Skip to main content

More Silicon Valley start-ups are pushing product development to India

It's not just the US software services companies like EDS, Keane, CSC, Accenture, Cap Gemini-E&Y (apart from "oldies" like IBM) that are making a beeline to set up operations in India. The product companies don't want to get left behind.

Just a glance at the job supplements of the top newspapers in Bangalore will confirm this. Last week's job supplement of Economic Times had a large ad from the Sunnyvale-based telecom equipment start-up Infinera (which has raised $130 million from top Silicon Valley VCs including Kleiner Perkins, Mobius VC, Accel Partners, Benchmark Capital, and Venrock Associates). In fact, Infinera has almost become a regular advertiser in this supplement.

In an article titled "India Inside" , in the latest issue of Business Today, the magazine's Assistant Editor Priya Srinivasan, has elaborated on this trend.

"Oh, it's an absolute fad out here; VCs are practically compelling their companies to go to India," says Krishna Kolluri, CEO of Sunnyvale, CA-based Neoteris, which "has had India on its business plan from day one". "We have interacted with several large VCs and companies they have funded. At least 50 per cent of these companies either have a presence in India or plan to have one soon," says Seenu Banda, CEO of NetDevices. (NetDevices itself has recently raised $15 million in first round funding from leading venture capital firms including Jumpstartup, Comventures, Columbia Capital, and Artiman Ventures. Jumpstartup, an US-India cross border VC firm, is assisting NetDevices in setting up its Indian operations.)

Oak Investment Partners, a large US-based VC fund, has roped in Ranjan Chak--who set up Oracle's development centers in India--to guide its portfolio companies with their India strategies. "Oak investees that want to come to India range from very small companies to those with several tens of millions of dollars in revenue. Around 10 Oak companies already have some presence in India. The most recent entrant is Aventail, a company that specialised in security for virtual private networks," says the BT article.

Why this rush to India among product companies? "After the tech meltdown, VCs are looking for more efficient business plans. An India presence becomes necessary," Amit Shah, a partner at Palo Alto, CA-based Artiman Ventures, says in the BT report. "Start-ups kept spending on product development, proof of concept, customers and marketing. By the time the product hits the market, the outgo can be as high as $50 million (Rs 230 crore). Now they have to compress these costs. You can cut two thirds of the engineering expenses by moving to India," adds Ganapathy Subramanian of Managing Director of Jumpstartup.

The BT article estimates that about 40 software product companies have set up devleopment centers just in Karnataka (read Bangalore) over the past year. Added to these are companies like the Bangalore-based Symphony Services (founded by Romesh Wadhwani, who earlier founded Aspect Development) and Hyderabad-based Pinexe (formerly called Portal Player), which offer product development services for hire.

Putting these trends together, BT concludes that "(India) could well become Taiwan's equivalent in software. Just like all chip manufacturing moved to Taiwan, all software 'manufacturing' could move to India. Products, which are conceived anywhere in the world, could be designed, built, tested, maintained, supported and upgraded out of India."

Mike Moritz chants the "go to India" mantra
In a recent Businessweek cover story on The Rise Of India, Sequoia Capital partner, Michael Moritz, who led the fund's investments in Yahoo and Google, says: "We can barely imagine investing in a company without at least asking what their plans are for India,. India has seeped into the marrow of the Valley."

Popular posts from this blog

VC Interview: Shailendra Singh of Sequoia Capital India

In a recent interview to Venture Intelligence, Shailendra Singh discussed some of the firm’s newer investments in the early stage segment including in the online payments space, the progress at a few existing portfolio companies and the active role the firm is playing in helping its portfolio companies scale and succeed in India and globally. Prior to joining the firm in 2006, Singh was a strategy consultant at Bain & Company in New York and before that, an entrepreneur in the digital media industry. Venture Intelligence: How does Sequoia go about identifying potential early stage investments in India? Is there anything different you are doing today than, say, a couple of years back? Shailendra Singh: There is a lot more focus on technology investing and early stage investing. In general, as you might remember a few years ago, we were doing primarily growth investing but in the past 18-odd months, we have had a very strong focus on early stage and that’s continuing. In terms

ChrysCapital, Motilal Oswal PE & Sequoia named PE-VC Firms of the Decade

Press Release ChrysCapital, Motilal Oswal Private Equity and Sequoia Capital India have been named the top Private Equity & Venture Capital investors in India during the last decade, as part of Venture Intelligence’s APEX Awards. The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer.  While ChrysCapital won the “Private Equity Investor of the Decade” award, Motilal Oswal Private Equity was feted as India’s “Growth Capital Investor of the Decade”. The Indian arm of the storied Silicon Valley VC firm, Sequoia Capital, was named the country’s “Venture Capital Investor of the Decade”. The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms as well as "crowd sourced" nominations and voting from the Limited Partner, PE-VC and advisory communities. (The main criteria were Exit Track Record, New Fund Raises & Fo

Ambit tops League Table for Transaction Advisors to Private Equity deals in 2019

Ambit Corporate Finance topped the Venture Intelligence League Table for Transaction Advisor to Private Equity Transactions for the year 2019. Ambit advised PE deals worth $2.4 Billion (across 4 qualifying transactions) during the period. Citi ($1.1 Billion across 2 deals) and  Avendus  ($969 million across 12 deals) took the second and third spot. Edelweiss Financial Services ($758 million across 9 deals) and  PwC  ($708 million across 15 deals) completed the top five in 2019.  The  Venture Intelligence League Tables , the first such initiative exclusively tracking transactions involving India-based companies, are based on value of PE and M&A transactions advised by Financial and Legal Advisory firms. Ambit Corporate Finance advised the $1.9 Billion buyout of Pipeline Infrastructure from Reliance Industries   by Brookfield Asset Management  and the IFC and I Squared Capital-backed   Cube Highways' acquisition of Delhi-Agra Toll Road from Reliance Infrastructu

Jio deals help PE investments climb 12% in H1'20 to $18.8 B

Press Release With Reliance Industries' communications unit Jio Platforms attracting 51% of the investment value, Private Equity-Venture Capital (PE-VC) investments in India rose 12% during the first 6 months of 2020 to $18.8 Billion (across 341 deals), shows data from  Venture Intelligence , a research service focused on private company financials, transactions and their valuations. Investments totaling over $9.5 Billion in Jio by a troop of global private equity firms, following social media giant Facebook's $5.7 Billion mid April investment in the company, helped overall PE-VC investments better the $16.8 Billion (across 503 transactions) invested during the same period in 2019. (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate).   Jio Platforms' $9.5 Billion Private Equity haul (excluding Facebook’s strategic investment) was led by Middle Eastern and American investors with KKR, Saudi Arabia's Public Invest

Inventus, Sixth Sense, Blume & Norwest win Apex'20 Venture Capital Awards

Inventus Capital Partners, Sixth Sense Ventures, Blume Ventures and Norwest Venture Partners were voted the top Venture Capital investors in India during 2019. The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer. Other 2019 winners in the VC segment included  Axilor Ventures which was voted   the  Accelerator of the Year for the second year running, 3one4 Capital (VC Fund Raise of the Year) and Innoven Capital (Venture Debt firm of the Year). The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms as well as "crowd sourced" nominations and voting from the Limited Partner, PE-VC and advisory communities. (The main criteria are Exit Track Record, New Fund Raises & Follow-on Funding Rounds for Portfolio Companies).    " It is an honour to be recognised by entrepreneurs and investors as