Skip to main content

VC Interview: Kanwal Rekhi of Inventus Capital


Venture Intelligence recently spoke to Kanwal Rekhi of early stage investing focused Indo-US cross-border VC firm Inventus Capital. The firm, which started investing in late 2008, has been among the most active VC investors in India recently. In early January, Inventus also exited one of its portfolio companies - IT services firm Sierra Atlantic via sale to Hitachi Consulting. The firm’s current portfolio includes online bus ticketing firm RedBus, digital marketing services firms Sokrati and Vizury Interactive, wireless app platform provider Genwi, and online personal financial services firms FundsIndia and Credit Sesame.

Venture Intelligence: Can you tell us what Inventus’ key differentiators are when it comes to identifying investments? Maybe you can highlight them using some recent investments.

Kanwal Rekhi: As a small fund, we are very focused on getting into companies in the early stage and typically put in about $1 million. So, that determines the kind of companies we can do – very capital efficient plays and not sectors that need a lot of capital (like semiconductors, etc). We invest especially in enterprises that can leverage technology to tap into the consumption of middle class Indians, be it India- or US-based companies. The companies must leverage Indian talent or be focused on the Indian market. We are of the view that the Indian technology industry is tightly coupled with the US market, and there is very fluid movement of people and ideas back and forth between both markets.

We basically invest in the entrepreneur. If we aren’t comfortable with the entrepreneur, the deal is a no go.

VI: Will you invest in 2 guys with a PowerPoint?

KR: All of our portfolio companies have had some revenue traction prior to our investment. It is not as if we will not invest in just an entrepreneur and his idea; it’s because we have such a heavy dealflow of companies that have bootstrapped with support from friends and family, have some working technology and early customer traction.

We do not expect proven business models and technology, but we would like to see some level of maturity in the entrepreneurs, which we saw in companies like FundsIndia which was pre-revenue when we invested.

VI: Your recent investments in Sokrati and Vizury seem to suggest that digital marketing services are an area of focus.

KR: Given how the world economy and the way business is done is getting restructured by the Internet and the emergence of India and China, such businesses are naturally of interest.

In Sokrati, we grew very comfortable with the entrepreneurial team. Vizury was bringing a business model from US to India.

VI: A company like Genwi (which offers a development platform for creating apps on mobile platforms like iPhone, Android, etc.) seems to be doing cutting edge work. How do you evaluate such companies?

KR: Magic happens when we can get an entrepreneur who is at cutting edge of technology. The founder of Genwi, PJ Gurumohan who was 29 when we met him, had previously tried and failed with two startups. He had already been bootstrapping Genwi, along with his 20 year old partner Raju Sagiraju, for a year and had developed over 1,000 apps already. But they were charging just a onetime fee of $10 for developing apps and weren’t capitalizing on the demand.

We had some of our contacts in the Internet space play around with the technology. And we checked with Apple and they were very happy with what the team was doing - because what Genwi offered, sped up the app development process. So, we spent time with the entrepreneurs on the pricing and they have now gone to a different plane with over 1,200 apps under their belt and good revenue traction.

VI: In the online personal finance space, you have Credit Sesame in the US and in India, FundsIndia.

KR: Given the indebtedness of the average US consumer, a service like Credit Sesame - which provides tools for consumers to take control of their credit and save money on loans – is a very timely investment. When we bet on them, there was no revenue, now they have $600 million of debt under management. The company has gone on to raise a new round ($6.15 million Series B round led by Menlo Ventures) at 6 times the first round valuation. FundsIndia, on the other hand, advises customers on how to invest their savings, which is more appropriate in the Indian context.

VI: Personally, you are very well known as an entrepreneur who turned into a very successful angel investor. How are you finding your new role as a VC?

KR: When you make changes in your career, you have to re-invent yourself and prove yourself each time. Being a successful entrepreneur does not guarantee that you can become a good angel investor and being a successful angel investor does not translate into becoming a successful VC. As an angel investor, it’s one’s own money that you are betting and there is no fiduciary responsibility. But as a VC, you have to work in a team and convince the LPs.

The full version of the interview appears in the latest issue of the Venture Intelligence India Venture Capital Quarterly Report.


Popular posts from this blog

PE-VC investments decline 8% to $6.2 B in Q1'24

Press Release: Private Equity - Venture Capital (PE-VC) firms invested over $6.2 Billion (across 205 deals) in Indian companies during the first three months of 2024, shows data from  Venture Intelligence , a research service focused on private company financials, transactions, and their valuations. (Note: These figures include Venture Capital type investments, but exclude PE investments in Real Estate). The investment amount represents a 8% fall over the $6.7 Billion (across 242 deals) invested in the same period during 2023 and also down by 6% when compared to the immediate previous quarter (which witnessed $6.6 Billion being invested across 200 deals). Deal volumes in Q1'24 also declined 15% compared to Q1'23 and were up by 3% compared to the immediate previous quarter.  Q1’24 witnessed 8 mega deals ($100 M+ rounds) worth $3.5 Billion, compared to 17 such investments (worth $3.6 Billion) in Q1’23 and 15 such deals (worth $4.1 Billion) in the immediate previous quarter....

