ET BureauNEW DELHI: A number of global investment firms are queuing to establish teams in the country, including a Hong Kongbased hedge fund that backs India's largest internet companies and a Silicon Valley multi-family office that counts Mark Zuckerberg among its billionaire clients.
Steadview Capital, an investor in Flipkart and Ola; Iconiq Capital; venture capital firm LionRock Capital; Russian conglomerate Sistema; and other global firms are scouting for top talent to build their own teams in India, according to multiple people aware of the developments.
Monk's Hill Ventures, which was also rumoured to be scouting for talent in the country, however, denied that the firm had plans to open an office in India, or build a team here.
"Monk's Hill Ventures focuses on investing in tech companies operating in Southeast Asia. We currently have offices in Singapore and Jakarta and we have no immediate plans to start an office or build a team in India," said Fiona Budihardja, a spokesperson for the investment firm.
The renewed interest in India's startup ecosystem comes just in time, as several companies stare at a funding crunch.
This threatens to undermine the sector's tremendous growth last year. India received record risk-capital inflows in 2015 — $16.8 billion (about Rs 1.1 lakh crore) — smashing the previous best of $14.5 billion set in 2007.
The global funds, which currently operate in India typically by flying in their top managers to strike deals, want to have teams on the ground both to secure potential deals as well as to manage their portfolio companies here, the sources said, all of them declining to be identified as the plans are in very early stages.
"It tells you that (investors) want to be here and there is conviction in the long-term potential," said Sanjeev Krishan, transaction services and private equity leader at PwC India. Iconiq Capital and Steadview Capital did not reply to emails sent by ET.
Building India-specific teams has paid rich dividends for top-tier investors Sequoia Capital and Accel Partners, which entered the country during the heyday period of 2006-08. The firms have recorded blockbuster exits (sale of investments) or seen the value of their investments rise multifold.
Sequoia, which realised significant gains from the public market debut of JustDial in 2013 and from Snapdeal's acquisition of FreeCharge last year, recently completed raising a new $920-million fund. A majority of this money will be ploughed into Indian companies, which would likely lift Sequoia's assets under management in the country to nearly $3 billion. Accel Partners, known for its early bets on Flipkart, now India's largest ecommerce company, raised a $305-million, India-focused fund last year.
The focus of the global funds seeking to establish teams in India now is to onboard experts with deep operational experience than just investment backgrounds, the sources mentioned earlier said. A number of leading talent advisory firms have been mandated to identify and hire these people, they said.
Global risk capital investors that already have significant exposure to India, too, are increasingly looking to adopt a more hands-on approach towards their portfolio companies in the country.
Leading consumer internet companies such as Flipkart, Ola and Quikr are on a constant fund-raising mode as they scale rapidly, but this coincides with continuing volatility in global equity markets and rising concerns over emerging economies.
"A lot of the startups have had very little oversight so far. Investors have to keep a more diligent eye on them, and will need to challenge them on a regular basis," said Krishan of PwC India.
Steadview Capital and Iconiq Capital, for example, are investors in Flipkart but have a largely hands-off approach, leaving the lead to the company's biggest investor Tiger Global Management. In January, ET reported that the Bengaluru-based online retailer had started talks with investors to raise about $1.4 billion.
"No investor can understand the realities and nuances unless they have a team on the ground," said Sunit Mehra, founder and managing partner of board advisory firm Hunt Partners, "especially now that, while the ecosystem here is beginning to mature, there are still a lot of nuances and complexities to manoeuvre."
Steadview Capital, an investor in Flipkart and Ola; Iconiq Capital; venture capital firm LionRock Capital; Russian conglomerate Sistema; and other global firms are scouting for top talent to build their own teams in India, according to multiple people aware of the developments.
Monk's Hill Ventures, which was also rumoured to be scouting for talent in the country, however, denied that the firm had plans to open an office in India, or build a team here.
"Monk's Hill Ventures focuses on investing in tech companies operating in Southeast Asia. We currently have offices in Singapore and Jakarta and we have no immediate plans to start an office or build a team in India," said Fiona Budihardja, a spokesperson for the investment firm.
The renewed interest in India's startup ecosystem comes just in time, as several companies stare at a funding crunch.
This threatens to undermine the sector's tremendous growth last year. India received record risk-capital inflows in 2015 — $16.8 billion (about Rs 1.1 lakh crore) — smashing the previous best of $14.5 billion set in 2007.
The global funds, which currently operate in India typically by flying in their top managers to strike deals, want to have teams on the ground both to secure potential deals as well as to manage their portfolio companies here, the sources said, all of them declining to be identified as the plans are in very early stages.
"It tells you that (investors) want to be here and there is conviction in the long-term potential," said Sanjeev Krishan, transaction services and private equity leader at PwC India. Iconiq Capital and Steadview Capital did not reply to emails sent by ET.
Building India-specific teams has paid rich dividends for top-tier investors Sequoia Capital and Accel Partners, which entered the country during the heyday period of 2006-08. The firms have recorded blockbuster exits (sale of investments) or seen the value of their investments rise multifold.
Sequoia, which realised significant gains from the public market debut of JustDial in 2013 and from Snapdeal's acquisition of FreeCharge last year, recently completed raising a new $920-million fund. A majority of this money will be ploughed into Indian companies, which would likely lift Sequoia's assets under management in the country to nearly $3 billion. Accel Partners, known for its early bets on Flipkart, now India's largest ecommerce company, raised a $305-million, India-focused fund last year.
The focus of the global funds seeking to establish teams in India now is to onboard experts with deep operational experience than just investment backgrounds, the sources mentioned earlier said. A number of leading talent advisory firms have been mandated to identify and hire these people, they said.
Global risk capital investors that already have significant exposure to India, too, are increasingly looking to adopt a more hands-on approach towards their portfolio companies in the country.
Leading consumer internet companies such as Flipkart, Ola and Quikr are on a constant fund-raising mode as they scale rapidly, but this coincides with continuing volatility in global equity markets and rising concerns over emerging economies.
"A lot of the startups have had very little oversight so far. Investors have to keep a more diligent eye on them, and will need to challenge them on a regular basis," said Krishan of PwC India.
Steadview Capital and Iconiq Capital, for example, are investors in Flipkart but have a largely hands-off approach, leaving the lead to the company's biggest investor Tiger Global Management. In January, ET reported that the Bengaluru-based online retailer had started talks with investors to raise about $1.4 billion.
"No investor can understand the realities and nuances unless they have a team on the ground," said Sunit Mehra, founder and managing partner of board advisory firm Hunt Partners, "especially now that, while the ecosystem here is beginning to mature, there are still a lot of nuances and complexities to manoeuvre."
( Originally published on Feb 09, 2016 )
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