we first started to invest in India; now we are active in the US also.

VI: How is Norwest structured internally to handle VC-type opportunities differently from the PE-type ones (NSE, Asian Genco, etc.)?

We have 3 partners in India with Sohil Chand taking care of infrastructure deals like Asian Genco and Niren Shah who has a focus on E-Commerce and financial services. I focus on Technology, Medtech and Education. In case, an entrepreneur from Infrastructure or Financial Services approaches me directly, I will still have an initial look at it, and then pass it to the respective colleague. When a deal comes to any of us, we look at who is the best person suited to lead the deal based on their expertise and interest. Any one of us can do VC deals or late stage ones.

VI: Do you have a minimum ticket-size when it comes to VC-type investments?

We do not look at minimum ticket-size, but we do look at taking an at least 20% stake when we do venture deals.

VI: While in Perfint, Komli and Quikr, you have been a part of the follow-on rounds, in the case of iProf, you are a part of the first round. Is there a shift in your preference towards earlier stage deals?

When entrepreneurs approach us with an idea, we look at it and if we like it, we just go for it - be it Series A, B or C. When Perfint approached us and told us about their idea for cancer detection, we were impressed with the team, but it was definitely “a leap of faith”. Hence we look at the background of the entrepreneurs and see if they are capable of pulling it off.

VI: What is your view of the E-Commerce space where we have seen a flurry of deals recently?

Norwest has some early investments in E-Commerce including Yatra Online and It’s not that we are now staying away from E-commerce; but in the last 6-9 months, with the MakeMyTrip IPO acting as a catalyst, all the deals come with high valuation price tags. E-Commerce in India is about 3-5 years behind China, hence opportunities are still out there. This is very similar to what happened in the Mobile sector where India was about 5 years behind China in 2000 and now has caught up.

VI: Which sectors are the most appealing to you at this point?

One area we are very keen on is companies using cloud-based computing with tablets and smart phones as the user devices. iProf is a good example of this in the Education space. We believe this concept can be extend to Retail, Hospitals, Manufacturing, etc. and can disrupt the dynamics in their respective sectors.

We have also invested in a China-based Smartphone company called Borqs, which we have now brought to India. They make affordable ( under Rs 8000/- ) Android based Smartphones. They have an operation in Bangalore and will be launching their products in the domestic market in partnership with Indian mobile phone brands.

VI: As someone who comes with deep technology and operating background, how are you finding your role as a VC investor?

You obviously don’t want to run the day-to-day operations, but you can definitely bring in your prior knowledge in terms of growth strategies, customer acquisition, team management, etc. So, it’s a balance and I have found it very interesting to work with the types of companies that can benefit from my background. Personally I would be most excited in working with early stage companies and help them grow.