Avendus tops League Table for Transaction Advisors to PE deals in H1'24

Citi and Ambit claim the No.2&3 slots Avendus topped the Venture Intelligence League Table for Transaction Advisor to Private Equity Transactions in H1’2024 advising 12 deals worth $2.4 Billion. Citi stood second, having advised 1 deal worth $2 Billion. Ambit followed with 7 deals worth $797 million. Kotak Mahindra Capital ($735 million across 2 deals) and Ernst & Young ($657 million across 7 deals) completed the top five for H1’ 2024. The  Venture Intelligence League Tables , the first such initiative exclusively tracking transactions involving India-based companies, are based on the value of PE and M&A transactions advised by Financial and Legal Advisory firms. Among the larger deals in the latest quarter, Citi, KPMG , Ernst & Young advised $2 Billion acquisition of the Indian business of American Tower Corporation by Brookfield . Avendus, Ernst & Young, JM Financial, Barclays and KPMG advised $ 554 million acquisition of Shriram Housing Finance by Warb...

AZB tops League Table for Legal Advisors to PE deals in H1’24

Trilegal and Khaitan & Co. claim the No.2 & No.3 slots AZB & Partners (AZB) topped the Venture Intelligence League Table for Legal Advisor to Private Equity Transactions in H1 2024 advising 41 deals worth $5.4 Billion. It was followed by Trilegal ($5.1 Billion across 54 deals) and Khaitan & Co. (4.8 Billion across 46 deals) in the second and third spot respectively. Cyril Amarchand Mangaldas (CAM) ($2.9 Billion across 34 deals) and Talwar Thakore & Associates ($2.4 Billion across 9 deals) completed the top five. Among the larger Private Equity deals during H1’2024, Khaitan & Co., Talwar Thakore & Associates, S&R Associates ,and Trilegal a dvised the $2 Billion acquisition of the Indian business of American Tower Corporation by Brookfield which was the largest PE-VC investment in 2024 . AZB advised the $900 Million acquisition of Altimetrik by TPG Capital and the $840 Million acquisition of Healthium Medtech by KKR . Resolut Partners , Khaitan & ...

Citi tops League Table for Transaction Advisors to M&A deals in H1'24

  Ernst & Young and Avendus claim the No.2 & No.3 slots Citi , which advised the  $2 Billion acquisition of the Indian business of American Tower Corporation by Brookfield,  topped the Venture Intelligence League Table for Transaction Advisors to M&A Deals   during H1 2024. Ernst & Young stood second advising 8 deals worth $1.5 billion. Avendus followed with 7 deals worth $1.2 billion. KPMG ($1.1 billion across 5 deals) and JM Financial ($900 million across 4 deals) completed the top five. The  Venture Intelligence League Tables , the first such initiative exclusively tracking transactions involving India-based companies, are based on the value of PE and M&A transactions advised by Financial and Legal Advisory firms. Among the other larger M&A deals in H1 2024 (other than the  ATC-Brookfield deal) , Ernst & Young, KPMG and Deloitte advised $1.1 Billion acquisition in PNC Infratech 12 Road Projects by Highways Infrastructure Tr...

AZB & Partners tops League Table for Legal Advisors to M&A deals in H1’24

Khaitan & Co. and J Sagar Associates claim the No.2 & No.3 slots AZB & Partners topped the Venture Intelligence League Table for Legal Advisor to M&A Transactions during H1 2024 advising 37 deals worth $14.8 Billion. It was followed by Khaitan & Co. ($12.8 Billion across 32 deals) and J Sagar Associates (JSA) ($9.8 Billion across 13 deals). Cyril Amarchand Mangaldas (CAM) ($6.2 Billion across 38 deals) and Trilegal ($4.8 Billion across 20 deals) completed the top five. Among the largest M&A deals during H1 2024, AZB, JSA and Khaitan & Co. advised $8.5 Billion acquisition of Disney Hotstar by Reliance Jio . S&R Associates , Talwar Thakore & Associates (TTA), Khaitan & Co. and Trilegal advised the $2 Billion buyout deal   of  ATC India by Canadian infrastructure investor Brookfield Asset Management . CAM advised the $1.3 Billion in the acquisition of a  further  stake in Ambuja Cement  by Adani Enterprises . Among fo...